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Operator: Good afternoon. I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the company's remarks, there will be a question and answer session. And if you would like to withdraw your question, press 1 again. Thank you. Before we begin, I would like to remind everyone that today's call may contain forward looking statements within the meaning of the federal securities law, including but not limited to statements about BridgeBio Pharma, Inc.'s future operating and financial performance, business plans and prospects, and strategy. These statements are based on current expectations and assumptions that are subject to risk and uncertainties, which could cause actual results to differ materially from those expressed or implied in these forward looking statements. For a discussion of these risks and uncertainties, please refer to the disclosure in today's earnings release and BridgeBio Pharma, Inc.'s periodic reports and SEC filings. All statements made here are based on information available to BridgeBio Pharma, Inc. as of today, and the company undertakes no obligation to update any forward looking statements made during this call except as required by law. With that completed, BridgeBio Pharma, Inc., you may begin your conference. Chinmay Shukla: Good afternoon, everyone, and thank you for joining BridgeBio Pharma, Inc.'s first quarter 2026 earnings call. I am Chinmay Shukla, Senior Vice President, Strategic Finance. With me are Neil Kumar, our CEO, Matthew Outten, our Chief Commercial Officer, and Thomas Trimarchi, our President and Chief Financial Officer. On today's call, Neil will walk through our commercial pipeline and business updates, with Matt providing additional commercial detail and Tom covering financials. Following our prepared remarks, we will open the call for questions. For the Q&A session, we will be joined by Ananth Sridhar, Anna Wade, and Justin To who will lead our program with BCP-418, and encaleret, respectively. With that, I will turn it over to Neil. Neil Kumar: Thanks, Chinmay, and thanks, everyone, for joining us today. As always, this is a forum in which we communicate salient aspects of our business that are of interest to investors, and we welcome your questions and feedback along the way. I want to spend the bulk of my time today talking about three things. The first is the Atruvio franchise, and I want to talk about our continued commercial momentum there and how we think about clinical differentiation. Importantly, these two things, plus the economics associated with the Part D orphan drug channel, underpin our confidence that Atruvio will continue to grow even past 2032. The second thing I want to discuss is launch readiness across the three exciting first-in-class or best-in-class brands we have in ADH1, LGMD2I, and achondroplasia. Although there are no major near-term clinical catalysts for any of these brands, there is a tremendous amount of activity going toward ensuring expeditious and high-quality approvals and launches. In its history, BridgeBio Pharma, Inc. has demonstrated across now three approved products, with hopefully three more to come, the ability to take on post–Phase III regulatory submission activities at very high quality, and we intend to build on this tradition with these new brands. I will end my comments addressing the current gap between our intrinsic value and where our shares trade today. I have heard from investors in the past that too much NPV talk is not what people tune into these calls to hear. At this point, it is my responsibility to discuss matters related to capturing the value that investors who have been in our stock for a long time have helped create. Our focus at BridgeBio Pharma, Inc. has always been on long-term value creation, and on reliably being able to take in money to do more work over time. And by the way, our activities across the greater bio ecosystem show that there are many more of these R&D opportunities out there. But this model is reliant on capturing the value of the work for investors, which is why today I will be discussing a share buyback program that will commence immediately. Let me begin my comments by talking about Atruvio. As many of you have read in the press release, we had $180.6 million in U.S. Atruvio net product revenue this quarter, which represents 24% growth from the last quarter and 392% growth year over year and is consistent with the brand globally becoming a blockbuster in 2026. Our focus continues to be on winning in the frontline. We believe a 95% stabilizer that preserves the native tetramer is not only the optimal solution, but even against combinations is the only solution one should start with, as it provides the highest degree of management of TTR monomer deposition, provides impact more quickly, is consistent with the pharmacokinetics of TTR stabilization, and ultimately achieves all of this in a cost-efficient and easy-to-access manner. Parenthetically, our data suggests a tripling in combo use with Atruvio with the various knockdowns, suggesting that the message that one should reach for a better stabilizer, even in combination, is resonating. As it relates to the frontline, our major competition continues to be Pfizer, and our best understanding of our share is that it has grown from the NBRx share I quoted at the JPM talk of 25% even furthermore, but still remains behind what Pfizer has been able to accomplish in the frontline. We believe that in this quarter, total new patient starts in the category were in excess of 6,100 new patients. We believe that for the first time, we are convincingly the second brand by volume in the space. There is more work to be done, but all of these trends continue to be in the right direction for us. So how do we pour some gasoline on these growing sales? The obvious way to do that in our mind is through clinical differentiation. We began to see reasonable inclines in the second derivative of our growth as the serum TTR story began to evolve in the marketplace, with multiple papers suggesting that higher levels of serum TTR are associated with lower levels of mortality at 30 months. As a reminder, every mg per deciliter of incremental increase in serum TTR seems to correspond to a 5% decrease in mortality risk at 30 months, meaning a more potent stabilizer should lead to better outcomes for the patients that we serve. We do not hear from many physicians quibbling with the fact that Atruvio is a near-complete stabilizer. Building on that, we are now beginning to explore and are confident in the outperformance of acoramidis versus tafamidis in the real-world setting. There were only really two real-world evidence studies reported to date, survival studies done in Colombia and by Dr. Mazri, that showed outperformance of acoramidis; both those were comparing our trial data and not, at that point, classic real-world data because we did not have enough time in the market to demonstrate anything in the classic real-world evidence setting. That is now changing. At ACC, an independent real-world evidence study presented by the Valley Health System of Nevada revealed statistically significant outcome improvements associated with acoramidis as compared to tafamidis. Building on this, we have a study in medRxiv that we will publish shortly in a major journal showing that Atruvio reduces diuretic intensification by 43% as compared to tafamidis. We intend to continue studying and publishing on differentiation in the real-world setting and are glad to see the cardiology community doing so independently. Interestingly, one of the benefits of acoramidis that was identified in the independent real-world evidence study was a lower incidence of acute kidney injury. As I mentioned in my J.P. Morgan talk, we are driving toward what we believe will be a seminal publication with potential impact for patients, physicians, and even on our label, as it discusses an observed rapid hemodynamically mediated renal protective effect, which is unique to Atruvio as opposed to the other stabilizers and knockdowns in the space. We continue to present and publish on acoramidis at major medical meetings as well. At ACC recently, we presented long-term efficacy and safety data from our Phase III open-label extension showing sustained clinical benefit from acoramidis at month 54, including a remarkable statistically significant risk reduction of 45% in all-cause mortality with a p-value of less than 0.0001, and a 49% reduction in cardiovascular mortality, again with a similar p-value, versus placebo. I would like to turn to the rest of the pipeline now. On LGMD2I, as I alluded to in my earlier comments, our team was able to go from top-line data to NDA submission in 155 days, consistent with our ethos that every minute counts and the fast pace that we have previously set with regard to our TTR regulatory submissions. We continue to work closely with the agency and foreign regulators to bring this medicine as expeditiously as possible to the patients who need it. I had the opportunity to attend the top-line results presentation recently in Orlando at the MDA meeting. It was a trip I will not soon forget. I was struck by the excitement our data generated not only within the LGMD2I community, but more broadly, given the striking results associated with BCP-418, suggesting that functional improvement is possible targeting well-described conditions at their source. Given the already ~500 genetically confirmed patients in the United States today, the highly engaged patient community, and physician education being conducted by the team, all of this augurs well for a positive launch dynamic. Moving to ADH1, I will be leaving from here to a very similar gathering—top-line presentation of our CALIBRATE Phase III data—at the European Congress of Endocrinology in just a matter of days. Here again, we will be looking to drive excitement into the broader physician community and to educate the patient community and establish a base of data that, together with our publication of our data, can ensure market-building exercises continue with high fidelity. Importantly, BridgeBio Pharma, Inc. has been supporting via grant family genetic testing events in the United States that continue to identify new patients with relatively high yield. Although we will be launching at a time when the majority of patients with ADH1 have not been identified yet, the combination of genetic testing, ICD-10 codes, and broad disease awareness education, plus our belief that we will be able to find ever more patients in need of this compelling drug product, supports the opportunity. Furthermore, our Phase III in chronic hypoparathyroidism will be commencing this summer and is bolstered by recent published work that illuminates the central role the calcium-sensing receptor in the kidney plays in regulating calcium metabolism. Finally, moving to achondroplasia, the results from this trial came after LGMD2I and ADH1, but I suspect given the strength of the results, prominence of the condition, and the remarkable KOLs we are privileged to partner with, that the Phase III manuscript will be forthcoming in a major medical publication and we anticipate presenting the full PROPEL 3 data set at a medical conference in 2026. Early commercial research here suggests unaided awareness in excess of 40% of the prescribing physician community, which for those of you who have commercialized brands know is a very high starting point and certainly higher than we have seen before in our own portfolio. Finally, I want to touch on the share repurchase program that we announced today. To do so, I would like to go back to BridgeBio Pharma, Inc.'s founding principles. The company was built on two things: to help as many patients as possible, and to establish a corporate and financial model that creates and captures value in predictable, responsible ways. That value capture has always been part of the mission. We talk about NPV, and while we anchor to intrinsic value, we try to make the right economic decision at every port. The reason for that is because if we capture value, more capital flows into drug development over time, and more patients get served, by us and others employing our decentralized, diversified model. Unfortunately, at this moment, we have not adequately captured value for the investors we serve, given the large disconnect between our NPV per share and our firm's intrinsic value. Even with the revision of Invitae’s entry from 2035 to mid-2031 or early 2032, our intrinsic value remains markedly higher than where our shares trade today for investors. To that end, the board has authorized a $500 million share repurchase program. These repurchases should allow our shareholders to concentrate their ownership in a portfolio whose risk profile has fundamentally improved. Of note, we have employed this technique in the past some six times. In aggregate, even accounting for the pre–Part A buyback, we have driven substantial returns for investors with our share repurchases. While we have this lever, we still believe in putting capital into our launches and advancing our clinical trials. Repurchases are additive and opportunistic, not substitutive, and are a direct result of our strong balance sheet. On the balance sheet point, we will always size deployment such that we preserve full flexibility to finance every critical program and activity in our portfolio. Plenty of liquidity and the ability to easily service our liabilities is a requirement before we deploy dollars into the buyback. With that, I will turn the call over to Matt to talk more about our commercial efforts. Matthew Outten: Thank you, Neil, and good afternoon, everyone. Q1 was another strong quarter for Atruvio, delivering an impressive 24% increase in net sales from Q4 and a 392% year-over-year increase from Q1 2025. Growth was driven by our existing and expanded sales teams accelerating new patient starts and first-line share gains. There are several factors which contributed to these results. Market momentum has remained strong. New-to-brand market share hit its fastest quarter-over-quarter growth since Q1 2025, and first-line patients have increased each and every month of the launch. Fill rates, app rates, gross-to-net, compliance, and persistency all continue to remain in line with expectations. Insurance reauthorization dynamics have been a topic of industry discussion this quarter; I want to address them directly. Atruvio did not experience reauthorization disruptions for two reasons. Part D, as in David, is a continuous plan-based model which avoids the annual renewal friction of Part B, as in boy. That structural advantage matters. In addition, in 2025, the average copay for Atruvio patients was only $190 for the entire year, with many patients paying $0 out of pocket as well. Our field teams executed with exceptional discipline to keep patients on therapy without interruption. We hire exceptional people, and those people make sure that any patient who wants a near-complete stabilizer can get Atruvio and, importantly, can stay on Atruvio. Turning to our pipeline, we are encouraged by early indicators across our three anticipated near-term launches on LGMD2I R9, ADH1, and achondroplasia. In LGMD2I R9, we are entering a disease area where no approved therapy exists. We have onboarded a commercial leadership team and have set up a specialized patient identification and field reimbursement infrastructure. Our goal is simple: find every patient who can benefit and be ready to serve them from day one of approval. In ADH1, our claims analysis has already identified nearly 2,000 in the U.S., and that number continues to grow. We have built a dedicated sales leadership team and patient infrastructure tailored to this community. In CALIBRATE, we will be the first medication to target the disease mechanism correctly and it is orally administered. Physician excitement is high, and we are ready to move immediately at approval. In achondroplasia, we are preparing for a global launch with a truly differentiated clinical profile. Infigratinib is the first medication to demonstrate statistically significant improvement in body proportionality, not just improvements in average height velocity, and the only oral option in the category. For families seeking an alternative to injectables, or returning to treatment after a negative experience, the clinical profile and route of administration of infigratinib is very compelling. To summarize, Q1 continues to reflect a durable growth trajectory for Atruvio and proof of the commercial capability we have built at BridgeBio Pharma, Inc.—an organization that knows how to launch, scale, and build franchises. We remain focused on execution for patients, for families, for prescribers, and for long-term value creation. I will now turn the call over to Tom. Thomas Trimarchi: Thank you, Matt, and good afternoon, everyone. I will now walk through our financial results for 2026. Our commentary will focus on GAAP financials unless otherwise noted. Total revenues for 2026 were $194.5 million compared to $116.6 million for the same period in 2025. The $77.9 million increase was primarily driven by a $143.9 million increase in Atruvio net product revenue. Atruvio net product revenue in the quarter was $180.6 million compared to $36.7 million in the same period last year. Royalty revenue increased by $9.3 million to $9.5 million, primarily earned from net product sales of acoramidis in Europe and Japan. License and services revenue was $0.4 million compared to $79.7 million for the same period last year. The decline reflects recognition of a one-time $75 million regulatory milestone from the prior year. Total operating expenses for 2026 were $290.5 million compared to $218.4 million in the same period last year. The $72.1 million increase was due to deliberate and disciplined investment in Atruvio and preparations for three upcoming launches. SG&A expenses were $163.9 million, an increase of $57.5 million compared to the same period last year, reflecting measured investment in our commercial capabilities. R&D expenses were $126.6 million, an increase of $15.2 million, driven by investments in medical affairs and CMC in support of our next three launches. On the operating line, in the first quarter, we recorded a $106 million operating loss. For the last five quarters, our loss from operations has narrowed by more than 50%, reflecting OpEx discipline and strong execution on Atruvio. Looking at the quarterly trend, if we back out one-time milestone payments, we have seen improvement in the operating line every quarter since the Atruvio launch. Looking ahead, we expect the trend in loss from operations to flatten over the next two quarters as we ramp up launch readiness activities for the next few products, and continue narrowing toward the end of this year as we transition to a P&L breakeven, followed by cash flow positivity, which we expect to be sustainable from that point on. Turning to the balance sheet, we ended the first quarter with $940.2 million in cash, cash equivalents and marketable securities compared to $587.5 million at the end of last year. We believe our current cash position provides us with significant runway to fund our operating activities, advance our three late-stage programs to approval and launch, and continue to invest in Atruvio’s growth, all while maintaining financial discipline. With that, I will turn the call back over to Chinmay. Chinmay Shukla: Thank you, Neil, Matt, and Tom. Operator, please open the line for questions now. Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star 1 again. In the interest of time, we kindly ask everyone to limit themselves to one question only. We will pause for a moment to compile the Q&A roster. Thank you. Our first question comes from the line of Tyler Van Buren with TD Cowen. Please go ahead. Tyler Van Buren: This is Sam on for Tyler. Thanks very much for taking our questions, and congrats on another strong quarter. I was just wondering, can you talk about what is driving the continued IQVIA acceleration? And specifically, what you are seeing in those treatment-naive patients? Thank you very much. Matthew Outten: We are definitely excited about the continued performance of Atruvio. I think the acceleration you are referring to is being driven by a few things. The first is physicians’ desire to use the only near-complete stabilizer on the market. Stabilization is the backbone of therapy in ATTR cardiomyopathy, and near-complete stabilization, along with Atruvio’s speed in showing separation from placebo, is attractive to patients and HCPs. They want something that is going to work quickly, and Atruvio has shown that it can do that. And recently, as you heard from Neil in his original remarks, the real-world evidence has backed all of these points up for both the treatment-naive patients and the switch patients, and that is helping to drive our share upwards. Neil Kumar: Maybe the only thing I would add there is the serum TTR story. You saw a bevy of papers both from us, but then importantly from others, with the numbers that I put forth—each mg/dL increase associating with pretty remarkable decreases in mortality downstream. As a reminder, when we put patients on acoramidis following administration of tafamidis, coming out of our Phase III trial, you saw a 3.4 mg/dL increase and every patient increased their serum TTR level. So it does not really matter how you measure it—you are getting increases in serum TTR. The question outstanding was never whether acoramidis is a better stabilizer; I think most people can understand that even if they cannot understand a specific in vitro assay. The bigger question was how much more is that buying in terms of downstream results? The serum TTR work was just the first part of that. I think you can see a lot more of that in the coming 12 to 24 months, really just because we have enough patients now with enough duration that we can start to ask and answer those questions. Operator: Our next question comes from the line of Mani Foroohar with Leerink Partners. Please go ahead. Matthew Outten: Hey, Manny. Thanks for the question. So the clarity on where the IP sits is clearly a meaningful positive for BridgeBio Pharma, Inc. and Atruvio. We now have at least six years of runway before generics, which is more than enough time to reach peak share, and obviously this all materially reduces any tail risk to the NPV of the program. I do not think the resolution really changes our commercial strategy. We have always been focused on establishing Atruvio as the treatment of choice in ATTR cardiomyopathy, given its differentiated profile, and we are executing against that. You heard both Neil and me talk about the value of the literature that we are producing as well as all the commercial activities we are undertaking to really reinforce that differentiation and drive share. We have shared our belief that Atruvio will be a $4 billion drug; we said that last year in our Q1 2025 earnings call. I do not think we have ever been more confident in that estimate. If anything, there might be some room for potential upside. As Neil mentioned in his prepared remarks, Atruvio is likely to keep going even after 2032 given the ecosystem and channel dynamics that exist here with Part D. That is what is driving our confidence. Neil Kumar: Maybe I will add to that. I personally did think—and I said it—that it would be 2035, so obviously I was wrong on that. That is a little bit of a discount, but not material, as I mentioned in my comments. The bigger thing is, all of these differentiating studies that we are running are really starting to resonate with clinicians, in addition to the fact that access programs are superior. I guess what your question really relates to is: will we run a double-blind head-to-head? We still might; we reserve the option to do that. Certainly, we would be excited to do that in the context of either TTR levels or NT-proBNP. But how we size a hospitalization study is difficult if you look at the number of events. We are going to have a strong look at the placebo arm of the upcoming APOLLO-type trial to really understand what those event rates look like in the context of clinical trials to see if there are some double-blind head-to-head opportunities. But there is nothing obvious right now, so let us continue doing the real-world evidence studies, which I think are the best characterization of the differential competitive dynamic. Operator: Our next question comes from the line of Biren Amin with Piper Sandler. Please go ahead. Biren Amin: Can you walk us through the board's decision to authorize the $500 million share repurchase program and how you are thinking about balancing that against your investment in new launches and pipeline? And what, if any, considerations are there for additional business strategic initiatives with this share repurchase program now being announced? Thanks. Neil Kumar: I can take that. Right now, the focus is on focused execution against the pipeline that we have. We have ample growth that has not been valued in the context of this company today—the LGMD2I launch that I referred to, the ADH1 launch, the achondroplasia launch even in its totality. We are projecting market share numbers well in excess of what typically a third mover gets in that space. Then you think about the consequential additional indications, both in terms of hypochondroplasia and, importantly, in terms of chronic hypoparathyroidism that we are kicking off, and then we have the Canavan program. That constellation of activities is more than enough to drive long-term growth for any company, and that is what we are focused on. Can we fully finance all of that comfortably? We feel like we can. Therefore, beyond that, what do we do with excess capital? We think the best relative return way that we can deploy capital right now is into our own shares, given the disconnect between intrinsic value and where we are trading. That is what the discussion came down to. I know the normal way that a biotech would grow is to say, who cares if share price is low, let us go ahead and dilute everyone and just keep going after science that we believe in. That is not a reliable, sustainable long-term model in my belief, nor is it one that we intend to employ here at BridgeBio Pharma, Inc. Operator: Our next question comes from the line of Cory Kasimov with Evercore ISI. Please go ahead. Cory Kasimov: I want to follow up on the real-world evidence that was referenced in both the press release and the prepared remarks that reinforces Atruvio differentiation versus tafamidis. Can you unpack what this real-world data is showing and how it compares with what was demonstrated in the clinical trial setting? Is anything different now than it was, or just more of it? Thank you. Neil Kumar: It is pretty different because recall that we had a significant left shift in our clinical trial. Our placebo outperformed the on-drug arm of ATTR-ACT. So there is no way for us to actually, apples to apples, go across things like diuretic intensification. And by the way, even the use of diuresis and renin-angiotensin control meds and SGLT2i use in this population—all of that has changed pretty markedly. It almost made it impossible, excepting the in-trial comparisons we can make between tafamidis and acoramidis with all the available caveats there—where acoramidis has outperformed tafamidis in all aspects, which you did not see in HELIOS-B. I think real-world evidence is the right way to do this within systems or across a constellation of systems that we know have a lot of integrity in terms of clinical studies. Here, you are seeing things like what we mentioned in terms of diuretic intensification. We certainly did not look at downstream kidney effects like the Nevada system did, but it is all resonant with the advantages that we think Atruvio has versus tafamidis in terms of mortality and hospitalization. It is nice to see it actually play out in the real world. Operator: Our next question comes from the line of Salim Syed with Mizuho. Please go ahead. Salim Syed: Congrats on another great quarter. Just one from us maybe on infigratinib and PROPEL 3. Since you have had that read, I am sure you have done some market share work or at least spoken to additional folks in the achondroplasia community, both on the clinician side and family side. What has the feedback been, and how has additional feedback informed your expectations for the commercial opportunity? I believe you said previously you think about achondroplasia as being a $2.5 billion TAM and maybe hypochondroplasia the same. Just curious if you have any other color to offer on the commercial opportunity. Thank you. Matthew Outten: Thanks for the question. The feedback from clinicians has been overwhelmingly positive. HCPs are telling us that they are constantly being asked by families when the oral is coming—not only by families on treatment today, but more importantly, those that stayed on the sidelines, which as a reminder makes up about 70% to 80% of the U.S. market. The consistent best-in-class profile is continuing to resonate with clinicians. They understand that AHI is best in class, height score is best in class, we have the most attractive safety profile, and, importantly, proportionality. The proportionality data point is the one that is resonating most with clinicians because this is the only product that has a statistically significant result in proportionality in a 3- to 8-year-old population. This demonstrates how directly targeting FGFR3 impacts more than just height. On that note, we will be releasing more data on how infigratinib is benefiting more than just height in medical conferences later this year, some of which has never been seen before in a 52-week placebo-controlled trial. Ultimately, all this reinforces our belief that we will have a big market share—actually, more than 65% market share—as validated by our market research. Operator: Our next question comes from the line of Eliana Merle with Barclays. Please go ahead. Eliana Merle: Thanks for taking the question—two from me. First, on limb-girdle, you submitted the LGMD NDA very quickly—from our math, about 155 days from top line—which is very fast compared to average. Can you walk us through where you stand on launch readiness and how you are preparing to get this drug into the hands of the limb-girdle community from day one? And then a second question on the ATTR space: how are you thinking about what we will see from CardioTransform specifically, and what hazard ratio do you think could be competitive? Anna Wade: Thanks for the question, Eliana. We are really excited. We have our commercial and sales leadership onboard, and we are getting ready to have the sales reps hired later this year. We also now have our medical leadership in place as well as a seasoned MSL team with neuromuscular and rare disease experience. In Q1, our major catalyst was the NDA conference that Neil mentioned in March, where Dr. Kathy Matthews, a leading KOL in the field, presented our Phase III interim analysis data. We got incredibly positive feedback at the meeting about the compelling data package. Since MDA, we have heard about significant patient outreach to neuromuscular centers, and internally, we have received many inbound inquiries from both patients and physicians. Our focus right now is driving awareness of the Phase III data, as well as emphasizing the importance of genetic diagnosis leveraging sponsored testing programs that are currently available, so that on day one of launch, we are ready to get patients on therapy. Neil Kumar: Let me address your second question on CardioTransform. We agree it is a super well-powered trial. Against the primary it should be good, and even in the subpopulations, taking the same point estimate from 0.05 or less, they are pretty well powered. I actually expect that they will hit on almost everything they are interrogating. Then it comes back to how to cross-trial compare and how to understand this knockdown technology. Part of that will be how much knockdown they get and whether they are able to improve on the PK profile because I think the reason that vutrisiran performed similarly to eplontersen in HELIOS-B has to do with the timing it takes to get to mean mass knockdown; it took a lot longer than I would have expected. We will see if that is the case with their drug. Overall, honestly, CardioTransform has more to do with the commercial dynamics with Alnylam than it does with us, especially given the combo data that I just told you about. I think people are going to reach for stabilizers first line anyway. Number one. Number two, I think when they are failing stabilizers, they are going to want a better stabilizer onboard in combination. So if that trial does hit, I do not see it having a meaningful effect for us. From a biochemical standpoint, you always want to preserve the native tetramer. We are seeing more and more information about that. I am surprised people have not been looking at the publicly available FAERS database and what things look like when you are knocking things down versus actually stabilizing, which is consistent with the 225,000-plus patient studies out there suggesting that higher levels of serum TTR are better for you. I understand that in a short trial those signals are not necessarily resolvable, but over the longer period of time, stabilizers will continue to be frontline and, in combination, will have a pretty good stay there too. On your hazard ratio question, we think the bar is relative risk reduction of 42% and risk reduction of 50% on hospitalization, which I suspect—if this study is consistent with the rest of the modern studies—will be where a vast majority of the events lie. So that 50% reduction in hospitalization is what I will be looking for. Operator: Our next question comes from the line of Anupam Rama with J.P. Morgan. Go ahead. Anupam Rama: Congrats on the quarter. Quick one here. I know the NDA is on track for the first half of this year, and the press release highlighted nearly 2,000 now identifiable patients with an ICD-10 code. Can you give us an update about further patient identification efforts and how this sets up how we should all be thinking about the initial launch curve? Thanks so much. Neil Kumar: Good to hear from you. The foundation of everything we are doing around patient identification is really awareness—awareness of the disease as an important distinct subset within hypoparathyroidism, and then, of course, awareness of our drug encaleret and the wonderful effect we can have for these patients. A major catalyst for awareness will be the upcoming presentation at ECE next week, followed by U.S. presentations later in the year, then hopefully a very high-impact publication as well. In the background, there are some important tactics and strategies. First, as you mentioned, the ICD-10 code is a huge advantage. Many rare diseases do not have an ICD-10 code; we likely will have one that has been in place for a couple of years already, so there is a good amount of data. That lets us take our analytics capabilities, put them on top of this, and really deploy our field-based medical and commercial leadership in a more surgical way to go to offices, spread awareness, and also make sure the patients they think they have are appropriately diagnosed with sponsored genetic tests or other commercially available genetic tests. Third, and this has been a bigger driver of identification than I would have thought, is family tracing. It makes sense when you consider this is a dominant condition, so there is a 50% chance of passing it on. When we find one person with this condition, if they look and go to a family event, we find out that many of their brothers, cousins, aunts, uncles may be affected. That has been a valuable source of patient identification as well. We will continue all these efforts and accelerate them as we approach launch. Operator: Our next question comes from the line of Derek Archulo with Wells Fargo. Please go ahead. Derek Archulo: Congrats on the progress. Just to follow up on infigratinib: some recent commentary and some of the early KPIs from the Voxzogo launch seem positive and maybe early validation of this market expansion thesis. How do you think about infigratinib’s profile versus the injectables, and how could this further accelerate the market expansion potential? Thanks. Matthew Outten: Thanks, Derek. Most physicians and families are excited about the total package of infigratinib—not just one thing. It starts with a 2.1 cm change from baseline in annualized height velocity, the largest effect shown across any of the three Phase III programs, which was remarkably consistent across the age groups. Then, as I mentioned earlier, the only statistically proven proportionality benefit—a demonstration of the importance of directly engaging FGFR3. Then you have a differentiated safety profile—no injection site reaction, no symptomatic hypertension, no hypertrichosis. I think the safety differentiation is further playing out given these increasing and concerning signals of SCFE and femur fractures, which are both looking like potential CNP class effects. On top of this, we are a daily oral. Based on historical benchmarks, we know that when an oral enters a market with only injectables, it expands the market on average by 3 to 4 times at year five after launch. Ultimately, families will have a choice of either 365 injections a year, 52 injections a year, or zero—and I know which one they prefer. Operator: Our next question comes from the line of Paul Choi with Goldman Sachs. Please go ahead. Paul Choi: Hi, thank you and good afternoon, and thanks for taking the question. Sticking with infigratinib, I want to ask with regard to the PROPEL infant and toddler study in patients who are newborns or up to two years old. Can you comment on your updated thoughts on enrollment timing and when that might potentially be completed in the wake of your positive results from the PROPEL study, and how you think about timing for that potentially being completed and added to the label? Thank you. Matthew Outten: Thanks for the question, Paul. There is a lot of excitement from sites following the efficacy in the Phase III PROPEL 3 data. What we know from the field shows that the earlier you intervene, the more likely you impact central outcomes. We will provide an update on timing later on once we have more clarity as this program progresses. Operator: Our next question comes from the line of Analyst with Jefferies. Please go ahead. Analyst: Hey. Thanks for all the updates. Congrats on execution. I have a bigger-picture question on your broader pipeline. Now that you have succeeded across four major programs all the way through Phase III, as investors think about the sustainability of your R&D engine, can you talk about how you are currently thinking about the next wave of development beyond your portfolio, how open you are to adding more to the pipeline in the near term, and what indication areas you could be interested in? Thank you. Neil Kumar: Thanks for the question. Right now, our comments and actions have always been consistent with being very focused on the opportunity in front of us. It is not often that a biotech will launch three different products in three different indication settings alongside a pretty competitive market at the same time, and that is going to take, certainly against our lean backbone, all of the focus that we have. I also mentioned earlier that we have significant additional opportunities associated with every single one of our drug products, including some that we have not talked about vis-à-vis Atruvio. There is some pretty interesting stuff to do. We have an internal pipeline—programs in ADPKD, eliminating polyketide monomers, and the complement antibody program in ATTR cardiomyopathy. Those are programs that are very capital efficient. We also have backup programs against all of our current pipeline programs so that we can do what is right for the patient and physician community to continue to serve them as long as possible. All of those things together represent the menu of activities that we are interested in the near term. Obviously, we are students of the genetic disease space. BridgeBio Pharma, Inc. has a significant stake in another company called Bonum Therapeutics, which is one of our sister companies and has 17 programs ranging from Phase II all the way back to the preclinical setting—small molecules, ASOs, antibodies, all targeting well-described genetic conditions at their source. We are happy for that to be an off-balance-sheet R&D exercise for now, as is BridgeBio Oncology Therapeutics, and really to focus on what we need to focus on here: continued prosecution of our pipeline programs, delivery of these important medicines to patients, and ultimately the capturing of the value that we have created for the investors that have backed us for many years. Operator: Our next question comes from the line of Danielle Brill Bongero with Truist. Please go ahead. Danielle Brill Bongero: Congrats on the great quarter. Neil, I believe you mentioned in your prepared remarks that there were 6,100 new patient starts across the class in the quarter. If I recall correctly, this represents a meaningful step up from prior quarters where I think it was more in the 4,000 new patients range. What is driving this step up, and moving forward, how should we think about the size of the quarterly patient pool that you are actively competing for? Thank you. Neil Kumar: I think this market continues to grow to somewhere between 5,000 and 6,000 a quarter in terms of new patient starts or new-to-brand patients. I do not think we had 4,500 last quarter; I think it was above 5,000. A little bit of this math has to do with us guessing for our competitors what the inventory holdback was or what the inventory buys were and things of that nature—so we can never get it fully right. We can get our own patient numbers fully right. But that does suggest continued growth. Will it continue to grow? I think so. There are 250,000 patients with a cardiomyopathy at the low end in the U.S., and I think we are doing a better job of three things. One is making sure that the algorithms are in the EMR so that people look for these patients. There is the Tracer AI stuff that we have been doing and other algorithms that individual health care systems have been putting forth to get people to think, “Ah, maybe this is a TTR-CM patient.” Second is driving genetic testing into variant-heavy populations; that has been helpful as well. Third, and probably the best, is broad physician awareness and education through speaker bureaus, really getting out into the academic practices and the community practices to educate them more. All of that is positive. On the negative side, we have heard quite a bit about this PYP shortage—the technetium scan is one of the ways to get a definitive diagnosis—so we have to keep an eye on that. We heard about that before in 2025, I think in the second or third quarter; the market continued to grow. That is resolvable. There are three major suppliers, and I expect in the years going forward we should not see much more of this supply chain iteration around PYP availability. Long story short, I believe you should see superlinear growth in identification, given the number of patients that we believe have a cardiomyopathy coupled with the number of sponsors in the playing field and the availability of reasonable testing. I would expect that positive trend to continue, with some error bars quarter to quarter. Operator: Our next question comes from the line of Jason Zemansky with Bank of America. Please go ahead. Jason Zemansky: Good afternoon. Congrats on the great progress, and thanks for taking our question. Maybe one more on encaleret, if we may. As you look beyond the ADH1 opportunity to the broader chronic hypoparathyroidism opportunity, how are you thinking about encaleret’s positioning relative to the parathyroid hormone replacement therapies? Is there a particularly attractive subgroup to target, or are you looking at the broader opportunity as a whole? And maybe talk about some of the pricing implications of pursuing a market that maybe looks a little bit like 25,000 patients in the U.S. and EU versus 200,000? Thanks. Matthew Outten: Hey, Jason. Great to hear from you, and thank you for the question. We look forward to seeing you next week at the conference. In chronic hypoparathyroidism, when we did our market research, three things drove our excitement. First, this will be the first oral option available in the chronic setting. The ability to give patients freedom from injection-site reactions and all the pain that comes with it resonates very well. Second, if you look at the current options available, you do see an effect in terms of blood calcium normalization, but you do not really see an effect on urine calcium normalization. With encaleret, we have a very unique profile where we could normalize potentially both blood and urine calcium, and we saw that in our, albeit small, Phase II trial, where around 80% of the patients normalized both blood and urine calcium—these are patients who are very sick and did not have the parathyroid gland or any amount of the hormone. Third, there is a potential safety risk in terms of bone resorption from giving PTH at high levels for the whole day. We could completely avoid that. The ADH1 readout significantly de-risks and highlights the therapeutic profile for encaleret. Those three things—oral administration, urine calcium normalization, and potential benefit on safety—are why we think we can compete and get a reasonable share even in the chronic hypoparathyroidism market, obviously assuming the trial works. Operator: Our next question comes from the line of Analyst with Morgan Stanley. Please go ahead. Analyst: This is Morgan on for Sean. Thanks for taking our question. Can you remind us specifically for infigratinib in achondroplasia what kind of, if any, commercial preparations are taking place from BridgeBio Pharma, Inc.? Thank you. Matthew Outten: Thanks for the question. We have built strong commercial and medical leadership, bringing on both sides of the business with experience in second and third launches with superiority data, especially with launch and global experience as well. Ultimately, we are making sure we get the word out not just to leading geneticists and ASCs, but also to the broader community of pediatric endocrinologists who are excited about having an oral option, especially for families who are not seen at super-specialized centers of care and are more interested in something that is easier for families to administer. There is a lot of education going on that front. Also remember, we have a lot of the teams in place from the Atruvio launch that can help with future launches across indications—market access with the payers, specialty pharmacies—these are the same individuals. We have relationships with all of those people and are able to launch quickly as a result, and get access and coverage. Operator: Our next question comes from the line of John Boyle with William Blair. Please go ahead. John Boyle: Hi, team. Thanks so much for taking our question and congrats on a strong quarter. Patient advocacy groups for achondroplasia seem to have a pretty big voice in the indication. Have you had interactions with them and can you speak to how the infigratinib profile is resonating there? Matthew Outten: Thanks for the question. That has been a core tenet of how we have developed since the very beginning. We have been working alongside advocacy groups both in the United States and internationally, making sure that their input and voice are implemented in our development program and how we think about endpoints. For us, being able to target FGFR3 directly addresses their concerns of being able to look at not just height outcomes, but health outcomes as well, which is something we expect to play out in the longer term and in our clinical extension program. They have been wonderful partners with us, and we anticipate that persisting through commercialization and launch as well. Operator: Thank you. Ladies and gentlemen, that concludes our Q&A session. I will now turn the call back over to the BridgeBio Pharma, Inc. team for closing remarks. Chinmay Shukla: Thank you, everyone, for your questions today. We really appreciate your interest and look forward to updating you again next quarter. Operator: Ladies and gentlemen, that concludes our conference call. You may now disconnect your lines. Have a pleasant day.
Operator: Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2026 Xenon Pharmaceuticals Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Colleen Alabiso, Senior Vice President of Corporate Affairs at Xenon Pharmaceuticals Inc. Please go ahead. Colleen Alabiso: Good afternoon. Thank you for joining us on our call and webcast to discuss Xenon Pharmaceuticals Inc.’s first quarter 2026 financial and operating results. Joining me today are Ian Mortimer, President and Chief Executive Officer; Christopher John Kenney, Chief Medical Officer; Darren S. Cline, Chief Commercial Officer; and Thomas Kelly, Chief Financial Officer. After completing our prepared remarks today, we will open the call up for your questions. Please be advised that during this call, we will make a number of statements that are forward-looking, including statements regarding the timing of and potential results from clinical trials; the potential efficacy, safety profile, future development plans in current and anticipated indications; addressable market, regulatory success, and commercial potential of our and our partner’s product candidate. The strength of our clinical trial designs; our ability to successfully develop and achieve milestones in our clinical development programs, including the anticipated filing of INDs and NDAs; the timing and results of those filings and our interactions with regulators; our ability to successfully obtain regulatory approval; anticipated timing of top line data readouts for our clinical trials of AZET2 calendar and other candidates; and our expectation that we will have sufficient cash to fund operations into 2029. Today’s press release summarizing Xenon Pharmaceuticals Inc.’s first quarter financial results and the accompanying quarterly report on Form 10-Q will be made available under the Investors section of our website at xenon-pharma.com and filed with the SEC on SEDAR+. I will now turn the call over to Ian. Ian Mortimer: Thanks, Colleen, and good afternoon to everyone joining us today. We are excited to recap an exceptional quarter for Xenon Pharmaceuticals Inc., where we made tremendous progress toward our goal of becoming a fully integrated neuroscience company delivering life-changing medicines to patients. In March, we reported results from our Phase 3 XTOL-2 study of azetu calder, or AZK, in focal onset seizures that exceeded our expectations. Now with these positive data in hand, we are focused on our NDA submission to the FDA expected in 2026, and we also continue to work on increasing AZK awareness and education through our scientific engagement amongst HCPs, as well as our commercial readiness activities. In addition, we continue to broaden the therapeutic opportunities for AZK beyond epilepsy with potential neuropsychiatric indications where we have strong preclinical, clinical, and genetic evidence. Our three Phase 3 depression studies in major depressive disorder and bipolar depression continue to enroll and we are on track to deliver top line results from EXNOVA-2 in 2027. Successful studies in MDD, BPD, or both would serve to benefit patients and substantially expand the commercial opportunity for AZK. Finally, we remain focused on expanding our pipeline through the advancement of our promising earlier-stage ion channel programs, with exciting candidates that provide the potential to drive our long-term growth. This includes completion of our first-in-human studies for XEN1701, targeting Nav1.7, and XEN1120, targeting Kv7, later this year, with the intent to advance both programs to Phase II proof-of-concept studies in pain. As we continue to execute our clinical programs and prepare for the anticipated approval and launch of AZK, we also continue to prioritize maintaining a strong balance sheet. So today I am going to focus most of my comments on AZK and epilepsy, and then I will turn the call over to Chris, Darren, and Tucker. As you all know, in Q1 we announced positive top line results from the XTOL-2 study in focal onset seizures, which exceeded our expectations by surpassing the already strong results from the Phase 2b XTOL study and, to our knowledge, demonstrated the highest placebo-adjusted median percent change in monthly focal seizure frequency ever seen in a pivotal FOS study. Similar to XTOL, we observed a rapid onset of efficacy, strong and dose-dependent responder rates, and a consistent safety and tolerability profile. Following the top line announcement, we were excited to present the data as a late-breaking oral presentation at the American Academy of Neurology Annual Meeting in Chicago. Around these two milestones, we have engaged with hundreds of epileptologists and neurologists and the feedback we have received has been incredibly positive. HCPs are enthusiastic about the magnitude of the efficacy benefits seen in our two randomized trials; the breadth and consistency of our safety and tolerability data; the impressive rates of seizure freedom in the OLE; and the key differentiating attributes of AZK. This includes a novel Kv7-targeting mechanism of action, no titration, once-daily dosing, and no dose adjustments for other ASMs. If approved, this profile would add a meaningful new medicine to their toolkit and provide the opportunity for rational polytherapy. We feel increasingly confident in AZK’s potential to become a preferred ASM for the significant number of patients who do not achieve seizure freedom with initial treatment. We are working hard to submit our new drug application to the U.S. Food and Drug Administration in 2026. Our base case assumption is a standard review period followed by DEA scheduling, which would put the anticipated launch timing at 2027 or early 2028. At the same time, we are focused on building out our commercial infrastructure and finalizing our go-to-market strategy, and Darren will speak to this a little bit later on the call. Beyond FOS, we are encouraged by the potential of AZK in primary generalized tonic-clonic seizures, and our Phase 3 EXACT study continues to enroll. Positive results in EXACT would enable us to submit a supplemental NDA for an additional epilepsy indication, which would meaningfully increase our addressable patient population. Outside of epilepsy, we are making good progress enrolling our three ongoing neuropsychiatry studies: EXNOVA-2 and EXNOVA-3 in major depressive disorder, and EXEDE in bipolar depression. There is strong rationale for Kv7 openers in depression. Several preclinical and clinical studies, including our own NOVA study, have shown promising signals of antidepressive effects for the Kv7 mechanism. Additionally, in bipolar depression, there are genetic links with Kv7, including evidence of Kv7 downregulation. We look forward to sharing our first top line Phase 3 data set in MDD in the first half of next year. We also continue to progress our early-stage programs, including our first-in-human studies with XEN1701, targeting Nav1.7, and XEN1120, targeting Kv7. These are both compelling targets to treat pain with non-opioid approaches. These programs are exciting as they leverage our deep expertise in ion channel science and the strength of our discovery capabilities, and would address large unmet medical needs. Acute and chronic pain affects more people than diabetes, heart disease, and cancer combined, yet effective non-opioid options are scarce. There is a significant opportunity for Xenon Pharmaceuticals Inc. to be a leader in unlocking the next generation of pain therapeutics. We are also excited about our early-stage epilepsy programs, including our Nav1.1 program in Dravet syndrome. IND-enabling studies are ongoing, and we continue to showcase our encouraging preclinical findings at large congresses, such as the recent AAN meeting. Our collaborators at Neurocrine are also progressing a Phase 1b study for 121,355. This is an investigational selective inhibitor of voltage-gated sodium channels Nav1.2 and Nav1.6, which is being investigated as a potential treatment for certain types of epilepsy. Data from this study are expected next year. Finally, I want to highlight another major accomplishment for Q1, which was the completion of our $747.5 million financing. It significantly extends our cash runway into 2029, allowing us to transition to a commercial-stage company and advance our depression and pain programs to key data milestones. Now with that overview, I will turn it over to Chris to provide an update on our activities at AAN and our broader clinical program. Chris? Christopher John Kenney: It has been a really exciting time at Xenon Pharmaceuticals Inc. since we reported our top line XTOL-2 data. As you would imagine, there is a great deal of enthusiasm in the epilepsy community with the prospect of a new anti-seizure medicine that could address many of the gaps in today’s treatment paradigm, including the limited number of mechanisms available. With the strong XTOL-2 data that exceeded all expectations, coupled with the long-term OLE data showing sustained effects and impressive seizure freedom, I am incredibly excited about the potential for AZK to positively impact the lives of patients in the near future and for decades to come. Recently, our team spent a week in Chicago at the American Academy of Neurology Annual Meeting, where we gave several important clinical, preclinical, and real-world data presentations, which collectively underscored the significance for AZK and our growing leadership within epilepsy. I will start by highlighting the XTOL-2 data that were featured as a late-breaking science presentation. Every year, AAN receives more than 300 late-breaking science submissions, and this year they selected just 18 abstracts for data that they viewed as warranting expedited presentation and publication to their neurologists. Dr. Jackie French of NYU and chair of the XTOL-2 steering committee presented the XTOL-2 data in both an oral platform presentation as well as a poster. The reactions were very positive, with the session moderator from Harvard University and Massachusetts General Hospital characterizing the data as outstanding, and Dr. French highlighting rapid onset of efficacy and no titration as key differentiating aspects of AZK that will appeal to physicians. Our XTOL-2 presentation reinforced the positive top line data we announced in March, including that the study met its primary endpoint of median percent change in monthly FOS frequency from baseline to Week 12 in both the 25 mg and 15 mg AZK dose groups compared to placebo. Specifically, we observed an MPC reduction of 53.2% for 25 mg, 34.5% for 15 mg, and 10.4% for placebo, results which were highly statistically significant and actually outperformed the Phase 2b XTOL study. We also observed early dose-dependent MPC in weekly FOS from baseline to Week 1, which was sustained through the double-blind period with both AZK doses, reinforcing AZK’s rapid and sustained anti-seizure activity. These efficacy results are even more impressive when you consider that XTOL and XTOL-2 included the most treatment-resistant FOS population ever trialed. At baseline, patients in XTOL-2 were experiencing a median of 13 seizures per month, had been treated with a median of five prior ASMs, and more than half were already using three concomitant anti-seizure medications. About 60% were on or had already tried and stopped cenobamate, and still they had not achieved seizure control. We also provided additional data from our responder rate analysis, where we observed dose-dependent increases in the proportion of participants with at least 75% and 90% reductions in monthly seizure frequency through the double-blind period. We also presented 100% responder rate data, which demonstrated that a 100% reduction in seizures over the double-blind period was attained by a greater proportion of participants with AZK 25 mg than placebo, results which were highly consistent with the results of XTOL. While AZK has a rapid onset of efficacy, it also takes a few weeks to reach steady-state levels, and we have seen in other instances, such as the XTOL OLE, that efficacy continues to build over time. Therefore, we also conducted a post hoc analysis of the XTOL-2 data to see if a greater proportion of participants experienced a 100% reduction in seizures over time. Indeed, the 100% responder rate increased steadily over the last eight, six, and four weeks. For example, the 100% responder rate over the 12-week double-blind period for 25 mg was 6.5%, but over the last six weeks it increased to 11.3%, and over the last four weeks it increased further to 13.7%. We are looking forward to continuing to follow this trend in the Phase 3 OLE. This brings me to our other key AZK presentation at AAN: our 48-month XTOL OLE data, where the trend of efficacy building over time is even more compelling. The OLE is also where we are best positioned to evaluate whether patients are truly achieving seizure freedom, which has been a consensus definition of no seizure for 12 months or more. This definition also aligns to practical, real-world outcomes for patients, as in many states 12 months without seizures means they are able to drive again. Our long-term OLE data demonstrated continued reductions in focal seizures, with a 91% reduction in monthly seizure frequency for those treated for at least 48 months. Those who entered the study taking one or two ASMs demonstrated a 100% reduction in monthly seizure frequency, compared with an 82% reduction in seizure frequency among those taking three ASMs at baseline. With regard to seizure freedom, among patients treated for at least 48 months, almost 40% were seizure-free for at least 12 months, and one in four were seizure-free for at least two years. If you consider how treatment-resistant the overall patient population was at baseline, this is truly remarkable. Based on feedback from our investigators, we understand some of these patients have never experienced seizure freedom before taking AZK, and their stories fuel our desire to bring AZK to patients and clinicians as quickly as possible. Finally, I will also note that our AZK data at AAN continue to support a generally well-tolerated profile. The safety data are remarkably consistent between XTOL and XTOL-2 in terms of types of treatment-emergent adverse events, the frequency at which they occurred, the number and types of serious adverse events, and the events that led to discontinuations. The most common treatment-emergent adverse events across both studies in the AZK dose groups were dizziness, somnolence, headache, and fatigue. With more than 800 patient-years of safety and exposure data, we are comfortable that this profile is consistent with other well-tolerated ASMs and with a drug that is potent and active in the central nervous system. We will continue to add to these robust safety and tolerability data with our ongoing Phase 2 and Phase 3 OLEs in epilepsy. Another focus for Xenon Pharmaceuticals Inc. at AAN was education around unmet needs in epilepsy care, including the impact that titration has on both patients and HCPs, the opportunity for no-titration options to improve treatment experiences, outcomes, and healthcare resource utilization. We presented real-world data that captured the challenges reported by patients around medication schedules, daily life, and quality of life during titration periods, while physicians reported challenges related to treatment complexity and cross-titration. When questioned on their perceptions of ASMs without titration, most patients noted that they either agree or strongly agree that initiating an ASM without needing to titrate to a stable dose would boost their confidence, reduce anxiety, and improve adherence. Physicians noted that no titration would increase simplicity, as many patients are already on complex drug regimens. These findings suggest using ASMs that do not require titration may reduce stress and simplify FOS management, and we heard this echoed in our discussions at AAN as well, especially for general neurologists who value ease-of-use attributes in prescribing decisions. We rounded out our AAN scientific program with an oral presentation of preclinical data from our Nav1.1 program in Dravet syndrome. These data demonstrated that selective potentiation of Nav1.1 channels in Dravet mice improves motor function, suppresses spontaneous seizures, prevents sudden unexpected death from epilepsy, increases long-term potentiation (which is a potential cellular correlate of learning and memory), and produces more mature dendritic spine morphology. The data continue to support our belief that targeting Nav1.1 with a small molecule could potentially address the underlying cause and symptoms of Dravet syndrome. IND-enabling studies for this program are currently ongoing. All in all, we are very proud of our scientific contributions at AAN, as well as how positively they were received by the community. Moving on to our other clinical programs, we have had a lot of activity as we continue to enroll three Phase 3 studies in depression and two Phase 1 programs in pain. Depression is an area where the differentiated profile of AZK, including its novel mechanism of action, rapid onset of action, and potential benefits on anhedonia, could meaningfully benefit patients. Like epilepsy, the depression landscape has experienced a dearth in innovation for some time, and new mechanisms are urgently needed. Our clinical development team has made great progress with EXNOVA-2 and EXNOVA-3, which are ongoing and enrolling patients with major depressive disorder. As Ian previously stated, we anticipate sharing top line data from EXNOVA-2 in 2027. In addition, EXEDE, a Phase 3 clinical study evaluating AZK in patients with bipolar I and bipolar II depression, also continues to enroll. This is another area where there is significant unmet need for safe and effective therapies due to nonadherence related to side effects and other factors. The physicians that we have spoken with are keenly interested in AZK’s novel selective Kv7 mechanism of action, potential benefit on anhedonia, rapidity of onset, and differentiated safety profile. To round out my remarks, pain continues to be an area of growing focus and we are looking forward to completing our first-in-human studies for our novel pain programs this year. There remains a strong desire for non-opioid pain therapies given the limited efficacy of current options and substantial risk of abuse and dependency tied to opioids. We know that analgesics can act along multiple different points of the pain pathway and interrupt the pain signal on its way to the brain, and we believe in the potential for Nav1.7 inhibitors and Kv7 potentiators to play important roles at multiple points in this pathway, including in the initial transduction of pain stimuli into pain signals, the transmission of those pain signals along nociceptive neurons, and the relay from peripheral sensory neurons to spinal cord neurons in the central nervous system. We believe Nav1.7 is the best genetically validated pain target, with striking genetic data in patients with loss-of-function mutations that have no ability to feel pain. Gain-of-function mutations have also been identified that drive pain disorders, further underscoring the critical role Nav1.7 plays in pain signaling. With XEN1701, as well as other Xenon Pharmaceuticals Inc. programs in preclinical development, we believe we have solved for some of the critical limitations of prior Nav1.7 compounds. Kv7 is also a compelling target to modulate neuronal hyperexcitability at multiple points along the pain pathway, and we believe Kv7 potentiators have the potential to treat a range of pain conditions. This is supported by high levels of Kv7 expression throughout the pain pathway, and our preclinical data show that Kv7 is enriched in the C and A-delta subtypes of sensory neurons. In addition, Kv7 openers can block action potential firing in both DRG and spinal cord neurons, thereby significantly inhibiting pain signals from reaching the brain. Evidence supports that dysfunction or downregulation of Kv7 activity has been observed in altered pain states. We are excited to be advancing an optimized Kv7 opener with our XEN1120 program. We are really encouraged by our Nav1.7 and Kv7 work in pain and look forward to providing more details later in the year. With that, I will turn it over to Darren to provide an update on our path to commercialization, including interactions and discussions at AAN. Darren? Darren S. Cline: Thank you, Chris. I would like to reinforce the comments from Ian and Chris regarding the strong interest in our XTOL-2 data since we first reported the results in early March. Since then, we have seen sustained engagement and interest from a broad group of epileptologists and neurologists attending AAN. Across these interactions, they reiterated the strength of our XTOL-2 and OLE datasets and AZK’s differentiated profile, and we consistently heard enthusiasm about the potential to use AZK in clinical practice. Physicians highlighted the importance of efficacious therapies that are also straightforward to incorporate into routine patient care. AZK’s unique mechanism and its expected profile of once-daily dosing, an effective starting dose, no drug interactions, and no dose adjustments with other ASMs remain among the most frequently cited and most compelling attributes. Looking ahead, we plan to increase our understanding through primary research, advisory boards, and one-on-one meetings as we continue to deepen our insight of AZK in advance of potential approval and launch. Based on our growing engagements with this audience, we believe AZK has the potential to become the preferred branded ASM for general neurologists. We also continue to hear that AZK’s profile may support greater confidence in treating a broader range of epilepsy patients within community practices, rather than referring patients to a level three or four epilepsy center after exhausting existing available options, which could contribute to broader adoption, improve patient outcomes, and meaningful prescription growth over time. Launch readiness remains a key enterprise priority. Over the past several months, we have focused on increasing our scientific engagement with epilepsy specialists, neurologists, and advanced practice providers, while continuing to expand our field-based capabilities, including the recent addition of several medical science liaisons. In parallel, we have initiated discussions with payers to introduce Xenon Pharmaceuticals Inc., better understand unmet needs, and communicate the potential value proposition of AZK. In March, we attended the Pharmaceutical Care Management Association, or PCMA, meeting for the first time and held a number of productive introductory discussions with pharmacy benefit managers and payers. The timing of these conversations alongside our XTOL-2 data release helped drive interest and momentum. We plan to participate in several national payer meetings this year, and in the coming months, we expect to expand our field-based payer team to continue dialogue with this important constituency and further strengthen our launch preparedness. As we execute on these launch readiness priorities, we remain focused on building an experienced launch and lifecycle management organization, advancing innovation across channels and patient services, and increasing awareness across our customer universe. Our commercial objective is to establish Xenon Pharmaceuticals Inc. as a leader in epilepsy, and we believe we are making meaningful progress toward that goal. We are highly motivated by the opportunity to deliver meaningful benefits to patients and the physicians who care for them. With that, I will turn the call over to Tucker to review our financial results. Thomas Kelly: Thank you. As Ian mentioned, the exceptional results in XTOL-2 allowed us to complete a highly successful public offering of nearly $750 million, which fortified our balance sheet as we move toward potential approval and launch. We ended Q1 with cash, cash equivalents, and marketable securities of $1.3 billion, compared to $586 million as of December 31. Based on our current operating plans, this provides cash to fund operations into 2029. Given our strong balance sheet and fiscal management, we are well positioned to support AZK’s U.S. launch, multiple registrational programs for AZK, and the continued maturation of our early-stage pipeline. I would refer you to our press release and our 10-Q filed today for further details on our financial results. Overall, it is a very exciting time at Xenon Pharmaceuticals Inc. as we continue to build momentum in our pipeline spanning epilepsy, depression, and pain, and make progress against our critical priorities, with our first priority being the submission of our NDA for AZK to the FDA in 2026, as well as the advancement of our commercial readiness activities to support a strong launch in FOS. We also remain focused on broadening the therapeutic opportunities for AZK beyond FOS, and we continue to make good progress enrolling our studies in major depressive disorder and bipolar depression, with the readout of our first depression study anticipated in 2027. Lastly, we are pleased with the momentum in our early-stage pain programs, and we anticipate completing the first-in-human studies for 1701 targeting Nav1.7 and 1120 targeting Kv7 later this year, and we seek to advance both programs to Phase II proof of concept. We are in an excellent position to execute our priorities due to our strong cash position, and we are feeling very optimistic about a bright future as we begin to transition to a commercial-stage company delivering meaningful medicines to patients. With that, we will now open the call for questions. Operator: At this time, I would like to remind everyone that in order to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment. Your first question comes from the line of Paul Matteis with Stifel. Your line is open. Paul Matteis: Great. Thanks very much. Congratulations on everything from the first quarter. I wanted to ask a couple of questions on the pain programs, if that is okay. First, as it relates to the Nav1.7 compound, I was wondering if you could talk about where you have gotten to in your Phase I program at this point, and how much you feel like you have de-risked some of the safety issues that have plagued other drugs? And then separately, can you maybe speak to more specifics around these Phase II plans in acute pain? What would the size and scope of those studies potentially look like, assuming the Phase I data later this year lets you advance? Thank you. Ian Mortimer: Thanks, Paul. Chris, I am happy to start and then you can provide your perspective, especially on the future clinical development. At JPMorgan earlier this year in January, we discussed progress we had made on both Nav1.7 and Kv7. You asked specifically around Nav1.7. At that time, we said that we already felt that we were at high enough exposures to get receptor occupancy that would mimic the human genetics, so we had already made good progress in those early cohorts of dose escalation. Bringing it forward to today, we have continued to enroll additional healthy volunteers in that Phase 1 study. Sitting today, we feel really good that we can safely dose, have the appropriate therapeutic index, and give this mechanism a real shot to show proof-of-concept data in Phase II. Based on what we know today, our plans are to move forward into a Phase II acute pain proof-of-concept study. Obviously, on the acute pain side, we are looking at studies like bunionectomy or abdominoplasty. We have not yet fully designed the studies. We would want to have them of sufficient size and power, and these would be placebo-controlled studies to show a difference between active and placebo. The question we continue to think about internally is how many arms, active comparators, how many doses—those things we are still planning. That will become clearer as we finish Phase 1 and we have a really good idea of what we are seeing in terms of the dose response and safety profile in those Phase 1 healthy volunteer studies. Chris, any color to add on additional details for future development? Christopher John Kenney: I will just double down on your point that we think we have what we need to go forward into Phase II on both programs, and we have not worked out exactly what the plan would be after the proof of concept that would be with abdominoplasty and/or bunionectomy. Paul Matteis: Alright. All good. Thank you very much. Unknown Speaker: Thank you. Operator: Your next question comes from the line of Tessa Thomas Romero with JPMorgan. Your line is open. Tessa Thomas Romero: Hey, thanks so much for taking our question, and congratulations from us on all the progress. Ian and Chris, I was wondering if you could provide your perspectives on how the seizure freedom data that you have shared at 12 weeks from XTOL-2 compares to what we know about XCOPRI on a cross-trial basis numbers-wise. How do you think doctors will approach thinking through the seizure freedom data that we have for these two assets, given that nearly 60% of the patient population were taking or had already discontinued XCOPRI in XTOL-2, and, of course, that XCOPRI has to be titrated? Thank you. Ian Mortimer: Thanks, Tessa. I will start. Chris can provide perspective, but I also want Darren to weigh in because we have had a huge amount of interaction with HCPs and the feedback that they are providing us. Chris mentioned in the prepared remarks that the consensus definition of seizure freedom is really having no seizure for 12 months, and so when we talk about our seizure freedom data with prescribers, we focus more on our open-label data than our double-blind data. In the double blind, you will hear us use terms like RR100, which is the percentage of patients that had a 100% reduction over the double blind. You asked for a comparison between AZK and cenobamate. It is a cross-trial comparison and it is challenging, but I will make a couple of comments. One, it was a materially different patient population. As Chris walked through and as you have seen in our publications and posters, we believe that both in XTOL and XTOL-2 this was the most refractory population ever trialed in a pivotal FOS study. When we look at the cenobamate double-blind trials done over a decade ago, that was a significantly less refractory population. So we are comparing two different clinical populations within FOS. You also mentioned another key factor, which is because cenobamate is titrated, when they look at their RR100 during their double blind, they only report over the maintenance period, which is the last six weeks of dosing. One of the reasons why we provided a breakdown of the last eight, six, and four weeks is to enable a better comparison. Another point on the cross-trial comparison is that often they show their data at their 400 mg dose, which—based on feedback and real-world data—patients rarely reach. If you look at their 200 mg dose and you look at the last period within our double-blind period—within the last six weeks or four weeks of our data—I would actually say that our RR100 is higher than the cenobamate data seen at their 200 mg dose. Then the last point you made is important: we actually had a cenobamate-refractory population in our trial, with close to 40% of patients on background cenobamate and approximately another 20% who had tried it and failed it either for efficacy or tolerability and were no longer on the drug. Overall, I think our data stack up really well, and I have not even talked about the open-label data. That is just a cross-trial comparison during the double-blind period. I will pass it to Chris to talk about the open-label seizure freedom data and then to Darren on how that is being pulled through into the real world. Christopher John Kenney: Thanks, Tessa. In the epilepsy field, there is a bit of a disconnect. If you talk to epileptologists and neurologists and ask them what they are hoping to achieve, they talk about seizure freedom on a long time horizon—at least six months, more like a year, sometimes more. Yet, in the same conversation, they will ask what was your seizure freedom over a month or two or three months. As you make comparisons, the details matter. If you are talking about seizure freedom with cenobamate at 400 mg, with hardly anybody taking 400 mg, and many patients treated at 200 mg or lower, it is important to think about dose. Also, when they talk about seizure freedom in cenobamate, they are excluding the first six weeks of the trial period, which is why we provided those different cuts of seizure freedom to allow a better comparison. Zooming out, general neurologists want something easy to use. With AZK, you do not have to worry about titration, drug-drug interactions, or manipulating other medications to reach therapeutic dose. To wrap up on seizure freedom, what really matters is what happens in the long term. In the data we just presented at AAN, among patients treated for four years or more, we are seeing about 40% with seizure freedom for a year or more. That is what really matters—not so much what happened over one, two, or three months. Thanks. Darren S. Cline: Thanks, Tessa. I would reiterate what Ian and Chris said. When we engage with physicians—both epileptologists and general neurologists—at AAN and other forums, XCOPRI is largely an epileptologist drug. When we query about seizure freedom at 400 mg, very few, if any, patients get to the 400 mg dose. As it relates to their own experience, seizure freedom at those doses is not as compelling in the real world. XCOPRI does add benefit, but physicians are not seeing anywhere near what is shown at 400 mg. General neurologists have struggled with using it; many try it once and are done. What differentiates AZK—and what we believe will make this a tremendous opportunity—is the ease-of-use attributes: lack of titration, once-daily dosing, and no DDIs. These really resonate, and general neurologists look forward to incorporating AZK in their practice. Operator: Your next question comes from the line of Cory William Kasimov with Evercore. Your line is open. Cory William Kasimov: Hi. This is Addy on for Cory. Just on the earlier question asked on the pain assets, can you confirm if investors should anticipate any data this year? I believe earlier it was mentioned that maybe Phase 1 SAD/MAD data might be presented. Should we anticipate that data? Thank you. Ian Mortimer: Thanks. We are very comfortable saying that the Phase 1 healthy volunteer studies for both 1701 and 1120 will complete this year. In terms of how much of those data we provide publicly—for competitive reasons—we will certainly communicate that we believe we have enough receptor occupancy, exposure, and coverage to have a really good shot at seeing an analgesic effect in a proof-of-concept study. It is to be determined whether we will broadly show the Phase 1 data publicly. We are comfortable that those studies will wrap up this year. Operator: Your next question comes from the line of Analyst with TD Cowen. Your line is open. Analyst: Hi, thanks for taking our questions. Have you scheduled or had a pre-NDA meeting yet? If you have had the meeting, can you talk about any feedback you have received from the FDA? Then on scheduling, can you walk us through the timeline and your expectations for DEA scheduling if you get approved? Christopher John Kenney: What we have guided is that we had top line XTOL-2 in March. We expect about a six-month period between that and submitting the NDA. We are expecting a standard review of 12 months, and then DEA scheduling is expected to be three months, which is why Ian stated that we expect approval in 2027 or early 2028. Pre-NDA meetings are standard. We expect that to occur between the top line data and the NDA submission in the fall, but we have not provided specifics on timing. We have had thoughtful and timely interactions with FDA, we think we have a good reputation with them, and we have not foreseen any problems up to this point. We look forward to future interactions. Analyst: Great. Thank you. Operator: Your next question comes from the line of Andrew Tsai with Jefferies. Your line is open. Andrew Tsai: Hey, good afternoon. Thanks for taking my questions. This is Matt Barkis on for Andrew Tsai. Can you give us a little flavor on what other Phase 3 data analyses you might share later this year, especially at AES in December, which can further showcase AZK’s potential differentiation? Ian Mortimer: Thanks. Chris, do you want to walk through our thinking around AES and additional analyses? Christopher John Kenney: We have spent a lot of time digging into the Phase 3 data and are working through what we intend to submit as potential abstracts at AES. As you know, you submit and they may or may not be accepted. We are focusing on analyses that combine efficacy and safety from our two pivotal FOS trials—XTOL and XTOL-2. We may also revisit seizure subtypes as we did in XTOL. And of course, we will update the XTOL OLE data, as we do each year. Those will happen for sure; we are working through whether there will be anything else. Ian Mortimer: That was great. Thanks, Chris. Operator: Your next question comes from the line of Brian Skorney with Baird. Your line is open. Brian Skorney: Hey, thanks for taking the question. This is Charlie on for Brian. Thinking about your Nav1.1 in Dravet—obviously a preclinical space—how do you see this compound and mechanism differentiating from the field, especially considering there are other therapies out there addressing this issue in epilepsy? And one more on pain: what are you thinking about long term in terms of chronic pain versus acute pain, and how each asset might fit into that paradigm? Thank you. Ian Mortimer: Thanks. I can start on Nav1.1 and then Chris can add, and we can touch on pain strategy. In Dravet syndrome, these children are haploinsufficient in Nav1.1, so they have about 50% of the protein. Currently approved drugs address seizures—like clobazam, Epidiolex, or FINTEPLA—aim to reduce seizure burden. We believe the field is also moving toward correcting the underlying genetics. There are ASO approaches you are aware of. We see an opportunity for a small molecule that is orally administered and can be titrated or weight-based dosed across a wide range of pediatric weights. By potentiating the channel and increasing current through the wild-type channel, there is potential to correct underlying disease physiology. The preclinical data Chris described—presented at AAN, including in haploinsufficient genetic models that mirror the human phenotype with spontaneous seizures and SUDEP—are quite remarkable. We see not only seizure reduction but also potential disease modification, including protection from death and improvements in long-term potentiation. We are now in tox studies. There is a huge need for better therapies in Dravet, and we think this could fit in nicely, though it is still early days. On pain, our first proof-of-concept studies will be in acute pain—bunionectomy or abdominoplasty. There is nothing in the genetics of Nav1.7 or the mechanism of Kv7 that suggests they should only work in acute versus chronic, or nociceptive versus neuropathic pain. If these programs look promising in PoC, the plan would be to go broad in late-stage development. Christopher John Kenney: Maybe it is slightly crowded, but this is a devastating disorder and it is good that multiple groups are working on it. We think we are differentiated because we are advancing a small molecule that addresses pathophysiology in a manner analogous to ASOs targeting the mechanism, but delivered orally rather than intrathecally. Think about the SMA analogy: gene therapy, ASOs, and then orals—all played roles. We think we can offer something meaningful. On pain, we are focused on getting out of first-in-human and into PoC; we still need to figure out chronic versus acute and other parameters in the coming months. Brian Skorney: Great. Thank you for all the color. Really helpful. Operator: Your next question comes from the line of Myles Minter with William Blair. Your line is open. Myles Minter: Thanks for taking the question. One on the commercial side: it is interesting that we are all comparing to XCOPRI when that is not the number one branded product—BRIVIACT is, and I think that went generic at the start of the year. Is that a headwind to marketing a newly branded ASM because costs are coming down in general neurology, or is it a tailwind because you no longer have to compete for that branded slot and can come in and take the market within general neurology? Darren S. Cline: Thanks, Myles. On the contrary, we think AZK’s attributes—particularly the novel mechanism—stand out after generations of SV2A, sodium channel blockers, and GABAergic approaches. The novel Kv7 mechanism is a benefit. Our ease-of-use attributes that we have outlined and receive positive feedback on—no titration, once-daily dosing, no DDIs—are compelling. Considering the timing, when we ultimately launch it will be almost a decade of what I would characterize as stagnation in focal epilepsy innovation. Along with our clinical data and profile, we see a great opportunity. BRIVIACT is another “me too” mechanism following a wildly successful parent in Keppra; that is a completely different market and opportunity than what we have with AZK as we look to the future and prepare to launch. Operator: Your next question comes from the line of Analyst with Deutsche Bank. Your line is open. Analyst: Hi, thanks for taking my questions. On the commercial side, given the strong balance sheet you have now, how do you think about leveraging that to ensure the best commercial launch for AZK in focal epilepsy? For example, would you increase the number of sales reps you field? And a competitor is doing a monotherapy study, arguing that weaning patients off background meds could allow earlier-line use. Have you thought of a study like that, and would it be helpful for AZK? Ian Mortimer: Thanks. I am happy to start with a bit of historical context, and then Darren can go through launch preparation details, and Chris can address monotherapy and labeling. Since the XTOL data in 2021, we have invested in commercial preparation at risk. This is a generational, paradigm-shifting opportunity. Given our confidence heading into the XTOL-2 Phase 3 readout, we started commercial prep already. Darren was hired almost a year ago. We have had field medical—MSLs—engaging in scientific exchange; this summer it will be two years since that team has been in the field. Darren’s leadership team is in place. We have had access personnel in place for years. Early investment gives us an opportunity for real success in the early days of commercialization. Darren? Darren S. Cline: Thanks. Successful launches share a few ingredients. First is early investment, which was in place when I joined. Second is the team: we have commercial leaders with deep epilepsy experience, relationships, and launch experience—which gives us a leg up. Third, we will be a highly desirable place for epilepsy-dedicated professionals; there has been little new for years, so when we post roles we expect the best talent. On the product, from brand positioning to pricing commensurate with value to services and distribution, we are thinking creatively to extract value and, most importantly, deliver the best patient and physician experience. Creating demand is only part of it; converting to paid scripts, persistency, and compliance complete the equation. All those variables are being put in place, and with AZK’s clinical profile, we are extremely excited and bullish on the launch. Chris, on monotherapy? Christopher John Kenney: To be blunt, I do not see the upside of doing a monotherapy study. From a labeling perspective, current labels do not specify adjunctive; they state the indication. I do not see upside from a labeling perspective. If, for whatever reason, I did see upside, I would design a pure monotherapy study—drug versus placebo—from the start. Manipulating background ASMs, trying to back off, and then interpreting efficacy and safety is likely very challenging. Operator: Your next question comes from the line of Analyst with Wells Fargo. Your line is open. Analyst: Yes, this is Orpheus on for Ben. Good afternoon, and congrats on the progress. As we look forward to XTOL-3 data and a potential ex-U.S. launch, how are you thinking about commercialization in ex-U.S. territories? I know in the past you have shared you would look to partner in such geographies. Any updates you can share? Thank you. Colleen Alabiso: I am happy to address that. Ian Mortimer: We are conducting clinical development to meet regulatory requirements around the world. We have been clear that the clinical program should meet requirements in Europe. An update over the last couple of quarters was our interaction with PMDA and the incorporation of Japanese sites and subjects into XTOL-3 to meet requirements in Japan without having to run a separate Phase 3 program there. We have done what is needed to drive global clinical development and value. We have also been clear that we are not going to build market access and commercial infrastructure outside the U.S. When the time is right, we will engage with potential partners to access those markets. Right now, we are focused on global clinical development. Analyst: Very helpful. Thank you very much. Operator: I will now turn the call back over to Ian Mortimer for closing remarks. Ian Mortimer: Thanks very much, operator, and thanks to everyone for joining us today. I know there were other questions in the queue, so if we did not get to yours, we will reach out to you directly to connect. We look forward to providing continued updates as we advance our programs and deliver on important milestones throughout the remainder of the year. Operator, we can now end the call. Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Welcome to Globus Medical, Inc.'s first quarter 2026 earnings call. At this time, all lines will be on mute. A Q&A session will be held after the prepared remarks. Please be advised that today's conference is being recorded. I will now turn the call over to Brian Kearns, Senior Vice President of Business Development and Investor Relations. Mr. Kearns, please go ahead. Brian Kearns: Thank you, Kathy, and thank you, everyone, for being with us today. Joining today's call from Globus Medical, Inc. will be Keith W. Pfeil, President and CEO, and Kyle Kline, Chief Financial Officer. This review is being made available via webcast accessible through the Investor Relations section of the Globus Medical, Inc. website at www.globusmedical.com. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. Our Form 10-Ks for the 2025 fiscal year and our subsequent filings with the Securities and Exchange Commission identify certain factors that could cause our actual results to differ materially from those projected in any forward-looking statements made today. Our SEC filings, including the 10-Ks, are available on our website. We do not undertake to update any forward-looking statements as a result of new information or future events or developments. Our discussion today will also include certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most directly comparable GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are available in the schedules accompanying the press release and on the Investor Relations section of the Globus Medical, Inc. website. With that, I will now turn the call over to Keith W. Pfeil, our President and CEO. Keith W. Pfeil: Thanks, Brian. Good afternoon, everyone, and thank you for joining us on today's call. Our first quarter results demonstrate our ongoing focus as we continue to scale and capture share while maintaining operational discipline, driving margin expansion, favorably impacting Q1 and our full-year results looking ahead. Overall, we are moving with purpose and in the right direction. As we progress through 2026, look for market share-taking top-line growth coupled with exciting product launches while increasing gross margins and driving meaningful earnings expansion. Stepping back for a minute, I want to give a little perspective and highlight what we have accomplished by looking at our trailing twelve-month performance and the activity that has occurred since the close of fiscal 2022. Since then, revenue has more than tripled. We have generated six times the amount of free cash flow, all while closing two significant deals, extinguishing almost $1 billion in debt, while deploying over $600 million to repurchase over 10 million shares at an average price of under $60 a share. That represented greater than 25% of the dilution that was created from the NuVasive merger. We sit here today debt-free, generating significant free cash, and have launched over 30 new products during this time frame. Simply stated, we have leaned in and meaningfully scaled our business while maintaining the DNA of Globus of innovation, execution, and financial prudence. I am thrilled with our results in Q1 and look forward to what 2026 and beyond has in store for our business. Turning attention to our top-level performance, Q1 revenue totaled $759.9 million, growing 27% as reported and 25.5% on a constant currency basis. Fully diluted non-GAAP earnings per share was $1.12, growing 64.7% over the prior-year quarter. Our Q1 base business revenue totaled $677.2 million, growing 13.2% as reported versus the prior-year quarter, led by continued strength in U.S. Spine, while also seeing improved performance across Enabling Tech and International Spine. Digging further into U.S. Spine, this business continues to show strength and resilience, as it grew 10% in Q1 versus the prior-year quarter, marking the third consecutive quarter of 10% growth. Our U.S. Spine sales team remains resolute and focused operating against the backdrop of driving achievement against key objectives. We have seen this momentum continue and are now sitting at 58 weeks of consecutive growth. Cross-selling, competitive recruiting, and robotics pull-through are key to this strategy as we continue to capture volume and drive meaningful share growth across the category. Consistent with prior quarters, our growth remains broad as we continue to see double-digit growth across many categories, including standard fixation, MIS pedicle screws, expandable TLIF, ALIF, posterior cervical, as well as cervical plating. Categories such as power tools and products such as DuraPro continue to capture new share and drive incremental cross-selling opportunities as we seek to gain a greater share of each spine procedure. Competitive recruiting remains a strategic priority, and the spine leadership team is aligned from the top down to aggressively perform against this objective. The process of doing so remains a competitive moat for Globus and our execution around rep onboarding with sets and inventories continues to differentiate us, as our supply chain meets the needs of the field by providing high-return capital investments, which is a testament to our philosophy: having the right products at the right price and being on time. Robotics pull-through remains a key driver, and as we demonstrate greater flexibility in how customers acquire capital, we seek to more aggressively drive the recurring revenue, whether through implants, disposables, service, or case coverage. Strategically, we are slightly altering our approach to capturing more accounts and expanding upon surgeon and rep training, thus driving success at accounts with enabling technologies. Our first quarter saw Enabling Technologies post revenue of $26.9 million, growing 21% over the prior-year quarter. We saw a sequential step down in Q1 consistent with history. However, we maintain momentum in closing deals while also seeing greater penetration of international markets. Our pipeline of deals remains robust. However, the mix of pipeline deals is shifting with a greater focus on leases and rentals compared to the historical mix of outright sales, which historically resulted in higher upfront revenue recognition. This aligns with my earlier comments and the strategy of refocusing our capital approach to drive implant and other recurrent revenue product pull-through, all of which has been implied in our revenue guidance for 2026. Despite new and enhanced robotic competitors in our space, ExcelsiusGPS remains the standard for ease and simplicity with our floor-mounted navigation-based robotic approach. The ground-up design with its native platform gives surgeons the access and control they need to facilitate a spine procedure while seamlessly navigating through our workflow. To date, we have seen almost 130,000 robotic procedures and will continue to penetrate the market to launch new successful programs that foster utilization. No other competitive systems, including recently introduced products, have been able to replicate the reliability, ease, or accurate workflow attributes of our robot. Our international spine business grew 16.4% as reported and 9.8% on a constant currency basis as we did not repeat the supply chain disruptions which occurred in the first quarter of the prior year. Strength was seen mainly in the EMEA and LATAM regions, and our growth was broad based, including both direct and distributor businesses across our international markets. On the product front, I am pleased to announce that early in our second quarter, we received two FDA 510(k) clearances for both our patient-specific Scripps spacer system comprising seven patient-specific lumbar interbody systems as well as patient-specific Scripps rods. Both the Scripps spacers and rods are designed by surgeons using the Scripps Studio Design and surgical planning software application. Scripps lumbar spacers are static, static integrated, and expandable thoracolumbar interbody fusion devices additively manufactured with patient-matched endplate topography for maximum stability. The patient-specific Scripps spacers may be placed using ExcelsiusGPS instruments for navigation, ExcelsiusGPS, Excelsius Hub, and ExcelsiusXR. Scripps patient-specific rods are precision bent to the surgeon's pedicle screw placement plan and designed to reduce time spent on intraoperative rod bending. Rods are compatible with our CREO, Reline, and REVERE pedicle screw systems for both open and MIS procedures. Scripps Studio screw plans can be uploaded to our ExcelsiusGPS and Excelsius Hub systems for robotically navigated screw placement intraoperatively. Our platform keeps the physician at the center of the planning process with an intuitive interface allowing the surgeon to efficiently fine-tune disc height restoration, spinal alignment, and pedicle screw placement, translating their precise clinical intent directly into the implant design. Our software is treated as an advanced tool rather than a replacement for clinical judgment, ensuring the implant perfectly executes to the surgeon's operative strategy. Our expandable offering incorporates our proven technology, allowing surgeons to insert the implant at a lower height designed to minimize nerve retraction and reduce the impaction forces required to implant the spacers. Once in the disc space, the spacer can be expanded to restore optimal disc height. Finally, our patient-matched spacers and rods are bundled with our high-quality implants and best-in-class disc prep and retractor systems while integrating with our Excelsius suite, thus ensuring final placement matches the digital pre-op plan to ensure proper navigated placement. With our Scripps approvals, we will be the only company positioned to offer a complete portfolio of patient-specific lumbar interbody spacers and rods integrated with our enabling technology, truly establishing us as the one-stop shop for lumbar patient-specific implants. The team is working tirelessly to finalize the launch plan and bring these new exciting products to market shortly. We remain excited for the future as the team embarks on an enhanced focus of development and investment to bring new products to market in 2026 and beyond. I sit here today truly excited for what we have in store for 2026. Our trauma business posted a 34% increase over the prior-year quarter with growth coming from both our core trauma line through share taking as well as our PRECICE limb lengthening portfolio. Our Anthem elbow plating system continues to be a standout product exceeding our expectations as surgeons have responded to this product based on the anatomic fit of this plating system. Consistent with comments last quarter, demand on this product has continued to surpass initial expectations such that we will be delivering additional sets to the field in the second quarter. Both in PRECICE, driven by our ability to now fully satisfy the market after we transitioned manufacturing from the former NuVasive facilities to Globus in early 2025. Manufacturing output has now surpassed the historical output at the former facility such that we are now able to fully supply the market. Our commercial focus will remain on level one and level two trauma centers as we seek to drive share growth with a smart approach to investment that balances inventory and set availability in a manner that drives high ROI. We will remain diligent in sticking to this plan as we move ahead. First quarter Nevro revenue finished at $82.7 million as we have adopted the Globus approach to driving profitable sales growth. Although the strategy rollout led to sales declines, we had expected lumpiness to occur with this business as we work through bringing it under the Globus umbrella in its first 24 months. The team is actively recruiting new sales personnel and mapping new product introduction plans while transitioning to our revised selling model. We are and will remain active on the recruiting front as we move through 2026 and expect to return to a more historical run rate revenue late in the second half of the year as new associates are fully trained to enter the market. We are focused on enhanced training protocols moving forward and will stress this for all new and existing Nevro sales associates given the substantial clinical data pointing to our high-frequency technology offering a clinically superior solution for patients suffering from chronic pain. We are committed to this business and bringing these technologies to market while ensuring the business is positioned in a manner that will drive profitable sales growth over the long term as we seek to grow the existing business through improved go-to-market strategies and new product development while devising products to expand the use of Nevro's patent portfolio outside of the direct markets in which they operate today. Longer term, this continuum of care is complementary to our overall product portfolio and will help drive our strategy moving forward. Operationally, we continue to execute on manufacturing and supply initiatives across our business to drive gradual and meaningful improvements to core product profitability. We reiterate our commitment to achieving a mid-70s adjusted gross margin profile over the long term, leading to expanded levels of profitability, helping drive overall returns above our cost of capital. As we move further into 2026, our key areas of focus will remain on driving organic sales growth while continuing to internally invest and launch new products. Our moats of innovation, vertical integration, a high-touch salesforce, a scalable platform, and financial discipline allow us to move fast to address our long-term goals of improving outcomes and solving unmet clinical needs. Our approach to product development will remain focused on a ground-up mindset that is procedure enabling, integrating imaging, navigation, robotics, surgical intelligence, and implants in a more thoughtful way to improve ten-year surgical outcomes in 95% or better. Surgical intelligence will focus on bringing together patient selection, surgical techniques, and complementary implants with technology to drive proceduralization while creating a closed-loop intelligent ecosystem to help surgeons continuously drive outcomes higher. Thank you to all of our Globus team members from all around the world. Your teamwork, dedication, and focus are how we continually work to solve unmet clinical needs. I will now turn the call over to Kyle. Kyle Kline: Thanks, Keith, and good afternoon, everyone. Our first quarter delivered exceptional results on both the top and bottom line and is an impressive beginning to 2026 for the entire Globus Medical, Inc. team. Sales grew 27% as reported, compared to the first quarter of the prior year, with over 13% of growth coming from the base business, including strong growth from substantially all of our underlying businesses. Our top-line results were once again highlighted by the domestic spine business, which had its third straight quarter of 10% growth. We continued to see margin expansion in the quarter, with adjusted gross profit margin over 69% as we remain focused on disciplined execution of manufacturing and supply chain initiatives. We also achieved record Q1 fully dilutive non-GAAP earnings per share of $1.12. In today's prepared remarks, I will provide insights into our quarterly business performance, including the impacts of Nevro, and an update on guidance for 2026. First quarter 2026 results were highlighted by revenue of $759.9 million, growing 27% on an as-reported basis and 25.5% on a constant currency basis. GAAP net income was $124.3 million, resulting in $0.90 of fully diluted GAAP earnings per share. Non-GAAP net income was $154.9 million, delivering $1.12 of fully diluted non-GAAP earnings per share, or 64.7% of non-GAAP EPS growth over the prior-year quarter. Adjusted EBITDA margin was 32.3% in 2026. Our Q1 2026 base business Globus adjusted EBITDA margin was 34.8% and standalone Nevro adjusted EBITDA margin was 11.8% for the quarter. Our first quarter net sales of $759.9 million reflect base business Globus sales totaling $677.2 million, growing 13.2% as reported and 13.1% on a day-adjusted basis, with the same number of selling days in the U.S. and international and one more selling day in Japan compared to the prior year. Base business Globus sales grew 11.9% on a constant currency basis. As mentioned in my opening remarks, we saw growth across substantially all of our underlying businesses, led by U.S. Spine, which achieved 9.6% as-reported growth, and International Spine, which grew 16.4% on an as-reported basis and 9.8% on a constant currency basis. Trauma and our neuromonitoring businesses each grew over 30%, and Enabling Technologies started the year off with over 20% growth compared to Q1 2025. Nevro contributed $82.7 million of revenue during the quarter. On a sequential basis, Nevro's revenue contribution declined by $17.1 million, or 17.1%, compared to Q4 2025. As mentioned over the prior few quarters, since announcing the Nevro acquisition, our goal with Nevro was to right-size the business to drive profitable sales growth, while reducing excess spending to quickly adopt the Globus approach. In 2025, we saw positive progress in profitability through enacting significant organizational and procedural changes, culminating in an achievement of non-GAAP EPS accretion occurring in the first three quarters. In Q1 2026, we continue to see the lasting and sustainable impact of these cost control actions. However, in the first quarter, we also saw a decline in revenue, driven by the structural changes made within sales and marketing of the Nevro business at the tail end of 2025. Although we were not sure on exact timing, we had expected this decline to occur at some point in the early innings of owning the business, and it has been anticipated in our top and bottom line guidance for 2026. Pivoting back to overall results, musculoskeletal revenue achieved $733 million, growing 27.3% over Q1 2025. Base business Globus musculoskeletal revenue was $650.3 million, growing 12.9% as reported. Enabling Technologies revenue was $26.9 million, growing 21.1% as reported. The Enabling Technologies business saw a bounce back in both sales dollars and units when compared to a softer Q1 2025. While we remain flexible in our offerings for our customers to acquire capital, as shared in Keith's comments about the pipeline earlier, we note that Q1 2026 results were primarily from cash sales, which we have seen historically in this business. U.S. revenue during Q1 2026 was $604.9 million, growing 25% as reported. Base business Globus U.S. revenue during Q1 2026 was $537.7 million, growing 11.1% versus the prior-year quarter. Our base business Globus U.S. growth was primarily driven by our U.S. Spine, Neuromonitoring, and Trauma businesses, all of which have achieved double-digit growth for three straight quarters when comparing to the comparable quarter of the prior year. Q1 2026 international revenue was $155 million, growing 35.6% as reported and 27.8% on a constant currency basis. Globus base business international revenue was $139.5 million, growing 22.1% as reported and 15.1% on a constant currency basis compared to the prior-year quarter. International growth was seen across the board, with our EMEA and LATAM regions achieving double-digit as-reported and constant currency growth and APAC achieving high single-digit as-reported and constant currency growth. We note that the growth achieved this quarter was against a prior-year comp that was negatively impacted by the timing of distributor orders and temporary supply chain disruptions. We feel positive on our international spine business prospects this year as we work to finalize international integrations in 2026. Turning to the P&L, GAAP gross profit margin in the quarter was 66.4% compared to 63.6% in the prior-year quarter. Adjusted gross profit margin was 69.2% compared to 67.3% in the prior-year quarter, primarily driven by increased sales resulting in fixed cost leverage, favorable sales mix, and the impacts of synergy execution through our manufacturing and supply chain initiatives. Our base business Globus adjusted gross profit margin was 69.3%. As I mentioned in our fourth quarter prepared remarks, we have leaned into manufacturing and supply chain initiatives, driving the build back to a mid-70s adjusted gross profit target. From Q3 2024 forward, we have seen improvement in adjusted gross profit metrics in each sequential quarter. Q1 2026 continued that trend, maintaining a 69.2% adjusted gross profit margin from Q4 2025 despite the normal sequential step down seen in revenue from Q4 to Q1. We reiterate our expectation of adjusted gross profit margin falling in the range of 69% to 70% in 2026 and our long-term goal for mid-70s adjusted gross profit percentage. Research and development expenses in Q1 2026 were $36.5 million, or 4.8% of sales, compared to $33.1 million, or 5.5% of sales, in the prior-year quarter. Base business Globus R&D expenses totaled $32.7 million, or 4.8% of sales. The resulting decline in legacy Globus R&D both in dollars and as a percentage of sales is attributable to synergy capture resulting in lower headcount and leverage from higher sales volume. Nevro R&D was $3.9 million, or 4.7% of Nevro sales. As we have worked through the integration of both NuVasive and Nevro, we reset the legacy business product development processes to align with the Globus approach. We expect that this will pay dividends in 2026 and beyond as we look to minimize the timeline from concept to launch for our innovative technologies. In 2026, we expect R&D expense to be in the range of 5% to 6% of net sales with a ramp in spend moving methodically throughout the remainder of the year. SG&A expenses in Q1 2026 were $297.8 million, or 39.2% of sales, compared to $242.8 million, or 40.6% of sales, in the prior-year quarter. Base business Globus SG&A expenses were $251.7 million, or 37.2% of sales. For base business Globus SG&A, the increase in spend is attributable to increased sales compensation costs from higher volume and increased employee benefit costs, partially offset by decreased employee-related costs from synergy actions. Nevro contributed $46.1 million of SG&A expenses in the quarter, or 55.7% of Nevro sales. Q1 2026 net interest income was $5.4 million compared to $1.7 million in the prior-year quarter. The $3.8 million favorable change is being driven by a decline in interest expense from the paydown of the remaining $450 million outstanding convertible debt in Q1 2025 that was assumed from the NuVasive merger. The GAAP tax rate for Q1 2026 was 20.9% compared to 27.2% in the prior-year quarter. Our non-GAAP tax rate for the quarter was 21.6% compared to 26.6% in the prior-year quarter. Our GAAP and non-GAAP tax rates in the current period were favorably impacted by stock option windfall benefits. Cash, cash equivalents, and marketable securities were $799.3 million as of 03/31/2026, compared to $629.1 million at 12/31/2025. The increase in cash is driven by operating cash flow of $202.4 million primarily from higher net income and partially offset by cash spend on capital expenditures of $39.6 million, or 5.2% of sales. In Q2 2025, we announced a new share repurchase program of $500 million under which we purchased $110 million of shares in 2025. We have $390 million of authorization remaining under this program as of 03/31/2026. Our capital allocation strategy remains unchanged. First, we will prioritize internal investment in innovative product development efforts. Second, we focus capital spending on building sets for our worldwide sales force and investing in facilities, machinery, and equipment to continue to increase our manufacturing footprint. Third, we will continue to buy back shares through our share repurchase program, minimizing dilution and increasing shareholder value. And finally, we will continue to evaluate complementary M&A while focusing the use of our capital on driving investment for long-term profitable growth. Pivoting to financial guidance, Globus Medical, Inc. reaffirms its full-year 2026 revenue guidance of $3.18 billion to $3.22 billion, and we are increasing our guidance for non-GAAP fully diluted earnings per share to be in the range of $4.70 to $4.80 from the previous range of $4.40 to $4.50. The revenue guidance implies growth over 2025 ranging from 8.2% to 9.6%. The revised fully diluted non-GAAP earnings per share guidance implies growth over 2025 ranging from 18.1% to 20.6%. The upward revision of fully diluted non-GAAP earnings per share guidance reflects a favorable increase in expectations from the margin expansion seen in Q1, which we expect to have a favorable impact on our full-year results. We are extremely pleased with the start to 2026 and remain upbeat on the performance of our core businesses. Our efforts to drive lasting and profitable growth have taken shape over the past few quarters, and we remain excited regarding our prospects going forward. The Globus team's can-do attitude, resilience, and desire to win is reflected in the results that we achieve. Your everyday efforts are appreciated, and together, we drive Globus to be the leading musculoskeletal technology company in the industry. Operator, we will now open the call for questions. Operator: Thank you. To ask a question, you will need to press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please stand by while we compile our Q&A roster. Your first question comes from the line of Laurence Biegelsen with Wells Fargo. Ross Osborne: Hi. Thanks for taking our questions. This is Ross Osborne on for Larry. So maybe starting off your guidance and the reiteration of the top line, are there any incremental headwinds to revenue we should be thinking about versus when you established guidance at the beginning of the year? Or is this conservatism at this point? Kyle Kline: Thanks for the question. When we think about guidance, our main point in reiterating guidance is that we feel confident in our numbers. We feel confident with what we have done and been able to achieve in Q1, and feel confident in terms of the rest of the year from a guidance perspective. As you think about our prepared remarks, we noted that the U.S. Spine business was up 10%, the international spine business was up 10% on a constant currency basis, and we saw strength across many of our underlying businesses. But we also commented on a decline that we saw in Nevro coming from Q4 into Q1, something that was expected from the lumpiness, and the fact that at some point, we would see some lumpiness in that revenue. I think our overall expectation for the full year is still a strong conviction in what our guidance is, and ultimately, these numbers and our results were built into our expectation this year. Ross Osborne: Thank you. Operator: Thank you. Your next question comes from the line of Shagun Singh with RBC Capital Markets. Your line is now open. Shagun Singh: Great. Thank you so much, and congratulations on a strong print here. You know, I just wanted to ask a high-level question on the performance here. You know, I heard you say a couple of things around scale, capturing share, recurring revenue, and using an alternative approach here around enabling tech. And it seems like the base strategy is still in place, which is robotic pull-through and then cross-selling here. But it seems like you are doing something else differently. So can you just talk about your strategy and how you are able to deliver such strong results here in Q1? Keith W. Pfeil: Shagun, this is Keith. Thank you for the question, and thank you for the comment on the strong quarter. As you think about what we are doing, our strategy as it relates to implants really has not changed with rep recruiting, new product innovation, and robotic pull-through. The thing that we are really slightly altering sits on the enabling tech side. We historically have been more focused on just selling the robot. And as time passed, one of the things we saw is we need to get a little bit more flexible in how robots are placed in the hospitals. There are always changing CapEx environments. There is more competition in the field. And, really, at the end of the day, we are looking to drive the implant and the implant procedure to make sure that we are getting more of that case. So as we look at a robot, what is important to us is that the robot gets placed, or the robot or the navigation system gets placed in the hospital, and our teams are trained. The hospital is trained, or the personnel in the OR are trained, and that we are making sure that all the programs that we launch are successful with back-end support and really working to ensure that we are driving what I would call the replenishment sale in the OR, which is the implants, the instruments, service, all the things that go along with the case. That would really be the biggest thing that I would say that we are altering. As I think about the strong numbers and the business performance, really go back to some of the things I touched on in my prepared remarks. Our U.S. spine business is performing really well. We have had several quarters here of 10% growth, and more importantly, last year we talked about having some challenges early in the year in supply chain. Those challenges are really behind us. We are getting sets out into the field. We are getting inventory out into the field. And that is helping the team make sure that we can cover all the cases that they are being faced with. As I look across the rest of the portfolio, internationally last year we spoke about the first quarter being a little bit soft for some supply chain reasons also. We are not seeing that same thing this year. So as I look across our business, specifically spine, our spine business is performing well both in the U.S. and internationally, and we are continuing to see more contributions from our trauma business. Enabling tech did not have the rough quarter in Q1 that it did last year. We had a nice 21% growth. But again, as we think about that business moving forward, as I mentioned in my prepared remarks, we want to be more flexible. That mindset of being more flexible is contemplated in our revenue guidance for this year because in situations where there is more of a lease or a rent approach, you are not going to see all that upfront revenue recognition that you would historically. We are making sure we are taking that into consideration. Shagun Singh: Thank you. That is really helpful. And then, just very quickly on the mid-70s gross margin target long term, any directional guidance of how long it might take you to get there? Keith W. Pfeil: I would say, as I look at the last several quarters, we have had consistent steps forward in our adjusted gross profit margin. I expect to see that happening at about the same cadence. I think that there are a lot of supply chain initiatives going on to help us achieve that. Kyle Kline: The only thing I would add is, as you think back on the six sequential quarters in terms of improvement, we expect to continue to see improvement. Something that we felt really strong about and positive as we saw results for this quarter is that we did have a 69.2% gross profit in Q4. Now, with sales coming down, you typically see that gross profit come down a little bit as well historically from Q4 to Q1. The fact that we were able to maintain that, I think, sets us up positively to continue to expand our margin as we look forward through the rest of the year. Shagun Singh: Thank you. Operator: Your next question comes from the line of Matt Taylor with Jefferies. Your line is now open. Matt Taylor: Hi, guys. Thanks for taking the question and nice result here. Thanks. So maybe I just wanted to double-click on understanding the confidence to raise earnings by so much. Even though you beat revenue in Q1, maintaining that— Keith W. Pfeil: So really two questions in there. One is just unpacking the sources of EPS upside to make that more clear, and then why not raise the top line a little bit too given all the momentum? Thanks, Matt, for the question. As I think about the top line, and Kyle mentioned earlier, we remain confident in the parts and pieces of our business. Our legacy base Globus business is performing at a high level. As I think about revenue and why we did not raise the top line, it is still early in the year, number one. But number two, a couple of things we commented on: I commented on the change in approach slightly with enabling tech. That change may impact revenue as you look out the rest of the year, which, again, could impact overall top-line performance. And then secondly, we commented on some lumpiness that we saw in Nevro. As we work to further bring that business in, we are mindful of that as we move ahead. That is a good reason why we did not take top line up. When you think about the bottom line, it really touches back on the things that Kyle said in his prepared remarks. We have seen a nice step forward in gross margins. As he just answered in the previous question, you have not seen that sequential step down in gross margin from Q4 to Q1. That points to the manufacturing and supply chain initiatives that are happening. That to us is durable savings that should continue to happen. So when you think about how we performed—last year, we generated $0.68 in Q1; this year, it is $1.12—it is a nice increase. But as you think about where we are at through the rest of the year, those incremental changes should continue to occur in the gross margin line. And then, stepping down to OpEx, there are still synergy actions that are occurring. And as the business continues to scale, you are going to see greater leverage on the bottom line, which will drive enhanced profitability. All of those things together point to us feeling confident about taking the number up. Matt Taylor: Great. Thank you for the additional color. Operator: Your next question comes from the line of Matt Miksic with Barclays. Your line is now open. Matt, if your phone is on mute, please unmute your line. Matt Miksic: Hi. Thanks. Yeah. Thanks so much for taking the question. I was wondering about just robot demand—hospital investments, robot platforms. Keith W. Pfeil: Thanks, Matt. This is Keith. If you are thinking about the pipeline and what we are seeing, I see a healthy environment. Last year, we talked about having a soft Q1. This year, I would say coming into the year, we came in with a fairly strong pipeline. We converted a lot of that in Q1. As I look into the second quarter and beyond, I would say we have a large pipeline. The thing that I see in the pipeline this year is that the mix of how we are offering these robots is slightly different, where you see a higher mix of leases and rentals being quoted. But from my perspective, I see a durable market here, and we are going to continue to aggressively go after it the remainder of the year. Matt Miksic: That is great. Thanks so much. Sorry about the confusion there. So the other was just on what you are seeing competitively. If there has been any change—we all know some of the big moves that other companies have made in the space or maybe are contemplating making—and any shift in competitive dynamics that you are seeing either from the smaller players in the space or from some of the traditional larger players in spine in the U.S. in particular? Thanks. Keith W. Pfeil: As I think about the competitive landscape, what I see is we are competing mainly against Medtronic. That is what I see routinely. Obviously, as more competitors have entered the space, I would say that the speed to closing deals has elongated a bit because hospitals are now requiring everyone to go back and look at all the competitive offerings that are out there. But when I sit and look at Excelsius versus the competition, I still think we are very well positioned. When you think about the Excelsius technology, it was designed from the ground up. It is FDA cleared for cranial, cervical, sacrum, pelvic, and orthopedic applications, with end effector tracking. There are just a lot of things that are still very unique to Excelsius. And even with some of the things that our competitors have come out with, they are really now just catching up to where Excelsius has been. So as we think about where the robot is positioned, and even the rest of our tools, we still think we are really well positioned to compete in this market. Operator: Thank you. Your next question comes from the line of Richard Newitter with Truist Securities. Your line is now open. Richard Newitter: Hi, guys. Thanks for taking the questions. Congrats on the quarter. I wanted to ask on enabling tech. I think this is something you had mentioned, the strategy shift, actually over the last two quarters. It makes a ton of sense to try to get the Trojan horse, if you will, into more institutions faster. I guess, just with the guidance reiterated, is there a kind of switching of components that you would advise the analysts to move around? I see a consensus enabling tech around $150 million for 2026. We are at $104 million. I am just curious if there is any comment you could give on either of those two numbers just as we refine our models and get the components right to get to your guidance? Kyle Kline: Thanks for the question, Rich. We are not going to break out our guidance into the different parts and pieces. But what I would point you to is, in Q1 we were still having primarily upfront cash revenue recognition type deals, and Keith commented on the pipeline being a larger percentage than in the past in terms of rentals and leases and other types of models. I think you could use that to help guide your thoughts in the rest of the year. Richard Newitter: Okay. Thanks for that. And then I guess, just on Nevro, one question we have gotten: I believe spinal cord stimulation might be captured under the pilot WISER program that CMS has in place. I was just curious, is that right? And then, is that something that you have seen in any of the pilot states so far impacting the results at all and something you think will have an impact at any point going forward? Keith W. Pfeil: Rich, this is Keith. I have not seen that impacting us or impacting how we go to market. And I have really no comment. Because I have not seen it, I cannot say that I have seen it in any specific state at this point. Richard Newitter: Thank you. Keith W. Pfeil: Thank you. Operator: Thank you. Your next question comes from the line of Brian Zimmerman with BTIG. Your line is now open. Brian Zimmerman: Hey, good afternoon, and congrats on a nice quarter. I wanted to ask a couple of questions, if I could. A couple things on Nevro. We did not have last year—they actually never reported Q1 2025—and I am wondering, this is kind of a two-part question, but wondering if you have those numbers and can give them out just so we have some basis for comparison year over year. And then, given the guidance and in the context of the guidance, does Nevro get worse before it gets better—kind of implied in your comments, Kyle? And then I have a follow-up. Kyle Kline: Thanks for the question. We are not going to give out that Q1 of last year number. The only comment I would make is if you looked at Nevro's business historically, consistent with our business, you would typically see a step down from Q4 to Q1. So that would be expected last year as well. Separately, in terms of the expectation for the rest of the year, it is hard to predict because we are starting to see what happened in Q1, finally—that lumpiness that we have been talking about throughout 2025. My expectation is likely that it will probably get a little bit worse before it gets better. Then I would point you to Keith's remarks of expecting to get back in the direction of historical norms late in the back half of the year. Brian Zimmerman: Okay. Appreciate that. That is helpful. And then, on gross margins, I appreciate the comments and the long-term guidance. I am wondering, is the gross margin opportunity purely a cost exercise from your seat, or do you need price to drive your gross margins higher, and can you do that in spine in such a competitive market? And can you lay out some of the insourcing opportunities in Ohio or things where you see the best low-hanging fruit on gross margins? Kyle Kline: Thanks. So I would answer that and say that it is some of each. We are obviously focusing on cost, and that is something that Globus has always focused on, from manufacturing and supply chain initiatives—going back to what NuVasive had done historically from a manufacturing perspective versus what Globus had done—trying to align those sites and the approach within those sites. That gets you to the point of having some efficiency on the COGS line. From the top-line perspective, I think it points to our strategy of launching new and differentiated products and trying to identify places where we can get pricing premiums there as well to try to fight off any type of price erosion that is out there in the field and also find opportunities to sell those new and exciting products at a higher premium. Keith W. Pfeil: The only thing I would add is, as I think about that, we have always modeled that you are going to launch new products, but you are going to see price erosion—you might be down that 1%. But as you think about getting that mid-70s gross margin profile, the majority of that really comes from our ability to drive costs. It is really getting a more efficient supply chain, thinking about your contracts, thinking about how you manufacture. You are going to get leverage on your manufacturing footprint as you continue to drive growth. A lot of that comes from that ability to really focus on the cost side of things. Brian Zimmerman: Thank you. Operator: Thank you. Your next question comes from the line of David Saxon with Needham and Company. Your line is now open. David Saxon: Good afternoon, Keith and Kyle. Thanks for taking my questions, and congrats on the strong quarter here. I wanted to ask on the EPS guidance. You raised it—I guess this is your third time this year—and you are starting to bump up against where the Street is for 2027. I would love to understand how you think of Globus' go-forward EPS growth profile—with the path to mid-70s gross margin, maybe Nevro comes back, and some other cost actions. Can you be a double-digit grower over the next few years? And then, Kyle, if you could just clarify what the tax assumption is for the guide as well. Kyle Kline: Thanks, David, for the question. Thinking about raising guidance here a couple of times, I think what we would point to is seeing the results that we have had both for the end of the year in Q4 as well as here in Q1. We have taken away positive momentum primarily in gross profit margin expansion, and I think that is really the catalyst to why we feel good about the business. Obviously, we feel good about sales and where we are at with sales. As you have sales and sales growth, you are going to get leverage on your bottom line as well. So those two things are driving that guidance push a little bit higher. I will not comment on 2027 and specifically what we are looking at in terms of the out years. If you think about what we have always said with Globus, we strive to be that high single-digit top-line grower, and we look to go above and beyond that on the bottom line and outpace that growth on the top line. Keith W. Pfeil: We feel really good about our business, and we see a lot of organic growth opportunity across our business. As we look ahead, we are going to be spending more in R&D—doubling down in spine R&D and enabling tech R&D. That is something that we see happening as we move forward that will be a bit of an offset to some of that— Operator: Please remain on the line. Your conference will resume shortly. Please stand by. Thank you. Thank you again for standing by while we troubleshoot. Keith W. Pfeil: Are you guys back? David Saxon: Yes. We are back. Kyle Kline: Technical difficulties, David. Sorry about that. David Saxon: No problem. I think you answered my question well. So I will just throw my second one in, which is just around the competitive rep hiring. That has been a driver for a long time. Can we get an update on where you are from a geographic coverage perspective in the U.S.? Is it more about filling any gaps you might have, or is it more about density at this point? Thanks so much. Keith W. Pfeil: Our competitive rep program continues like it has with history. As we look to add, I am always looking to add density. There always could be gaps to fill here and there, but at the end of the day, we are always looking to add quality reps to our team. That has not changed. David Saxon: Great. Thank you. Operator: Thank you. Your next question comes from the line of Caitlin Roberts with Canaccord. Your line is now open. Caitlin Roberts: Hi. Thanks for taking the questions, and congrats on a great quarter. Any commentary on geopolitical risks in the Middle East, either from a revenue exposure or a cost/supply perspective? Kyle Kline: Thank you, Caitlin. It is a great question. From a geopolitical risk perspective, I do not see any material risk from a revenue perspective based on sales in the Middle East or other places. From a cost perspective, we also see little to no risk there as it relates to geopolitical events. Caitlin Roberts: Great. And then just any commentary on the progress in the ortho and then the eFlex rollout? Keith W. Pfeil: No comments at this point. We are continuing to develop implants. As that becomes more prominent, we will update on that in the future. Caitlin Roberts: Understood. Thank you. Kyle Kline: Thank you. Operator: Thank you. Your next call comes from the line of Tom Steffen with Stifel. Your line is now open. Tom Steffen: Great. Hey, guys. Thanks for taking the questions. First one, on the revenue guide, I wanted to ask about phasing. Comps are a little wonky in Q2 versus 2H this year. So can you help us think about revenue cadence for the rest of the year? And then I will have a follow-up. Kyle Kline: Thanks for the question. I would say your typical pattern that you would see in the past, pre any of the acquisitions and the noise that came in from having an acquisition during the year, is you typically see a step down from Q4 to Q1, like we saw here, and then a step up into Q2, roughly a leveling off in Q3, and then an increase again for harvest season in Q4. I would point you to those historical norms for how revenue will have a cadence throughout the year. Tom Steffen: Got it. That is great. Appreciate that. And then just my follow-up on OUS Spine—you are already back to double-digit growth. I know supply issues were a dynamic last year, but you mentioned finalizing some integrations in the back half. Can you talk about expectations for the rest of the year in OUS Spine? Is there a path to that business potentially accelerating as 2026 progresses, or is around this 10% range more reasonable for constant currency growth? Kyle Kline: Good question. I would point you to the fact that we saw double-digit growth in the mid-teens on the spine business from an as-reported basis. If you looked at it from a constant currency basis, it is just under 10%. So we did see some favorability from currency in Q1. I would also point you back to last year, first quarter, where we had some supply chain disruption and some movement in terms of stocking orders as well, which made it a little bit of a softer comp. If you go back to what we talked about in Q4 and what I will reiterate here, our expectation for that business is to pick back up as we move throughout the year. Despite the fact that we had a strong Q1, I still think as you work your way throughout the year, there is not a massive revenue acceleration in terms of growth year over year. But as we look to exit the year and get back to consistently in that low double-digit growth pattern. Keith W. Pfeil: I think we are going to grow into this. Long term, we still think the international business grows low to mid double digit—call it up to 15%—but we are going to grow into that over time. Our approach is to go deeper in the markets that we are operating in. We are not looking to suddenly add more countries because we want to drive density where we are operating. Tom Steffen: Got it. Thanks, guys. Operator: Thank you. Your next question comes from the line of Matthew O'Brien with Piper Sandler. Your line is now open. Anna Runci: Hi. This is Anna. I am on for Matt this afternoon. Thanks for taking the questions. I will just keep it to one in the interest of time here. I wanted to ask on U.S. Spine. You commented to 10% U.S. Spine growth, strong run rate for the past few quarters. Wondering if you could provide any more detail on how much of that growth comes from market share gains versus underlying market growth? And then just any comments you could provide on the health of the market in general? Thanks. Keith W. Pfeil: I would say that the majority of our growth is really coming from share gains. We do not spend a lot of time looking into research in terms of how the market is performing, but I would say that the market is probably growing 3% to 3.5%, give or take. From my perspective, the majority of growth you are seeing from us is obviously in excess of that, and that is because of us taking share. Anna Runci: Excellent. Thank you. Kyle Kline: You are welcome. Operator: Thank you. Your next question comes from the line of Matt Blackman with TD Cowen. Your line is now open. Drew Ranieri: Hi, Keith and Kyle. It is Drew Ranieri on for Matt tonight. Keith, maybe just a question to go back on enabling technology. We have seen soft tissue robotic companies have a pretty regular cadence of launching their next-generation systems. As you are looking at the ExcelsiusGPS development roadmap, are you thinking about how the system evolves since you are stepping up on R&D spend? Is the focus still to broaden applications or end effectors, or are you focused more on efficiencies? And maybe, as the next generation comes, does that bring more surgeons into the fold about using robotics in spine surgery? Thanks for taking the question. Keith W. Pfeil: Thanks. It is a great question. I am a little more limited in my comments, but as I think about the evolution of Excelsius, it truly comes down to more refined software and how the software performs in the OR. I think about interbody fusion, DuraPro, integrating DuraPro, and additional cranial procedures. That is what we are thinking about as we move forward in terms of enhancing the software. There is a lot to unpack there. Those are my comments that I would leave for now. Drew Ranieri: Okay. Maybe if I can just squeeze one in too—sorry for the time. We have heard other ortho and spine companies talk about weather and the Kaiser strike. Was that any drag for you in the quarter? And would you get those procedures back in the second quarter or throughout the year? Keith W. Pfeil: I would say there is maybe a small impact, but given the performance of the business, I do not want to say that we could have finished higher. I am comfortable with our prepared comments. As we think about the rest of the year, we are thinking about growing wherever we can and driving smart growth across our business. Drew Ranieri: Thanks. Keith W. Pfeil: Thank you. Operator: Thank you. With no further questions, this concludes the Globus Medical, Inc. earnings call. Thank you for participating. You may now disconnect.
Operator: Good day and thank you for standing by. Welcome to the GPGI, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Marshall, Chief Legal Counsel. Please go ahead. David Marshall: Thanks, Ann. Good morning and welcome to GPGI's conference call where we'll review GPGI's first quarter 2026 financial results. With me on the call today are the business leaders from GPGI, Resolute Holdings, CompoSecure and Husky. We'll begin with prepared remarks and then open the call for Q&A. During the call, we'll make statements regarding our business that may be considered forward-looking, including statements regarding our growth strategy, customer demand, macroeconomic factors, implementation of the Resolute Operating System and our guidance for 2026 as well as other statements regarding our plans and prospects. For a discussion of material risks and other important factors that could affect our actual results, please refer to the information in our reports filed with the SEC, which are available on the Investor Relations section of our website and on the SEC's website at sec.gov. As a reminder regarding the company's accounting. On February 28, 2025, GPGI completed the spin-off of Resolute Holdings Management, Inc. and our wholly owned subsidiary GPGI Holdings entered into a management agreement with Resolute Holdings. As a result, the results of operations of GPGI Holdings and the operating companies which are subsidiaries, including CompoSecure and Husky, are not consolidated in the financial statements of GPGI and are instead accounted for under the equity method of accounting. For more information about our financial presentation, please see our SEC filings, including our quarterly report on Form 10-Q to be filed later today. In the earnings release we issued earlier today and in the discussion on today's call, we also present non-GAAP financial measures to help investors better understand our operating performance. The company believes these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends impacting the company's financial condition and results of operations. These non-GAAP financial measures should not be considered as an alternative to performance measures derived in accordance with U.S. GAAP and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation of GAAP to non-GAAP measures is available in our press release and earnings presentation available on the IR section of our website. With that, I'll turn the call over to Executive Chairman, Dave Cote. David Cote: Well, we have a tale of 2 cities. CompoSecure is performing better than our expectations reflecting just excellent implementation of the Resolute operating system for both growth and operations. Husky unfortunately has encountered unanticipated market headwinds because of oil market volatility and tariffs. This has caused customers to delay accepting orders that normally would have been expected to ship in the quarter while also reducing new orders. Well, you'll likely ask what changed. Since I spoke to you on our March 12 fourth quarter earnings call, we saw a significant and surprising increase in customers taking a wait-and-see approach in response to those changing macro conditions. At the time of the call, February year-to-date orders were up approximately 27% versus prior year and the pipeline was up approximately 6% year-over-year. The amount of book and ship required to make the quarter was not unusual given history. And in the subsequent 2.5 weeks, several customers would not finalize their orders for shipment, we could not ship to a couple of countries and customers delayed placing an official order. This trend continues today. We can't predict when it will end so we have provided a wider revised guidance range. In anticipation of lower sales, we've taken various actions on expenses to mitigate some of the impact of those lower sales. At the same time we're seeing order delays, we saw the pipeline grow approximately 4% over last year in the first quarter and up 7% year-over-year through April. So there are reasons for optimism that this will not be a long-lived problem. Consistent with this, we're seeing the 12-month pipeline up while the 3-month pipeline is down. Husky leadership is aggressively tackling ROS implementation for both growth and operations. The investment thesis is very much intact with their great position in a good industry. Now I'm very unhappy to be sharing a different result today than I expected when I talked to you on March 12. While certainly disappointing in the short term, I can still say with confidence that the prospects for GPGI performance are quite rewarding. CompoSecure is on a roll and the new leadership has significantly energized that team and is improving the culture. The commercial prospects for growth are better than ever and ROS implementation and operations is showing significant gains. The prospects for this business are terrific and they're apparent today. Compo also benefits from being more than a year ahead of Husky in ROS implementation. Husky prospects are also excellent. It doesn't show right now because of the market headwinds, but it is real. We continue to fund R&D expansion because it will greatly benefit the business' future. Consistent with our underwriting thesis, we can already see that ROS will also have a profound impact on our Husky business. With Rob's leadership, they are aggressively implementing ROS and driving the cultural change necessary for success. We will navigate the market headwinds, implement ROS, continue increasing R&D and commercial excellence and become a significantly stronger business as we exit the year. I'm also pleased to say that Kevin Moriarty, a current GPGI Board member and deeply experienced finance leader, has stepped in to be Husky's acting CFO. This is yet another benefit of having a Board of superb operators. I've worked closely with Kevin in the past and he has a tremendous reputation as an operating CFO. We are actively evaluating a long list of candidates for the full-time role. But in Kevin, we have a proven leader who brings a steady hand to Husky and I know we'll benefit from his financial and operating capabilities. I wish we could have seen the Husky market issues sooner than we did of course. I have not looked forward to today. That being said, nothing has changed concerning GPGI and the prospects for both businesses. I'm personally energized by the progress I'm seeing in both businesses. The cultural change is well on its way at Compo and the cultural change needed at Husky is being accelerated in dealing with these unfortunate market headwinds. We can't predict today how long the headwinds will continue so we'll be cautious in our 2026 outlook. That though shouldn't take away from what both businesses can accomplish given they both have a great position in a good industry. I can promise you GPGI has my full attention. You all know my family and I have a lot of our own money involved here so I want to see GPGI perform extraordinarily well as much as all of you do. We will get through this just like we have in the past. This is an unfortunate blip, nothing more. We're excited about the path GPGI is on and what it will become. So with that, I'll now turn it over to Tom Knott, our Chief Investment Officer, to review our financial performance. Thomas Knott: Thank you, Dave. Going to Slide 4. GPGI delivered pro forma adjusted net sales of $421.2 million, up approximately 3% from the prior year; pro forma adjusted EBITDA of $82.1 million, down approximately 16% from the prior year; and pro forma adjusted EBITDA margins of 19.5%, down approximately 430 basis points from the prior year. As Dave mentioned, these results reflect record sales performance at CompoSecure offset by market-related underperformance at Husky. Given Husky's size relative to CompoSecure, this macro-driven delay in demand at Husky is more than offsetting excellent performance at CompoSecure. Starting with CompoSecure. We delivered a record quarter as strategic investments in the sales force and enhanced focus on commercial excellence are driving strong organic growth supported by ROS in the factory. ROS initiatives have led to a step change in manufacturing yields and operational efficiencies throughout the production process, which were the primary drivers of adjusted EBITDA margins expanding approximately 300 basis points in the quarter. Graham and Mary will go into more detail. But I would just highlight that CompoSecure is now 18 months of implementing the Resolute Operating System and we are pleased with the cultural and operational intensity taking hold at the company today. We expect CompoSecure to continue its strong trajectory of organic sales growth and improved profitability through the remainder of 2026. Turning to Husky. Rob and Kevin will discuss our performance in the quarter and our outlook, but I will reiterate Dave's comments in noting that customer demand for Husky's products deteriorated rapidly at the end of March in a way that surprised us. This change more than offset the strong pipeline and order book we saw developing through the first 2 months of the year as customers aggressively shifted to a wait-and-see posture as resin prices spiked. While we expect the business to rebound when uncertainty subsides, this change in near-term demand has led us to revise our outlook for GPGI. Turning to Slide 5. You have heard us in the past discuss the complicated accounting we are required to use. Given the transaction this quarter on top of that existing accounting complexity, Slide 5 shows a simplified walk to pro forma adjusted EBITDA. The full reconciliation appears in the appendix. As previously announced, we refinanced our debt concurrent with the transaction closing, extending maturities and materially reducing our interest burden. This is the first major component. Transaction expenses were in line with expectations and were paid through closing. These transaction expenses taken together represent over $200 million of onetime GAAP expenses, which will not recur going forward. Net interest expense for the quarter reflects stub period interest, deferred financing cost and the interest on the new debt. Other key items include purchase price intangibles amortization, ordinary course income tax provision, noncash TRA liability remeasurement, stock-based compensation and foreign exchange impacts. Moving to Slide 6. We're providing more details this quarter than normal to give a full picture of what we were seeing at Husky when we last spoke to you on March 12 and how things changed through the end of the quarter. Pipeline orders and backlog at Husky were trending favorably through February with positive commercial activity giving us confidence in our full year guidance for both Husky and GPGI. This momentum turned quickly late in the quarter. Orders fell 16% year-over-year to the end of March as resin prices spiked and customers delayed accepting shipments and placing orders. Backlog followed a similar pattern in 1Q. We saw an accelerated recovery through February following a softer January, but the negative trend accelerated in the middle of March with simultaneously decline in order activity. Despite all of this, our pipelines remain strong growing 4% year-over-year for the first quarter and ending April up 7% year-over-year. Even with this healthy pipeline growth, we continue to see slower conversion rates as customers defer some purchase orders in the current environment. Turning to Slide 7. The underlying demand drivers for our products namely nonalcoholic beverage demand remains resilient. This supports the healthy and expanding pipeline we've discussed even though near-term orders are volatile. While macro conditions have introduced significant ambiguity that is influencing near-term customer purchasing behavior, the core fundamentals of the market that Husky serves remain intact. Even though oil market volatility and its impact on resin prices is impacting customer behavior today, the volatility is also reinforcing areas where Husky products are well differentiated. As resin prices rise, the value of our systems become increasingly compelling for customers because our equipment delivers industry-leading throughput, superior cycle times, higher preform consistency, greater uptime and lower energy consumption. All of this enables us to offer customers a 15% to 20% lower total cost of ownership versus competitive offerings. Additionally, as the price differential between virgin and recycled resin gets smaller, customers are increasingly evaluating RPET as a feedstock alternative to virgin resin. Husky is the preeminent manufacturer of recycled PET systems, which will result in additional opportunities for new equipment sales and retrofit upgrades if customers shift to more sustainable feedstocks as an alternative to now expensive virgin resin. So while the current uncertainty is causing some customers to delay near-term purchasing decisions, we remain confident that the underlying demand driver, particularly consumption of bottled water, remains strong and that this period will drive customers to focus more on productivity, sustainability and system efficiency; all areas where Husky excels. I want to also take a moment to explain how we're responding to this challenging market environment at Husky. On the cost side, we are in the process of implementing targeted furloughs across jurisdictions to reduce direct labor cost without impacting our industrial base or impairing our ability to respond to the rebound in demand. We are aggressively managing indirect spend and making necessary changes to be more efficient while also working towards a full return to office to maximize collaboration and increase cross-functional accountability across sales, finance and operations. On the commercial side, we are reinvigorating our sales force under new leadership thus commercial excellence is also a key strategic priority. Husky is a little more than a year behind CompoSecure on the implementation of ROS. And while the market backdrop for our customers has changed meaningfully in a short period of time, we remain focused on doing the right things to position the business to achieve its potential. This includes making the necessary investments to accelerate innovation and long-term organic growth through aggressive expansion of the R&D organization and an unrelenting focus on ROS implementation. These critical initiatives are not stopping despite the market volatility we are facing because they will position the business to benefit from the rebound in demand and for the future more broadly. With that, I will turn the call over to Rob Domodossola, the CEO of Husky. Robert Domodossola: Thanks, Tom. Going to Slide 8, I want to begin at the most fundamental level of what we do. Husky produces systems that make a precursor to nondiscretionary items, primarily water bottles. Demand for these products is durable with long established history of through-the-cycle growth in periods of macroeconomic volatility. The current period of volatility is no different. The demand for nonalcoholic beverages continues to expand around the world. Our customers are continuing to operate these high essential systems every day to meet this demand and that will continue. While the current demand shock driven by steep increases in oil and resin prices has made customers delay normal purchasing behavior, the fundamental drivers of demand for our products remain solidly intact. Specifically, we currently have an installed base of 13,500 systems that are primarily used to produce nondiscretionary products. This installed base is embedded in our customers' operations and drives a large and growing aftermarket revenue stream across parts, tooling and services. The installed base is globally diverse across developed and emerging markets and new systems have a higher content than legacy ones. Roughly 35% of our revenue is tied to new system sales, which is currently being impacted most significantly by the demand shock as customers pause large capital investments while 65% of our revenue is tied to recurring revenue. Although current market dynamics are causing near-term demand deferrals, the mission-critical nature of our products and consistent underlying demand drivers in the markets we serve gives us the confidence in a return to normalized order patterns. Adding to our confidence, Husky is well positioned because our system delivers the lowest total cost of ownership for customers through faster cycle times, higher quality, lower energy use and maximum uptime. As higher oil and resin costs persist; our lightweight solutions, resin efficiency and system productivity enhanced by our connected Advantage+Elite remote monitoring further differentiates the value proposition of Husky's equipment relative to competitors. Taken together, we remain very focused on delivering on what matters most to our customers; uptime, output and durability at the lowest total cost. Turning to our results. We delivered pro forma adjusted net sales of $29.8 million and pro forma adjusted EBITDA of $38.2 million, down 5% and 40% year-over-year, respectively. As Dave and Tom mentioned, the Middle East conflict altered customers' purchasing behavior nearly overnight in mid-March as supply disruptions drove sharp increases in virgin PET prices, up approximately 46% in March and April. These higher input costs combined with tighter supply and increased financing costs have weighed on near-term demand as Dave and Tom described. We view these dynamics as cyclical rather than structural. In fact elevated material and operating costs tend to reinforce demand for efficiency, lightweighting and system level performance; all areas where Husky is highly differentiated and we've seen this pattern before. When geopolitical tensions ease and input costs stabilize, deferred investments tend to rebound and they rebound sharply. Importantly, the end markets we serve are tied to essential customer needs, which has historically proven resilient across cycles. Operationally, as Dave and Tom mentioned, we are in the early stages of implementing the Resolute Operating System and our focus is now entirely on disciplined execution. ROS is fundamentally changing the way we operate and these changes matter even more in times like these. A key initiative we are implementing includes the integrated sales, inventory and operations or SIOP planning to improve job sequencing, manufacturing output and to reduce waste. We are also managing indirect spend and enhanced enterprise cost discipline across our procurement team. And of course AI will be an accelerator to ROS as we identify bottlenecks and improve lead times. ROS is critical to our long-term success and we are using it every day to drive measurable inputs; improvements to growth, operations and financial performance. While the first quarter was disappointing, we know that fundamental SIOP planning efforts underway to establish a high performance culture and invest for the future are the right steps and are improving the business. Husky operates in essential categories. As macro pressures ease, we expect to see a rebound in deferred investment consistent with past cycles. Now turning to Slide 9. Given the breadth of our business, I want to cover what we're seeing in individual product lines and key geographies starting with our product lines. Specifically in systems, orders are being deferred to the resin price volatility, tariff-related uncertainty and elevated financing costs. We expect the weakness we saw in the first quarter to continue through the year if the market headwinds persist. For aftermarket tooling, orders at the end of last year were lower due to customer uncertainty related to tariffs, which weighed on Q1 2026 sales. However, we expect this segment to return to growth in the second half as customers invest in tooling for the existing installed base while deferring the purchases of new equipment. With respect to hot runners and controllers, we saw strong revenue growth across most regions in the first quarter, but continued market ambiguity is weighing on the order outlook in the near term. Lastly, for aftermarket parts and services, market ambiguity and tariff noise impacted demand at the end of Q1, which is expected to persist in Q2, but we expect to return to growth in the second half as customers increasingly prioritize productivity. In our key geographies, starting in North America, we see a pause in demand for PET systems, partly offset by growth in tooling, spare parts and services. We believe North American market is close to trough levels and represents a market within our oldest installed base. Shifting to Europe, we're seeing growth in aftermarket tooling driven by lightweighting and sustainability mandates that support further shifts to rPET adoption. For the Middle East and Africa, we see strong consumption-driven growth in PET systems and growth in hot runners for medical applications, offset by near-term geopolitical disruptions. Turning to LatAm. Inflationary pressures and the steep tax on sugar-sweetened bottled beverages in Mexico are driving near-term softness in PT systems. While aftermarket tooling continues to grow, given shift towards lightweighting and package optimization. Lastly, in Asia Pacific, we continue to see consumption-driven growth in PET systems and demand for hot runners tied to food and packaging and medical applications. I will now turn it over to our acting CFO, Kevin Moriarty, to review our financial performance in more detail. Kevin Moriarty: Thanks, Rob. Let's turn to our financial performance on Slide 10. Given the number of moving parts, let me level set where we landed for the quarter and our path forward. As a reminder, the first quarter is seasonally the smallest for Husky with the second half of the year typically much stronger than the first. Against this backdrop, Husky faced significant macroeconomic headwinds that weighed on both growth and profitability. We reported pro forma adjusted net sales of $290.8 million, down 5% compared to the prior year as declines in new system sales and tooling offset strong growth in spare parts, hot runners and controllers. Pro forma adjusted EBITDA decreased 40% to $38.2 million, driven primarily by lower revenue and resulting under-absorbed labor and continued investments in R&D and front-end sales capabilities to support future growth. In aggregate, these factors translated to an approximately 770 basis point erosion in pro forma adjusted EBITDA margin to 13.2%. As Dave, Tom and Rob all mentioned, we had over $20 million in revenue that got pushed out at the very end of the quarter. This included approximately $6 million tied to customer delays in taking deliveries, approximately $5 million tied to shipment and logistical delays tied to the Middle East conflict and approximately $4 million tied to delays in customer payments. Combined with the growth investments being made, this quantum of deferred revenue exacerbated margin degradation in the seasonally smallest quarter of the year as we carried excess labor costs relative to demand. Consistent with historical first half and second half seasonality, we expect margins to expand in the second quarter and continue improving sequentially throughout the year, driven by improved fixed cost absorption in the seasonally stronger second half, the impact of ongoing cost actions and acceleration operational efficiencies from ROS-led initiatives. These initiatives are central to our thesis of driving sustained margin expansion and bolstering long-term profitability at Husky. On the tariff front, after the Supreme Court invalidated IEEPA tariffs in February, the U.S. implemented modified Section 232 tariffs on April 6, 2026. While continued tariff policy pivot add uncertainty to when customers place their orders, we do not expect them to have a material impact on our results. The U.S. market represents less than 27% of our total sales, which helps moderate our overall exposure. Of this, roughly 40% of the revenue relates to systems and tooling shipped into the U.S. that is subject to a 15% tariff, 1/3 from imported aftermarket parts that have tariffs declining from 50% to 25%, and the balance is primarily hot runners, parts and services that are locally produced or delivered and therefore, not impacted. In addition, consistent with our standard terms and conditions, we have been successfully passing through tariff-related costs to customers since the third quarter of last year and will continue to do so. Finally, our Husky equipment qualifies under USMCA and remains exempt from the 3.1% U.S. import duty, further limiting our exposure. And we are not alone when it comes to tariffs. Industry demand in the U.S. has been negatively impacted for the last 2 years. The U.S. is an importer of PET systems and Husky's primary peers do not have domestic production capability. We believe our North American presence positions us favorably relative to international peers importing into the U.S., while this tariff regime remains in place, while also allowing us to capture the inevitable cyclical upturn. With that, I will turn the call over to Graham Robinson, the CEO of CompoSecure. Graham Robinson: Thank you, Kevin, and good morning, everyone. Going to Slide 11. We delivered an outstanding quarter at CompoSecure, continuing to build upon our commercial and operational momentum. We achieved record pro forma net sales of $130.4 million, up 26% year-over-year, underscoring both the effectiveness of our commercial execution and the robust demand for premium metal cards. We are seeing this strength translate into new program wins and accelerating issuer activity across leading fintechs and traditional financial institutions. We're also seeing growth in metal cards that have Arculus capabilities. At the same time, the Resolute Operating System continues to have a deep and profound impact across the business. We are realizing meaningful improvements across all functional areas from sales performance to improved operations, which helped us deliver strong pro forma adjusted EBITDA of $47.6 million, up 37% compared to a year ago. While we are encouraged by our progress, we remain highly focused on investing in our future, in line with our strategic and execution framework that includes 3 pillars of growth: one, accelerating organic growth; two, driving international expansion; and thirdly, increasing Arculus momentum. In the first quarter, we saw several exciting customer programs go live, including the American Express Graphite business card, X Money from Elon Musk, the Robinhood Platinum card and Revolut Audi F1 card as well as Fold, [ Cast ], Kraken and MetaMask US, which provide crypto rewards and the optionality to pay with crypto. These signature program wins reflect the breadth of demand for premium card solutions and our differentiated value proposition, combined with advanced design, engineering and manufacturing capabilities to reinforce our position as the partner of choice for issuers launching high-impact card programs. Most recently, we strengthened our leadership team by appointing general managers to lead our Arculus and international businesses. With that, I will turn it over to our CFO, Mary Holt, to review our financials in more detail. Mary Holt: Thank you, Graham. Let's turn to our financial performance on Slide 12. In the first quarter, CompoSecure delivered strong results across all key financial metrics, driven by continued demand strength and increasing impact of the Resolute operating system across the organization. As Graham mentioned, adjusted net sales were $130.4 million, up 25.6% year-over-year, driven by robust demand from traditional banks and leading fintech customers. Adjusted EBITDA increased 36.8% to $47.6 million, reflecting both volume growth and meaningful operational efficiencies, which led to a 300 basis point improvement in adjusted EBITDA margin to 36.5%. Some of these productivity gains will continue to flow through to profitability, while some will be strategically reinvested to support sustained growth. Overall, this performance highlights the operating leverage and tangible benefits we are realizing from the systematic deployment of the Resolute Operating System, including enhanced throughput and process innovation, which has led to higher and more consistent yields at the factory level. I will now hand it back to Tom to review GPGI's revised guidance. Thomas Knott: Thanks, Mary. Turning to Slide 13. We are introducing new guidance for 2Q '26 and revising our full year 2026 outlook to reflect the macro-driven headwinds facing Husky. For 2Q ' 26, we expect net sales between $425 million and $475 million, pro forma adjusted EBITDA between $105 million and $120 million and pro forma adjusted EBITDA margins between 24.7% and 25.3%. For FY '26, we now expect pro forma net sales between $1.95 billion and $2.1 billion, pro forma adjusted EBITDA between $550 million and $610 million and pro forma adjusted EBITDA margins between 28.2% and 29%. Consistent with the historical trends in the seasonally lowest quarter for free cash flow and despite the market-related challenges we faced at Husky, we generated approximately $29 million of adjusted free cash flow similar to last year's level, which gives us further confidence in our revised full year estimate of between $275 million and $325 million in pro forma adjusted free cash flow. Finally, we anticipate ending the year with approximately 3x total leverage. Our revised guidance reflects the impact of the market shock facing Husky, but we continue to view 2026 as a critical and foundational year of cultural change, ROS implementation and strategic seed planting at both businesses that will position us to deliver best-in-class top line growth, margin expansion and free cash flow generation across the GPGI platform. This remains our focus, and we are confident in the work underway at both businesses. With that, I'll hand it back to Dave for some closing remarks. David Cote: Thanks, Tom. We've got 2 businesses in CompoSecure and Husky that hold great positions in good industries, both of which are becoming even stronger through the cultural transformations their teams are driving and the consistent deployment of the Resolute Operating System. You can see the results clearly now at CompoSecure. The market dislocation we're experiencing in Husky is making those improvements harder to see, but they are there. The culture and the business processes are getting better. We're committed to continuing the course, investing smartly for the future and the results of our efforts will become evident. So with that, I'd like to open up the call for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Jacob Stephan with Lake Street Capital Markets. Jacob Stephan: I guess, first, I just kind of wanted to understand on the guidance a little bit better and make sure I have clarification on Slide 13, you have kind of 2 arrows pointing to the high end and the low end. So the low end represents Iran conflict being delayed with the Strait disrupted and the high end would be if the conflict is resolved. I guess if you could give a little bit better sense on like timing. Does the low end of the range, I guess, assume the conflict last for the remainder of the year? Or does the high end assume that this is over to borrow? Any kind of comments you can give there? David Cote: Yes. The way I would look at it is what we're trying to reflect is the impact of delays. So if the delays continue because the Iran conflict just keeps going, then those delays are going to cause us to come into the lower end of the range. To the extent that our customers let go of those delays and maybe even if the conflict is continuing, but they stop delaying because they need the aftermarket or they need the machines, then we'll end up towards the higher end of the range. So it's more a reflection of what do we think could happen on customer delays today driven by the Iran conflict and tariffs. Jacob Stephan: Okay. Got it. And then I guess just kind of continuing on the guidance factor. When you look at kind of the second half for adjusted EBITDA, I think it implies relatively higher adjusted EBITDA in the second half. I know Q4 is a strong quarter for Husky, but we're looking at kind of $450 million to $550 million of EBITDA in the back half versus the first half. So I guess any color there, especially when you kind of talk about the margins compressing on Husky a little bit? Kevin Moriarty: Sure. This is Kevin. If you look at our first half, second half; seasonally, second half represents roughly 60% of our revenue base. And again, with the cost -- better cost absorption, vertical contribution margins improving as well as the cost actions, we feel that the second half will be stronger. Jacob Stephan: Okay. And then just lastly on CompoSecure the core business there. Wondering if you could touch on the, I guess, new card launch pipeline. Is that strong looking at the kind of the last 3 quarters of the year? Graham Robinson: Yes. The pipeline continues to be quite strong. And we speak in a number of different dimensions. The programs that we have with our existing customers, those customers are also continuing to create and generate new programs also. And then lastly, we continue to penetrate a new customer base, both internationally and domestically and also with fintechs and with our traditional banks. So we are -- we continue to be quite optimistic about the strength of the pipeline that we have and what we're seeing going forward. Operator: Our next question comes from the line of Tomo Sano with JPMorgan. Tomohiko Sano: I'd like to ask about the Husky s margin declined by 770 basis Y-o-Y in the past quarters. So looking ahead to second quarter and remainder of the year, what specific factors or initiatives do you expect will drive the margin improvement towards your full year guidance? Could you qualify the key assumptions for margin recovery in the back half, please? Kevin Moriarty: Sure. So as I alluded to, the first quarter is historically are some lower revenue number. So as we sequentially go through the year, revenue will grow, which has been our historical pattern, heavier weighted to the third and fourth quarters. So the variable part contribution margin we're expecting on that is going to sequentially improve the margin rate. We're driving the ROS initiatives internally, which we expect to provide some lift as well as we've commented on cost actions that we're taking. We institute some furloughs as well as some indirect cost actions that we're also expecting to provide some lift. Tomohiko Sano: And a follow-up regarding leveraging the ROS to drive the margin improvement for Husky. Could you share some examples of the cultural changes and operational opportunities being executed to enhance resilience and profitability, please? Robert Domodossola: Sure. Maybe I'll start. It's Robert. One of the biggest things is what I mentioned, the SIOP process is really intended to level out the factories. It's hard to keep your costs under control if you have peaks and valleys. But with level loading of the factories, it's much easier to get the labor and material costs aligned with the volume that's coming out of the factories. So that's one of the biggest initiatives that we have right now. With reduced lead times, that also helps to level load the factories, not just making us more competitive, but more profitable as well. We have a significant focus on supply chain procurement excellence that's helping with material cost reduction. And finally, on the commercial excellence side, our whole go-to-market approach, we are taking steps to have some very effective value propositions globally rolled out, especially with regards to our new product launches. Operator: Thank you. And I'm currently showing no further questions at this time. This does conclude today's call. Thank you all for your participation. You may now disconnect.
Operator: Good morning, and welcome to the Victory Capital First Quarter 2026 Earnings Conference Call. [Operator Instructions] I'll now turn the call over to Mr. Matthew Dennis, Chief of Staff and Director of Investor Relations. Please go ahead, Mr. Dennis. Matthew Dennis: Thank you, operator, and good morning, everyone. As many of you know, last month, I shared that I will be retiring from Victory. It's been a true privilege to serve on this management team and to be part of the ongoing sensational growth of the firm. This will be my final earnings cycle. And while I'll certainly miss working alongside all of you, I'm excited to stay connected as an engaged shareholder and a proud enthusiastic supporter of Victory's continued success. One personal highlight for me was my first earnings call with this team and seeing the level of preparation, collaboration and care that goes into every detail. That spirit has been consistent ever since, and it's a big part of what I'll miss the most. Many of you already know Carly. And for those of you who haven't had the opportunity to meet her yet, I'm delighted to introduce her. Carly has supported me since joining Victory in 2023 as Director of Responsible Business. Prior to Victory, she led an Investor Relations team in the U.K., and she brings valuable experience and a very acute attention to detail that will serve you all well as I pass the baton. So with that, it's my pleasure to turn the call over to Carly Thomas, Director of Investor Relations and Responsible Business. Carly, we're glad to have you here. Please go ahead. Carly Thomas: Thanks, Matt, and congratulations. I have big shoes to fill, and I'm grateful for the example you've set over the past 3 years we've worked together. I've learned a great deal from you. And to everyone on the call, on the webcast or reading along, I'm excited to work with you and continue building on the momentum Matt's helped to create. Before I turn the call over to David Brown, I would like to remind you that during today's conference call, we may make several forward-looking statements. Victory Capital's actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release, which was issued after the market closed yesterday, disclosed both GAAP and non-GAAP financial results. We believe the non-GAAP measures enhance the understanding of our business and our performance. Reconciliations between these non-GAAP measures and the most comparable GAAP measures are included in tables that can be found in our earnings press release and in the slides accompanying this call, both of which are available on the Investor Relations section of our website at ir.vcm.com. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David? David Brown: Thanks, Carly, and Matt, on behalf of the entire Victory Capital team, thank you. Your dedication, your professionalism and the standard you set for how we engage with our shareholders and the investment community has been invaluable. We are deeply grateful, and we wish you all the best in this next chapter. Good morning, all, and welcome to Victory Capital's First Quarter 2026 Earnings Call. I'm joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer; and of course, Matt and Carly. I will start today with an overview of our first quarter results, which I'm pleased to say were exceptional while also highlighting a few specific areas of our business. After that, I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, we will be available to answer your questions. The quarterly business overview begins on Slide 5. I want to start by saying that Q1 2026 was an exceptional quarter, one that set new records across multiple dimensions of our business. We achieved record long-term gross flows, record adjusted EBITDA and record adjusted earnings per share, all in the same quarter. We also progressed meaningfully in several other strategic areas of our business that are reflected in our quarterly results. The results reflect the strength of the platform and our team's ability to execute. We ended March with $313 billion in total client assets, slightly below the record quarter end level we achieved at year-end. Long-term gross flows reached $18.9 billion, which was up 11% from Q4 2025. To put that in perspective, this is 104% higher than in the same quarter last year and reflects the continued momentum of our expanded U.S. distribution platform, our growing international distribution channel and the ongoing strength of our VictoryShares ETF platform. At an annualized run-rate of approximately $76 billion or roughly 24% of long-term AUM, we believe we are generating gross sales at a level that can support positive organic growth over time as we continue to invest and integrate sales and marketing resources from our Pioneer acquisition. Long-term net flows improved meaningfully during the quarter. The trajectory here is encouraging with multiple investment franchises and VictoryShares ETFs generating positive net flows. Additionally, our international distribution channel continues to yield positive flows even as we are just beginning to get vintage Victory products launched and into the channel. From a financial perspective, adjusted EBITDA reached $204 million, and our adjusted EBITDA margin came in at 52.6%. We are particularly proud of these results because they demonstrate the resilience of our operating model and the exceptional people who run it day in and day out. The consistency of our margin speaks for itself, above 49% every single quarter since 2020 and above 50% in the majority of them. That does not happen by accident. It is the direct result of a purposely designed, highly efficient, scalable platform utilizing technology and smart strategic outsourcing, which affords us the ability to invest in the areas that matter the most for future growth while allowing us to maintain the discipline that defines how we run the business. Adjusted earnings per diluted share with tax benefit were $1.82, up 2% from Q4 and 34% higher than Q1 of last year. We also continue to return meaningfully capital to shareholders. I will cover this in more detail later, but we repurchased a quarterly record of 2 million shares of VCTR common stock during the quarter and combined with our dividend, returned $185 million to shareholders. As we step back and look at where we are as a company, Q1 2026 reflects the continued payoff of the strategic investments we have made in distribution, technology, product development and people as well as the transformational impact of the Pioneer acquisition and the Amundi distribution partnership. The integration is substantially complete. We are on track with our synergies and the benefits are evident in our results. Turning to Slide 6. I want to provide an update on our VictoryShares ETF platform, which continues to be one of the most exciting growth engines in our business. ETF AUM ended the quarter at over $20 billion, up 7% quarter-over-quarter and 53% year-over-year. That is a remarkable pace of growth and reflects both the quality of our product lineup and the investments we have made in distribution. Our ETF AUM CAGR since 2017 is 28%, and we see no signs of that momentum slowing. Net flows for the quarter were $1.3 billion, continuing the strong organic growth trajectory. Our free cash flow ETF series continues to generate consistent inflows and our fixed income ETFs remain in demand across the intermediary channel. We are winning new shelf space and home office recommendations, and our sales team continues to deepen relationships with key platform partners and financial advisers. Lastly, I would also like to remind you that our average ETF fee rate is 35 basis points with margins that meet our firm-wide requirements. Internationally, I'm pleased to report that we have commenced selling our U.S.-listed ETFs across Asia, which represents a new distribution channel for this business. The early reception has been positive. And as we develop this channel, we think there is a great opportunity to expand our client base to include investors outside the U.S. In addition, we are close to having our ETFs available for sale in certain countries in Latin America, which would represent another new geography for this platform. Looking ahead, we also filed 3 new ETF products with the SEC during the first quarter with additional launches planned throughout 2026. Product development remains active, and we continue to identify opportunities to expand our suite in ways that are aligned with client demand. Slide 7 highlights our international distribution platform, which continues to gain traction. At quarter end, we had $55 billion of assets under management from clients outside the U.S. across 60 countries with 29 of those countries now having more than $100 million in assets under management in Victory products. Importantly, our international channel was net flow positive again in Q1 '26 and is net flow positive since we closed the Pioneer acquisition. I want to take a moment to provide some context on where we are in the development of this channel because I think it is important to appreciate both the progress we have made and the significant opportunity that lies ahead. The Amundi sales force is a large and highly capable global distribution engine, and they are quickly learning about Victory Capital and our Investment franchises. Building conviction in a new product set, completing the necessary due diligence and educating platforms, financial advisers, consultants and institutional clients across dozens of markets around the world is a multiyear journey. Everything is going as planned, and the structural foundation is firmly in place, which we are building on. We have a 15-year strategic distribution agreement with Amundi, under which Victory Capital serves as their exclusive provider of U.S. manufactured traditional active investment solutions. We have a Victory Capital sales team located in major geographies supporting the Amundi sales infrastructure as well as a sales support group here in the U.S. And we now manage 23 UCITS products spanning equities, fixed income and global multi-asset strategies, giving the Amundi sales force a diversified and growing product set to work with. We are planning additional UCITS launches in 2026, including additional strategies from Vintage Victory investment franchises with priorities driven by bottom-up demand signals from Amundi's local distribution teams. The product set is expanding, the sales teams are getting up to speed and the momentum is building. We look forward to reporting on our progress here as this channel continues to grow. Turning to Slide 9. Investment performance improved during the first quarter and remains excellent across the platform. As of March 31, 2026, 58 mutual funds and ETFs earned 4- or 5-star overall ratings from Morningstar, representing 68% of our rated AUM. This performance reflects broad-based strength across our investment franchises. When we look at performance against benchmarks, the picture is equally compelling. 71% of our AUM outperformed over the 1-year period, 67% over 3 years, 68% over 5 years and an impressive 81% over the 10-year period. On a strategy count basis, 69%, 67%, 70% and 70% of strategies outperformed over those same periods. Investment performance is the foundation of everything we do. The results we are reporting today reflect the talent and discipline of our investment professionals across all our investment franchises, and we remain deeply committed to delivering excellent investment outcomes for our clients. Slide 10 covers our long-term growth and capital allocation strategy. Since our IPO in 2018, we have returned $1.4 billion to shareholders through a combination of share repurchases and dividends. That is a remarkable figure when you consider that we received just $157 million in net proceeds from the IPO back in February of 2018. During the first quarter, we repurchased 2 million shares of VCTR common stock. This reflects our conviction in the value of our stock and our commitment to returning capital to shareholders when the opportunity presents itself. Combined with our dividend, we returned $185 million to shareholders in the quarter alone. And over the trailing 12 months, we have returned $512 million of capital to shareholders, more than $6 per share. I also want to highlight that since April 1, 2025, the date we closed the Pioneer acquisition, we have repurchased approximately 5 million shares of VCTR common stock. That represents approximately 22% of the 22.9 million shares we issued to Amundi as consideration for the transaction. That said, I want to be clear about our capital allocation priorities. Strategic acquisitions remain our best and primary use of capital. Our buyback program is meaningful and ongoing, but is complementary to, not a substitute for our long-term inorganic growth strategy. We evaluate capital deployment on a facts and circumstances basis, and our flexible balance sheet gives us the ability to pursue multiple objectives simultaneously. Turning to Slide 11. I want to spend a few minutes on our acquisition strategy because it remains an important input into how we think about creating long-term value for shareholders. Inorganic growth is a strategic priority, and our pipeline of acquisition opportunities is extensive, and we are very active. The environment for transactions in our sector remains highly favorable. The structural forces driving consolidation, increasing regulatory complexity, technology requirements, distribution access and scale economics are only becoming more pronounced. That backdrop creates a compelling opportunity for a well-capitalized, proven acquirer like Victory Capital. Our approach has always been and will remain disciplined. We evaluate every opportunity against a clear set of strategic and financial criteria, and we will not compromise those standards. Every acquisition we have made has been strategically grounded, designed to improve our overall platform, enhance our distribution capabilities, diversify our client base or add complementary investment capabilities. The financial benefits are a positive outcome, not the starting point. Importantly, this remains a highly fragmented industry, and there are a lot of opportunities to better our company via acquisitions. In fact, I would stress we have more opportunities today than we have ever had as we review our pipeline and our current discussions. We have the ability to pursue multiple opportunities at the same time, and that is exactly what we have done over the years and what we are doing today. That said, we have the patience and discipline to wait for the right opportunity and the financial strength to move decisively when one presents itself. We have a tremendous business today that is positioned very well in the market to deliver for our clients and our shareholders in a very positive way. The exact timing of any given transaction is always difficult to predict, but our track record of consistent superior execution over more than a decade gives me great confidence in our ability to continue delivering transformational growth through M&A as we work our way to our $1 trillion in assets under management goal. With that, I will turn the call over to Mike, who will go through the financial results in more detail. Mike? Michael Policarpo: Thanks, Dave, and good morning, everyone. The financial results review begins on Slide 13. Total revenue came in at $388 million, up 4% from the fourth quarter and 77% compared to the first quarter of last year. Adjusted EBITDA reached $204 million and adjusted EBITDA margin was 52.6%. Adjusted net income with tax benefit was $153 million or $1.82 per diluted share, up 34% from the same quarter last year. With the Pioneer integration substantially complete and our distribution investments beginning to gain traction, we are starting to see the earnings power of the business. We returned $185 million to shareholders in the quarter in combination of our quarterly dividend and the repurchase of 2 million shares of VCTR common stock. The Board also approved an increase in our regular quarterly cash dividend to $0.50 per share, payable on June 25 to shareholders of record on June 10. The balance sheet is in excellent shape with a net leverage ratio of 1.1x, which gives us the flexibility to pursue all our capital allocation objectives simultaneously. On Slide 14, we show our total client assets at quarter end. We ended March with $313 billion in total client assets. Our AUM remains well diversified across the U.S. retail, U.S. institutional, U.S. direct and international channels. One data point I would like to highlight on this slide is the continued growth of our international business. We now have clients in 60 countries and 29 of those countries have more than $100 million in AUM with us. As Dave described, we are still in the early stages of developing this channel and the trajectory is very encouraging. Our long-term flows are shown on Slide 15. Long-term gross flows of $18.9 billion were the highest quarterly gross sales in our history. This marks the fourth consecutive quarter of gross flows at or above $15 billion. Net flows improved meaningfully during the quarter, coming in at negative $457 million, and we are encouraged by the trend pointing towards sustained positive organic growth as our distribution investments continue to be realized and our momentum broadens. Multiple investment franchises and platforms contributed positive net flows in the quarter, including Pioneer Investments, Trivalent, RS Global, VictoryShares ETFs and WestEnd Advisors. This breadth of positive contributors is exactly what we have been working towards, and it reflects the diversity and quality of our investment platform. And our international channel was also net flow positive in Q1 and since the Pioneer acquisition. Our firm-wide won but not yet funded pipeline remains significant, spanning multiple franchises and distribution channels. We expect this to provide additional support to our flow results as mandates fund over the coming quarters. Slide 16 provides additional detail on revenue. As I mentioned, our quarterly revenue of $388 million was a record for the company. We saw an increase of $13.9 million quarter-over-quarter. Year-over-year revenue was up 77%, a reflection of the transformational impact of the Pioneer acquisition. Our average fee rate of 47.6 basis points was at the high end of our guidance range, and we continue to expect the fee rate to remain in the 46 to 47 basis point range going forward, reflecting the current mix of our diversified business. The stability of our fee rate through significant changes in our AUM composition, including the Pioneer acquisition, the growth in our ETF platform and various product launches speaks to the quality and balance of our product, client and vehicle mix. Turning to expenses on Slide 17. Total operating expenses were $228.8 million in the first quarter, up from $220.9 million in Q4. The sequential increase was primarily driven by 2 factors: first, the seasonal reset of annual payroll taxes and employee benefits that occurs every first quarter; and second, a modest increase in acquisition, restructuring and integration costs. Cash compensation as a percentage of revenue was 24% in the quarter, reflecting the seasonal payroll dynamics I mentioned. On a normalized basis, we continue to expect cash compensation to run in the low to mid-20s as a percentage of revenue. On synergies, we have now achieved approximately $104 million of the expected $110 million in total net expense synergies from the Pioneer acquisition, which closed just 12 months ago. The integration is substantially complete, and we are well positioned to capture the remaining synergies over the course of 2026. I want to take a step back and explain what this net synergy achievement represents. We acquired a business that significantly increased the size and scale of our company and will be fully integrated in less than 2 years. And we are exceeding many of our financial objectives while also globalizing our business through the international distribution channel, which has been net flow positive since the close of the acquisition. Moreover, the Pioneer Investments franchise has been net flow positive since we closed the acquisition, and we have launched new products for the franchise, specifically the first ETF managed from the platform. Lastly, we are simultaneously investing in the future growth of the entire business by adding significant resources to our sales and marketing functions across every distribution channel. Turning to our non-GAAP metrics on Slide 18. Adjusted EBITDA of $204 million and an adjusted EBITDA margin of 52.6% represents the continued strength and consistency of our platform. As noted, 19 of the last 23 quarters have delivered margins above 50% and all have been above 49%. This consistency through different market cycles, multiple acquisitions and while making significant investments in our platform is what distinguishes our business model from many others in our industry. Adjusted net income with tax benefit of $153.2 million or $1.82 per diluted share was up 2% from Q4 and 34% from Q1 of last year. Finally, turning to Slide 19. Our balance sheet and capital management position remains strong and provide us with significant strategic flexibility. At March 31, 2026, we had $76 million of cash, $980 million of debt and a net leverage ratio of 1.1x. Our $100 million revolving credit facility remains undrawn. Cash interest expense declined again in the quarter to $14 million, reflecting the benefit of the refinancing we completed in Q3 2025 that lowered our borrowing cost by 35 basis points through reducing our interest rate. On capital return, as Dave highlighted, we repurchased 2 million shares during Q1 and combined with dividends, returned $185 million to shareholders. Over the trailing 12 months, we have returned $512 million to shareholders, more than $6 per diluted share. We believe this context is important and reflects our commitment to creating shareholder value through disciplined capital allocation. Looking ahead, our capital allocation philosophy is grounded in flexibility and discipline. We evaluate our capital deployment on an ongoing basis, informed by the facts and circumstances at any given time. Our primary objective remains the execution of accretive strategic acquisitions that make our business better. Our buyback program is active and meaningful, and our dividend provides a consistent return to shareholders. The strength of our free cash flow generation and our healthy balance sheet gives us the ability to pursue all these objectives simultaneously. With that, I will turn the call back to the operator for questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Cho with JPMorgan. Y. Cho: I just wanted to touch on one of the areas you highlighted during your prepared remarks on ETFs. And so it's clearly seen extremely strong growth over the years and you continue to launch. It's still less than 10% of AUM today. So the question is, are there opportunities that might further energize growth here in this successful segment that you've seen? And when we think about strategy, are there are the priorities kind of the launch over the next 12 to 18 months? David Brown: Good morning, michael, it's Dave. Let me start off and say we have seen great growth on our ETF platform. We've seen that in a number of different areas on the intermediary side. Our client base and the platforms that we're on have been expanding. And then we're also getting additional products on those platforms. In our prepared remarks, I spoke about expanding the distribution outside the U.S. Today, our ETFs are available throughout Asia, and we're opening up some countries in Latin America. So that will help us with our growth. We're launching new products. We mentioned that we launched the first ETF off the Pioneer franchise platform. We'll launch additional ones. And we will expand out some other investment strategies as well into an ETF wrapper. So we'll have product expansion and development. We're putting distribution resources from a people perspective, from investment in our distribution partners and from a marketing perspective. So it will be multifaceted on how we grow the business. We're super excited about it. There is industry tailwind as well. And then I think our product set really matches well with what's happening in the industry where people are looking for solutions and really moving away from just ETFs as beta exposure. And then lastly, and I always like to remind this is our average fee on our ETF is 30-- ETF platform is 35 basis points, which very much looks and acts like an active product. So it matches our fee rate requirements and really matches our margin requirements as well as a firm. Y. Cho: Great. Thanks for that, Dave. If I could just follow up on your last point or last topic around fee rates and not specific to ETFs, but just more broadly for Victory in general. Can you just talk through -- Mike, I think you gave some commentary on mix or fee rates. But I was wondering if you could just talk through what supported the fee rate expansion quarter-over-quarter and if there's any performance fees or anything like that in there? And then why would you expect it to compress from here just given the normalized range of 46 to 47 you highlighted other than the mix that you called out? Michael Policarpo: Yes. Mike, thanks for the question. I think we've said our fee rates has really been a driver based on kind of the asset class, product mix, client mix, distribution channel and vehicle mix that we have. And I think as we sit here today, we've been pretty consistent over the last 12 months post the Pioneer acquisition in the 46 to 47 basis point range, plus or minus a little bit depending upon, as you -- as I called out, the asset mix or the client mix. In Q1, we did have some annual fees that we record that really are fees that get us to our standard rack rates. There's just an accounting that we record them in the first quarter. And so we look at that over the course of a normalized period, and we're still in that long-term 46 to 47 basis point range. The areas of growth from a business perspective, we highlighted our international distribution channel. We also highlighted and you just asked the question to Dave about our ETF growth. Those fees are still supportive of our overall fee rate. And we're comfortable with that guidance as we look out based on the growth that we foresee to still have that 46 to 47 basis point range. Again, I think one thing we always highlight when we talk about our fee rate is the margin. Everything we do, channel, client, vehicle meets the margin requirements that we have. And we'll continue to look at that as we move forward, but we're really happy with where the margins have been and will continue to be. Operator: Your next question comes from the line of Benjamin Budish with Barclays. Unknown Analyst: Hi, this is [Nathan] on for Ben. Just a follow-up on the fee rate dynamic here. Can you speak more about the annual fees that the firm has included and just the guidance around the total revenue. We understand that it has been guiding to 46 to 47 for a while now, at least from Q2 due to like asset mix and client mix. But it seems like the firm consistently outperforms this metric or the guidance. So I just want to have a little bit more color on what you guys are seeing in the annual fee portion. Michael Policarpo: Yes. We really -- it's not much more to add from the last question, I would say, the last answer that we provided. We're still comfortable with the 46 to 47 basis point range from a long-term guidance perspective. And any of the annual fees that we report in a particular quarter are pretty material to the overall business. And again, those fees are really just getting us back to kind of our standard rack rates with some of the clients that we have. So nothing to add at this point in time. I think if we continue to see changes in the dynamics from an asset class or a vehicle perspective, we can evaluate it, but we're comfortable with the 46 to 47 basis points. Unknown Analyst: Thank you, and just can you speak more about the won but unfunded channel? Is there a way to size how large that is for the business? David Brown: Yes. It's Dave. Our won but not yet funded business, we don't guide on a number, but I can tell you that it's widespread on a number of different franchises and platforms and a number of different channels. Where we're seeing strength is on the ETF side, on the global products side, both on Pioneer and from RS's perspective, Trivalent, WestEnd Advisors and then also on the Pioneer multi-asset and fixed income and also on the equity side. So all 3 of their major platforms. So we're very excited about, as we said in our prepared remarks about really the trajectory of gross and net flows -- we have excellent investment performance, and that's the beginning of it. And we've really taken the time to invest in our distribution channels. We've increased the investment. We've increased our FTE in almost all of the channels. And so we think we're pretty well positioned to continue kind of the growth in -- from a flow perspective and the won but not yet funded book really supports that. Operator: Your next question comes from the line of Kenneth Lee with RBC. Kenneth Lee: Just one on capital management and potential for inorganic growth opportunities there. Obviously, very meaningful share repurchases in the quarter. Should we interpret that as a signal that perhaps maybe an opportunity for inorganic growth is perhaps not really imminent? Or is that not the right takeaway there? Thanks. David Brown: No, it's absolutely not the right takeaway. We are opportunistic with buying our shares. We want to own our shares. We think there's great value in owning our shares and the earnings power of our company. So when we have the cash available, and we think we have the ability to do a lot of different things with our capital, we'll buy our shares. We've done it aggressively. We have a lot of capacity and a lot of dry powder. But as I said in the prepared remarks, our #1 use of our capital is to do strategic acquisitions. And we are in a really great environment from an acquisitive perspective. There are lots of pressures on many traditional asset management firms, and we are a proven acquirer. So we're going to use our capital to buy businesses. And when we're not buying businesses or in coordination with buying businesses where we have extra capital, we will buy our shares because we think they have -- there's a lot of value in them. Kenneth Lee: Great. That's very helpful. And one follow-up, if I may. I just wanted to dig into some of the comments, I think it was in the prepared remarks about adding some more sales and marketing resources across the various channels there. Wonder if you could just flesh that out a little bit more. Is this driven more by product specialization? Or I just want to get a little bit more details around what's driving this? David Brown: It's really on a number of different fronts. First, as we see our international channel expand, we're adding resources to support the growth there. And so we're adding resources in the field and really also from a support structure. And then as we grow our intermediary distribution, we're adding resources to deal with marketing, digital marketing, support of the platform, support of different channels within the intermediary side, and that's from a technology perspective and also from a people perspective. So it's a number of different channels. And something that I think that we're going to continue to do over time. We're going to continue to invest in distribution, continue to invest in servicing clients and continue to invest in our ability to get new clients. Operator: Your next question comes from the line of Alex Blostein. Anthony Corbin: This is Anthony on for Alex. I wanted to click into the like M&A attempt of Janus earlier in the quarter. And I guess my question is, I guess, what was the rationale behind the deal, just given the size and fairly similar overlap product mix of the 2 firms? And then maybe just as a follow-up, like on the forward pipeline, should we expect a similar size deal and maybe product mix? David Brown: So I think the Janus opportunity was well covered in the press. We thought that the Janus opportunity, buying that business would create a phenomenal business coming out the other side, and it was a business that we thought we could buy and it would make our company better. And as far as looking forward, we've guided towards a $1 trillion goal of assets under management. We are looking at larger acquisitions. We're also looking at, I'd say, smaller strategic acquisitions maybe to fill in certain products that we don't have or certain things we're trying to accomplish. But our acquisition focus is definitely on the larger side, but we're going to be opportunistic. And as I said in my prepared remarks, -- we're extremely active. We have the ability to work on multiple things at the same time, and we have significant capacity. So we're in a great spot. We can do something very large like a Janus. We can do something strategic that maybe is smaller. And we are talking to a lot of different people. But the #1 thing for us is, any acquisition we're going to do, we start off from a strategic lens, and it has to make our company better. And from there, we do our diligence and we have our KPIs that we need to hit to do an acquisition. Anthony Corbin: Thank you, that's it from me and Congratulations, Matt, on your retirement. Operator: [Operator Instructions] There are no further questions at this time. We have reached the end of the Q&A. This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and welcome to Genius Sports First Quarter 2026 Earnings Results Call. [Operator Instructions] Please note that this call is being recorded. It is now my pleasure to introduce your host, Genius Sports. Please go ahead. Brandon Bukstel: Thank you, and good morning. Before we begin, we'd like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our annual report on Form 20-F filed with the SEC on March 17. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius' operating performance. These measures should not be considered in isolation or as a substitute for Genius' financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available in our earnings press release and earnings presentation, which can be found on our website at investors.geniusports.com. With that, I'll now turn the call over to our CEO, Mark Locke. Mark Locke: Good morning, everyone, and thank you for joining. Before I get into the results, a quick word on context. We're really pleased to share that we've successfully closed the Legend acquisition last week. Integration is well underway, and we're excited to share our progress into the quarters ahead. Q1 was another strong quarter, reinforcing the simple point that this is a reliable compounding business model and that we are executing on plan. We delivered group revenue growth of 31% and adjusted EBITDA growth of 21% with meaningful contributions from both Betting and Media. Importantly, Betting grew 33% this quarter, and that consistency is structural, and I want to spend a few minutes on why. Net revenue retention remains in the 120% to 130% range across our Sportsbook customers year after year. We partner with circa 500 licensed Sportsbook brands across regulated markets globally, and over half our revenue is generated outside of the United States. Our consistent growth comes from the same drivers that we have always communicated, selling additional content and products to sportsbooks, winning new customers globally, sharing in market growth and increasing the value of our partnerships as they come up for renewal. Each renewal is a pricing event, more content, more products, more geographies. And that's what compounds into the growth that you see year after year. What sets us apart is how deliberately this business is built. That repeated performance across a diverse set of customers, products and regulated geographies is fundamental to how this business compounds. Further, we are selective by design, working only with licensed operators in regulated markets. It is what makes our business model predictable and sustainable. That predictability is reinforced by our contracts, which are structured to protect against the downside. Volatility in handle or hold does not translate to earnings volatility for Genius. We have proven this through periods of industry-wide pressure, and this quarter was no different. While discussing our Betting business, I want to spend a moment on prediction markets because, as we've mentioned before, this is a meaningful new ecosystem for Genius Sports. The regulatory framework is evolving. Leads are establishing agreements with the CFCC and prediction market platforms and well-funded operators are deploying significant new influxes of capital at scale. We are a beneficiary of this. Where we are different is that our position here is structural. We provide the data and the infrastructure that enables prediction market operators and the other stakeholders in the ecosystem to function at scale. We expect this to translate into both incremental data revenue and advertising demand as those operators ramp customer acquisition. The way to think about this is simple. We are applying the same proven model in the U.S. online sports betting market to a new category. As a concrete example of revenue, during the quarter, we onboarded several high-profile market makers using our low-latency data feeds to help them participate in prediction markets. That is the pattern. Our infrastructure becomes the foundation for new products as they emerge. And as the industry continues to evolve, we see a clear opportunity to execute that same proven strategy and effectively expand our addressable market. We are at the very early stages of that journey today and are excited about our pipeline. That is the Betting story. Now media. Media grew 22% in this quarter. Most excitingly for Genius was the launch of our Moment Engine that has already gained significant traction across the advertising industry and become the new standard. The Moment Engine identifies when fan engagement is likely to peak, not just from the scoreboard, but from momentum shifts, comebacks and the kind of high-impact moments where customer attention is most valuable to advertisers. GeniusIQ is what makes that possible. And importantly, it matches that moment to high-value audiences and activates them instantly. It's not just about identifying what is happening in the game. It's about understanding who it matters to and how they are likely to respond because not every fan reacts to the same moment in the game in the same way. That signal, the connection between the moment, the fan and the response is what advertisers pay for. What differentiates us is the combination of data and identity. Our FANHub:ID graph, 250 million consumers, combined with Legends intent signals drive better targeting and higher yields. The result is enabling advertisers to target high-intent audiences in real time, which drives higher yields and increased spend over time that translates directly into high-margin media revenue. To accelerate the growth of this opportunity, we have now integrated the Moment Engine with leaders, representing approximately 90% of the programmatic market, agencies, broadcasters and the major SSPs and DSPs. These integrations lets us connect into existing advertising workflows and budgets with minimal friction, supporting our ability to scale efficiently. The product was already live during the tentpole events like the Super Bowl and March Madness with NBA finals and FIFA World Cup still ahead. What we are executing here is a structural shift in how digital businesses create value. The economy has moved from selling attention to capturing intent. Search engines did it. Retail media did it at the point of purchase. In sports, we are enabling that shift to happen in real time, and the Moment Engine is built precisely for it. At our NewFront event in New York a few weeks ago, we partnered with nearly 70 new advertisers, clear evidence of growing demand for outcome-driven sports advertising. That builds on existing partnerships that we have with Publicis, WPP, DoorDash, Venmo and Samsung. Samsung, in particular, tested our self-serve CTV product early and quickly graded Genius as a Tier 1 partner within its internal evaluation framework, increasing spend by 220% from their test campaign to their most recent booking, a remarkable signal given Samsung's scale and selectivity in choosing advertising technology partners. We expect more of these graduations as advertisers complete their first full season with the product. As adoption continues to grow, we expect the Moment Engine to be a meaningful driver of high-margin media revenue over time. The core businesses in Betting and Media are on a strong footing. And now I want to spend a few minutes on the 3 areas that are accelerating our margin expansion and profitability. Legend, GeniusIQ and AI. They're all connected and all running on the same platform. First, Legend. As you know, Legend adds the intent layer of the system that we have been building for 2 decades, owned environments where 118 million unique users actively engage with sport and iGaming with more than 2/3 returning regularly. Combined with the official data and infrastructure that Genius already provides, the platform now connects context, engagement and action all in one place. As AI commoditizes information retrieval, owned environments are where users come back to engage. They become more defensible, not less. Legend also extends the Moment Engine into the global iGaming market, which is expected to grow at near 20% CAGR over the next 3 years. On customer acquisition, as U.S. markets mature, sophisticated operators are shifting spend from the blanket promotional offers towards targeted high-intent performance media, channels where Legend is a proven leader. We're already seeing clear evidence of this shift. For example, Legend acquired customers delivered 60% higher yield for operators after 1 year. The category is moving towards Legend's model. Integration is underway, and we'll share more on synergy execution next quarter. Second, GeniusIQ is replacing legacy systems across the sports league landscape. As we outlined at our Investor Day, GeniusIQ is the operating system of modern sport, one platform that captures live game action, understands fans, distributes data and powers every touch point where sports is consumed, officiating, coaching, betting, fan engagement, advertising, all running on the same system. Legacy manual data capture, where humans key in events from television feeds is obsolete. Leagues are transitioning towards automated AI-driven solutions, and we are winning that transition. Our recent expansion with Liga MX is one example, a single relationship covering officiating support, performance analytics for clubs, betting data and fan engagement, all powered by GeniusIQ. We see a meaningful opportunity to take market share and drive incremental revenue with limited additional costs as more leagues make this transition. This is the strategic shift that we anticipated and that we built for, and we are now seeing the return on that investment in real time. Third, AI lowers our cost base and increases speed across the business. GeniusIQ automates data collection in venues where it is deployed, delivering faster, more accurate data with reduced operational overhead. By the end of next year, we expect that automation to span our entire data rights portfolio. That is a meaningful margin lever as we scale. Internally, Agentic AI has cut feature development time by more than 50%, and we expect these gains to compound. We're extending the same capabilities into partner workflows, embedding our technology more deeply into customers' operations, which both creates stickiness and creates additional commercial opportunity. We have also developed automated antipiracy solutions to protect our most valuable asset, the data itself. AI is not just enabling innovation in our products, it is structurally improving our margin profile and reinforcing the defensibility of our business. The true line is this: one platform; three, accelerants, expanding operating leverage. That is what gives us confidence in sustained margin expansion from here. Bryan will take you through the financials, but I'll leave you with this. Q1 extends a consistent pattern of execution on a durable model. We are moving from a data provider to the operating system and monetization layer of global sport. We've built a competitive position and margin profile that few others in the sports ecosystem can replicate. Consider this against the backdrop of an industry that's being reshaped by AI. Every wave of AI progress increases the value of 2 things: data that can't be replicated and destinations audiences actively choose. We own both, which puts us in a rare position. AI doesn't threaten our core. It compounds it. The opportunity is to use AI to make our data more useful, our destinations more essential and the gap between us and everyone else even wider. I want to close with a direct comment. We understand and appreciate but it's early days with respect to Legend. As I wrote to shareholders in February, the gap between how we see this business and how some of the market currently sees it is where the asymmetric returns live. The way that we close that gap is by delivering quarter after quarter with the discipline that has defined this business for 2 decades. These results begin that process and every conversation between today and our next call will be about exactly that. And with that, I'll turn the call over to Bryan. Bryan Castellani: Thanks, Mark. Three things I want to land today. Q1 was another quarter of well-balanced, consistent growth. The Legend financing priced well with strong lender support and the combined company takes our 2026 EBITDA margin from 23% to 28%, pulling our long-term target forward by 2 years. Starting with Q1, we delivered well-balanced revenue growth across both segments. Betting was up 33% and Media up 22%, translating to group revenue growth of 31% and adjusted EBITDA growth of 21%. Geographic balance was equally strong with over 25% revenue growth across Europe, the Americas and Rest of World. Two housekeeping notes on the quarter. First, as outlined previously, we now consolidate our Sports Technology and Services business into Betting and Media. This aligns with how we manage the business and reflects where expected growth and profitability will come from. Going forward, we will report on those 2 segments only. Second, on cash, we historically see outflows in the first half and inflows in the second half, netting positive for the full year. We expect that pattern to repeat in 2026. Now on Legend. The financing tells you what outside capital thinks of this business. Concurrent with closing last week, we funded an $825 million Term Loan A at SOFR plus 350 basis points, better terms than where credit markets sat when we originally signed and a lower cost of capital than we initially expected. In a more selective credit environment, lender diligence reinforced the predictability of our cash flows, our low leverage profile and the durability of the model. We also elected to size the debt $25 million below the original structure, reflecting our confidence in free cash flow generation and our commitment to disciplined deleveraging. This reduces upfront and ongoing interest, fees and amortization while preserving ample liquidity which brings me to guidance, now reflecting the combined company beginning May 1. For Q2, we expect 1 month of stand-alone Genius and 2 months of combined group financials, delivering group revenue of approximately $185 million and group adjusted EBITDA of $45 million. For full year 2026, we expect group revenue of between $990 million and $1.01 billion and adjusted EBITDA of between $270 million and $280 million, in line with the 2026 annualized estimates we provided in February. The headline number. This raises our 2026 adjusted EBITDA margin expectation from 23% to 28%. The acquisition is immediately margin accretive and accelerates our path to our previously stated long-term revenue and margin targets by 2 years. On cash flow, 2 points. First, this year Q2 will mark the low point, consistent with the seasonality of prior years, while also having one-off acquisition expenses. In the second half, we expect the combined business to generate approximately $100 million of total cash flow, including all interest expenses and debt repayment. This equates to roughly 50% to 55% conversion of the approximately $200 million of adjusted EBITDA we expect in the period. Second, the trajectory. As we move into 2027, free cash flow conversion increases towards our previously stated 2028 target of at least 60% on an unlevered basis. And 2027 is also the year we transitioned to positive GAAP net income on a sustained basis. One last point, and it's the most important forward-looking one. Today's guidance does not yet include the 4 revenue synergies we identified at the time of the transaction, and these are where we see significant upside potential. To recap them briefly, they are: first, customer cross-sell uniting Genius' official data with Legend's high-intent acquisition funnel; second, monetization of the combined audience asset across the advertising ecosystem; third, scaling Legend's technology platform across our 400-plus league and team partners; and fourth, distributing Genius data and products through Legend's channels. On that fourth synergy, work is already underway. Over the coming weeks, users on Legend's properties will begin seeing Genius products integrated directly into their experience. This will be the first visible signal of integration progress. In 2026, the majority of Legend's value comes from consolidation, margin uplift and cross-sell of Legend inventory into existing betting partners. Deeper data-driven media synergies build as we move into 2027 and beyond. One specific synergy worth calling out separately, prediction markets. As Mark covered, the ecosystem requires both official data and high-value audiences, capabilities we uniquely combine. Together, Genius and Legend create the only platform in our industry that delivers both at scale. We see this as one of the most attractive incremental revenue opportunities ahead and only the very early stages of this opportunity are reflected in today's guidance. To close, Q1 extended the track record, the financing validated the model. Legend pulls our long-term targets forward by 2 years. The combined business is set up to deliver sustained revenue growth, margin expansion and cash flow and meaningful long-term value for shareholders. With that, we'll open the line for questions. Operator: [Operator Instructions] Our first question comes from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Ryan Sigdahl: Nice to see the strong Q1 results. I want to start, Bryan, with guidance just because you ended on it. Are you able to break out the legacy Genius guide relative to your new guide? And then what's included for Legend? I tried to do some reconciliation relative to the stand-alone expectations you had put out there. It appears like maybe a little lower on the revenue and the same EBITDA, but hopefully, hoping you can help me with that. Bryan Castellani: Ryan, thanks. On guidance, this is all in line with the earlier guidance we gave in February. And in February, we started with the Genius stand-alone guidance that had 22% revenue growth and 36% EBITDA growth, which is really strong, and we're on track to achieve that. With Legend closed just last week, we now present it as a combined business. So the guidance you see is effective May 1 on the combination. And you can see it's immediately accretive to margin and cash flow, potential synergies to drive upside. And so we feel good about that guidance. And again, I just want to stress it's all in line with that earlier guidance in February. Ryan Sigdahl: Helpful. NFL, so there's -- it's reported the NFL does not have an official Sportsbook. They're in those negotiations, previously DraftKings, FanDuel, Caesars that expired at the end of March. Curious kind of what your view is of that. I know it's a long time until the start of the season, but just how that relates to you guys and what you expect to happen there? Mark Locke: Ryan, thanks for the question. Yes, I mean, look, it is a long time to start the season, right? And I mean, this is nothing we haven't really seen before. I don't want to comment for the NFL or how those negotiations are going. But from our point of view, we've got very strong visibility over our future revenues and our partnerships and our relationship with the NFL, just to remind everybody, is locked in until Super Bowl 2030. Operator: Our next question comes from the line of Clark Lampen from BTIG. William Lampen: Thanks for really detailed thoughts around sort of Legend and the opportunity sort of moving forward. Maybe to drill down on that at a slightly more micro level. I wanted to see if you guys could talk about some of the ongoing work and the Publicis and sort of Moments integrations that you guys talked about in the March time frame. Could you give us a feel for early commercial traction, what you're seeing with the integrations? Are those driving incremental revenue now? Or are we still in the sort of activation and testing phase? And then a clarification on guidance. I think, Bryan, you just said immediately accretive. There are potential synergies, but guidance should be considered basically in line. It sounds like you guys have a very nicely growing demand backlog from core and prediction customers. What would you want to see before maybe starting to underwrite or sort of embed those potential synergies that you just talked about? Mark Locke: Clark, thanks for the question. Look, I'll let Bryan pick up the second part of it. But I mean, suffice to say, I think we said a few times that the upside isn't priced -- sorry, isn't in any of the guide. To answer your question sort of micro details, I think you called them. Look, we've got a few main things we're going. On the Legend integration, things are going really, really well. From an operational point of view, we've got a 60-person commercial off-site together, I think, next week or the week after, which is going to bring the businesses together, and we're going to address a lot of the inbounds that we're getting already, which is a really, really good sign. So the combined offering is going down very well. From a product point of view, we're integrating BetVision into Legend at the moment, which gives us not only additional reach, but more inventory, which we should be able to immediately drive value from through our advertising partnerships. On the Moment Engine, you saw the comments or heard the comments in the prerecorded script. We think we picked up 70 new customers and 90% of the SSP, DSP market, and that's delivering immediate revenue. So we're extremely excited about the opportunities. It's going exactly to plan, and we feel very confident about the growth and the revenue numbers that we put out into the market previously. But I'll let Bryan pick up the second part of the question. Bryan Castellani: I think that second part, just on the what we would need to see to layer in those synergies. And we've always been consistent that the acquisition was -- we guided with what was in front of us. And as those synergies come to light, we will start to layer them in. We've said the nearest ones are the cross-sell opportunities. And as Mark said, the teams have started to get together. There's interest on both sets of customers and proposals going out where we can now leverage the combined opportunity. So as those things start to layer in, we will update you as we go. Operator: Our next question comes from the line of Jordan Bender from Citizens JMP. Jordan Bender: Mark, you touched on onboarding the market makers to your platform. Broadly, can you maybe just help us think through the economics of what selling that data might look like? I know you're not going to be able to kind of give us contract by contract, but just kind of help us size the overall opportunity there for you guys? And maybe the second part of that is you have the infrastructure in place, would you guys ever consider market making yourselves? Mark Locke: Yes, it's a good question, Jordan. I mean these are fairly early days. Whilst we've got a great deal of experience of doing this in Europe, I think we've mentioned before that we've worked with market makers there for a long time on the exchanges. And I think from a technical point of view, we don't really see much difference over here, saying all about the economics and the way it's going to wash out in the U.S. is clearly something that we're keeping an eye on and watching the evolution of. As a result of that, the deals that we're running are short-term deals. We have various different economic structures. But fundamentally, as time goes on, we'll evolve those deals as we get more clarity, frankly, on what the best economic deal is, but that's going to be on a case-by-case basis depending on the quality and the type of the market maker that we're working with. We're leaving ourselves a lot of flexibility. Jordan Bender: Understood. And then just on the follow-up, Bryan, I think I caught that you said $100 million of free cash flow in the second half of the year. If I look at the 1Q number, it kind of implies you have to not lose that much in the second quarter. Is that to say that you might actually be free cash flow negative for the entire year? Did I catch that correctly? Bryan Castellani: Sorry, no. So let me just give you a little bit of a walk on the cash flow. So Q1 seasonal pattern, that is part of our history and just the way timing vis-a-vis -- timing of rights payments versus revenue, right? We monetize our rights over 12 months, but the rights payments time into the season. Q2 will have a number of onetime impacts just given the transaction. So we will see the low point in Q2, probably around $140 million to $150 million. And then that build back that $100 million and starting from really the second half of the year, you really start to get a clean read on the earnings and cash flow power of the combined business. And so that's 50% to 55% total conversion just so that we were cleaner on where you might model that. And so that reflects basically the back half of the year earning about $200 million of EBITDA that may be more Q4 than Q3, again, in line with the pattern of history here. But hopefully, that answers your question as to how to think about the cash flow in that. Operator: Our next question comes from the line of Barry Jonas from Truist Securities. Barry Jonas: Maybe just talk a little bit more about the prediction opportunity right now. I don't believe the NFL has reached an agreement at this point. So just curious what the opportunity is and then what you're sort of waiting on to proceed once you get more buy-in from the NFL or any other leagues. Mark Locke: Yes. It's a good question and clearly a hot topic at the moment. So I think it's probably best to break it into 3 buckets because already the prediction markets are driving a lot of value for us. And the first one, we touched upon a minute ago with the market makers, we're generating good revenues there. Early days, but we're seeing real positive opportunities there. You've got the second part of the -- or the second bucket, if you like, I'm sure you've all watched the valuations and some of the raises that have been going on at the moment, which, frankly, is going to be for marketing for product. And we see a lot of that raise coming through to Genius and Legends as part of customer acquisition and the marketing. So there's a significant opportunity there, which we are already starting to capitalize on. And then finally, on the data side, look, we've got to have a very close eye on the regulators and the regulatory environment is something that we are obviously very sensitive to and our partners are very sensitive to. But you're seeing positive moves from the CFTC towards official data. A lot of our partners outside of the NFL are showing strong interest in engaging. So we expect that those sorts of deals will come in on a longer -- sorry, on a short-term basis. On a medium-term basis, the NFL and the U.S. sports leagues, I'm sure, are considering their positions. But I think it's fair to say that for the prediction market to have a long and rosy future, they're going to want to work very closely with those leagues and with the CFTC. So as a result of that, we expect in the medium term some progress on that front. Barry Jonas: That's helpful. Then just for Mike, can you talk about allocation specifically customer purchases? I think the company volume in the quarter fell off. Mark Locke: So we will prioritize our capital in the highest ROI opportunity. We're closing the trends and finance favorable focus on management. We always focus on scheme and to a paying down that as well. We get done because we've set our strap and the quick lever, the quick have optionality to do those other types of things you're asking about. Our focus right now is the delever. Operator: Our next question comes from the line of Chad Beynon from Macquarie. Chad Beynon: Wondering if you could expand a little bit just in terms of engagement in Syria as that season comes to a close. And this was a big integration year with your new rights contract in BetVision. So any additional color just in terms of what you've seen from that contract in this first year? Mark Locke: Yes. Thanks for the question. Look, it's super interesting. I mean the -- Italy is the biggest betting market in Europe. It's often missed by people. Our relationship with them is very strong. We're very happy with the technology integration that we've done and the distribution of the products. And we feel really good about the future of that relationship. Chad Beynon: Okay. Great. And then as we think about the NFL ad inventory opportunities and kind of tying that back with the event that you just had with NewFront, when will we start to see you kind of fill the bucket in terms of that inventory? Is that something that's closer into the season? Or is that a process that's going on right now? And any commentary there would be helpful. Mark Locke: Yes, sure. Look, we're already outselling the NFL inventory. And clearly, with the addition of the Moment Engine and the improvement in ROI that our advertisers see a result of that, we are very confident that that's going to generate a very good result for us this year. Operator: Our next question comes from the line of Eric Handler from ROTH Capital. Eric Handler: I wonder in terms of your Media business, is -- would you be willing to sort of quantify either from a volume or dollar basis, how interest is shaping up for the NBA finals this year? And as well, when you look at the incremental opportunity with the World Cup, is there any color you can give around that? Mark Locke: Yes. So this is an interesting moment for us, excuse the pun, with our Moment Engine. We -- the great thing about it and the fact that we've distributed it so widely and it's being picked up by so many clients is that we're part of the workflow of those clients. And so when you combine that with the fact that we have a rolling set of events throughout the year, you mentioned a couple, and obviously, the World Cup is a big one. The combination of that means that this product will automatically be used by our clients as part of their campaign management. So effectively, we are now running our product sets on a 24/7, 365 basis based on the events, based on what's going on in the match and generating revenue from every campaign. Eric Handler: Great. And I wonder if there's any sort of updates or color or data you can give for BetVision in the quarter. Mark Locke: Yes. Look, BetVision, we're super happy with it. It's going really nicely at the moment. We've seen BetVision's growth in global football actually now with the with the off-season, but now pass some of the NFL. So there's a huge amount of opportunity that we're seeing outside of the core U.S. market there. We're really happy with the output and the results that we're getting are really strong. And clearly, we're winning result -- sorry, we're winning rights away from our competition, and that product is really helping us do that. So we feel very, very strongly about it, and we're super happy with the ROI that we're getting on that. Operator: Our next question comes from the line of Bernie McTernan from Needham & Company. Bernard McTernan: Maybe to start, Mark, I know it's early days, but is official data holding that same demarcation that had in online sports betting meeting? Are you and your competitors staying in your own lanes in terms of selling data to prediction market stakeholders that only you have official data for? Or is it more of the Wild West out there at this moment in time? Mark Locke: Yes. I mean it's certainly not the Wild West. It's much more -- the market has evolved. It's much more rational than it used to be, and I think you're seeing that in the results. We are pretty clear, and I think our competitors are pretty clear about what rights we hold, and we're engaging with not only the rights holders, but the prediction markets on that basis. I think the most important thing that people need to think about in terms of prediction markets is as they evolve and mature and become -- move towards sort of stronger regulatory framework, they're going to need to fall much more in line with the way that, I guess, the more traditional sports betting market work. So they're going to look to mirror those -- that type of framework, which provides a significant opportunity for us and also other players in the market who have access and the control over that data. And again, if you look at the -- and I think I mentioned this before, you look at what the CFCC has said about the need to move towards official data and the fact that the leagues are starting to align, you're just going to see more adoption on that basis. Again, we're very well placed for that. Bernard McTernan: Got it. And then just a clarification. Bryan, I believe you mentioned the full year kind of legacy Genius guide was unchanged, but there was a pretty substantial beat in the first quarter. So was this just a pull forward or just maybe some confusion that we had on seasonality? Bryan Castellani: No confusion. We're always mindful in managing to the full year guide, and we're consistent with that. And so again, here with Q2 just closing the transaction, we want to come out of the gate here well. And so really no change, just managing the full year rather than quarter-to-quarter. Operator: Our next question comes from the line of Jed Kelly from Oppenheimer. Jed Kelly: I think when you acquired Legend, you were kind of calling for like 20% growth for the full year. It seems like 2 of the largest sports books are increasing the amount they're willing to invest in prediction markets. Kalshi has gotten funding. So it seems like we're ramping up for what one would call maybe a '22, '23 advertising spend that you saw in OSB in prediction markets. So just how should we think about the back half advertising ramp for Legend? Mark Locke: Thanks for that. Look, obviously, we love that comparison, and we agree with it as well. We're seeing a lot of the sort of excitement that we saw in those early days. The back half is going to be seasonal. There's still going to be rational spenders and even though they raised a lot of money and they're being aggressive with their acquisition. However, it's going to be based around sports events, and we would think it's likely to follow that calendar, albeit it's a big opportunity for us. And as I've said for a while, we're extremely well placed, even more so now with Legend and the distribution network that they have. Jed Kelly: Got it. And then just as a follow-up, just with Legends, I guess, just in the relationship with the LLMs, when you go do and you kind of go into some of these LLMs, they are scraping covers and taking the sources. Is there any way to protect that data or protect what they have or maybe integrate with the LLMs? Can you just talk about that relationship in terms of preserving some of the uniqueness around the Legends portfolios? Mark Locke: Yes. Look, LLMs are a big opportunity for us through Legend. We -- I think I said in my prepared remarks, we -- what LLMs are good is aggregating information. But really, this is all about destination sites, which Legend has and the new app that's just been soft launched as well. So we feel from an AI point of view and an LLM point of view, we're a net winner. And we're seeing record audience coming through the LLMs to Legend at the moment, which is obviously translating to cash. Operator: Our next question comes from the line of Mike Hickey from StoneX. Michael Hickey: Mark, Bryan, congrats guys on a great 1Q and the closing of your deal here. Just 2 questions from us, Mark. First one, renewals. Obviously, you've had a lot of success in renewals historically. Just curious sort of how you're thinking about any upcoming operator renewals in the U.S. And what are the key levers you think in terms of driving incremental growth from these agreements? Mark Locke: Yes. I mean, look, Mike, we're horizontally relaxed about this stuff. We've been doing it for years, and we expect this to carry on in the same way that we've seen it historically. We know what the levers are. We know what our value proposition is, and we've got an incredible track record of customer renewals and net revenue retention and growth. So we feel very confident and very relaxed about that. Michael Hickey: Then just curious on the marketing opportunity you see, Mark, international. Obviously, the U.K. is a big area. I think in terms of Legend on gaming marketing, just the tax situation there has gotten nasty. Obviously, that's already baked into your guidance. Just wondering the impact you're seeing there. Do you think it will normalize or I guess, how it will trend through the year? And then just broadly speaking, when you look at the Moment Engine, which has been absolutely exceptional. And now Legend, when you look international, the biggest opportunities for growth that you guys see in the future? Mark Locke: Yes. Thanks, Mike. Good question. Look, I mean, Legend obviously globally diversified, and that's a super important part. One of the things that might be quite interesting is to think about the U.S. If you remember, look at Flutter's results yesterday, 90% of the growth was iGaming versus 1% betting. Now clearly, Genius is outperforming on the betting front in a very significant way, as you've seen from the results this month and going forward. But I think the proportion of the money that's coming and growth that's coming from iGaming is very significant and a really good indicator for how well Legend is going to perform in the U.S. market. Suffice to say, we're pretty excited about that, pretty excited about the new exposure that we've got to the iGaming market. That, combined with the growth that we're seeing in the advertising product means that we expect some really strong results from that space. Operator: Our next question comes from the line of Trey Bowers from Wells Fargo. Raymond Bowers: Just first, a couple of guidance questions. Any seasonality to call out around Legend? The incremental EBITDA for Q2 just relative to 2 months, seems a little lower in that quarter, if I just annualize the overall annualized EBITDA contribution of Legend. And then with that, any update to those long-term guide targets that you guys provided at the time of the acquisition? And then I have a quick follow-up. Bryan Castellani: While Legend is less seasonal than Genius, and you guys know our back half, just given the sports calendar and the advertising calendar is significantly weighted to Q3, Q4. Legend is more even given that it is iGaming, but they still have their peak quarters in Q3, Q4. So there is some seasonality to it where the front half is notably less than the back half. And no change on the guide. We remain consistent. And I think you guys know me well enough that I keep saying we're consistent. Raymond Bowers: And then just on cash flow, just if we could put a finer point on this. If Q1 burned around $80 million, Q2, you guys expect that to be $140 million to $150 million and then a rebound in the second half of $100 million, it's a negative cash flow year of north of $100 million. And then you mentioned kind of conversion showing up at the 50% plus rate in the second half. But if you're usually in a cash draw position in the first half, you should be well north of that in the second half. So I think it would be super helpful just to kind of try to quantify what the one-timers related to the deal, et cetera, were in the first half, just to get a better sense of what kind of underlying cash flows look like. Bryan Castellani: The underlying cash flow, again, Q3, Q4 is the clean read. It's about $100 million total. And that Q2, a reminder that given just the confidence in the business, we did reduce the loan balance in any transaction as any company would upon close, you do have the financing and the closing costs. So -- and as we end the year, we will have optionality on that cash balance in terms of delever or invest in the business. So again, the Q3, Q4 is the better read. And the guidance to '28, we expect '27 to build towards that 60% free cash flow conversion in '28. And so all of it remains consistent. And as you get through the second half into '27, much cleaner and moving away from one-off transaction-related costs. Operator: Our next question comes from the line of Jeff Stantial from Stifel. Jeffrey Stantial: Maybe just starting off by following up on, I think, Bernie's question earlier. So the CFTC just wrapped up an engagement process for some potential rule-making. We know there's some understandably mixed responses regarding whether or not the CFTC should require the use of official data. I think it's specifically from the exchanges. Mark, can you just help us think about sort of sensitivity to the addressable customer mix and the TAM here for your data if the CFTC does require the usage of official data versus the scenario where it's really more a function of latency that determines official versus nonofficial data? Mark Locke: Yes. I think the key thing is that quality of data that you need to have an official result set by. Otherwise, you've got the Wild West. And I think that's well understood. And you're only going to get the official result from the official holder of data, and that's fundamentally the leagues and Genius or the leagues and whoever holds those rights. So I think that's a fairly clear relationship that's out there. In terms of the TAM, the way I think about or the way we think about it, the way we model it is we think of each of the major prediction markets being like one of the top U.S. sports books. So we see the economics of Flutter or DraftKings or Kalshi or Polymarket or Robinhood, we see all of them being equal in terms of their size. So when we think about the TAM and then we think about the opportunity for revenue from us, that's our sort of base case. You've then got marketing around the edge. You've got the addition of Legend, which obviously over-indexes on customer acquisition, which in the current market is extremely good for us because they've got the opportunity to go outside of the current states where you've seen potential saturation from the existing OSB. So we see an outsized opportunity in the prediction market. But ultimately, we think that the underlying data piece will settle down, as I said, around the large OSB players size. Jeffrey Stantial: That's great. And then switching gears, Mark, you touched on this briefly in your prepared remarks, but just double-clicking here into some of the focus on specifically or only regulated markets and operators. I just want to clarify, does any of your betting business or material -- any material portion of your betting business revenues come via B2B resellers? Or is it only direct relationships with regulated license operators? And then if you could just sort of broadly refresh us on your compliance processes that are in place to ensure that customers are behaving according to commercial terms and conditions, that would be helpful as well. Mark Locke: Yes, sure. Look, I mean, I think it's a good question. And obviously, we expect it to talk about this. But I've been doing this for 25 years, and we've always taken very deliberate steps to avoid any exposure to any sorts of these risks. And the way we operate is that we're very, very selective by site. And what that means is that we structurally set ourselves up to only work with operators that meet our very high property standards, which is why we've limited ourselves to such a carefully curated list of only about 500 operators. Operator: And our last question comes from the line of Greg Gibas from Northland Securities. Gregory Gibas: You mentioned being flexible with respect to market maker contracts and them being fairly shorter term relatively as a result. So I was wondering if you could -- maybe how you expect those contract terms to evolve over time as prediction markets mature. Mark Locke: Sure. It's a good question. Look, you've got a couple of levers, right? You've got liquidity and you've got breadth of market and then you've also got regulatory change. And we've got to be focused on all 3 of those. So taking short-term contracts gives us a bit of a view and flexibility around that. As liquidity in those markets grow, clearly, the value of our data and the need for low latency, high-quality specific data becomes more valuable. And that's something that we've got a very clear eye on. So we see a very, very clear path to revenue -- significant revenue growth in that space as the natural evolution of that market values the higher quality data that's available. Gregory Gibas: Got it. Very helpful. And as a follow-up, I wanted to just see with your Moment Engine now generally available or greater availability now integrated across partners that represent 90% of programmatic advertising ecosystem, how would you maybe characterize early adoption or engagement with those advertising partners relative to your early expectations? Mark Locke: Yes. Look, we're super excited about this. The adoption rate that we've seen is really, really good. And more importantly, the results that we're getting are very, very strong. As I think you heard in the prepared remarks, we mentioned Samsung out spending by 220%, and it's early days. So I mean, look, there's a number of test campaigns that we're running at the moment and is still to finish. But if the initial results maintain at the level that we've seen, this is going to be a very strong product in the market. Operator: Thank you, everyone. That concludes our conference call for today. You may now disconnect.
Operator: Good day, and welcome to the 1-800-FLOWERS.COM, Inc. Fiscal Year 2026 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Andy Milevoj, Senior Vice President of Investor Relations. Please go ahead. Andy Milevoj: Good morning, and welcome to our fiscal 2026 third quarter earnings call. Joining us on today's call are Adolfo Villagomez, Chief Executive Officer; and James Langrock, Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents. During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company disclaims any obligation to update any of the forward-looking statements that may be made or discussed during this call. Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the table of our earnings release. And now I'll turn the call over to Adolfo. Adolfo Villagomez: Thanks, Andy, and good morning, everyone. As we move through fiscal 2026, we remain focused on stabilizing the business and building a stronger foundation for future growth. During the third quarter, we continue to make progress on the key initiatives we outlined earlier this year, and we are starting to see early signs that our actions are improving execution and the overall customer experience. I want to start with our Valentine's Day performance, which is an important indicator of that progress. This year, we delivered a significantly improved customer experience with strong gains across our key service metrics. These results reflect better execution, stronger processes and a clear focus across the organization on delivering a high-quality experience for our customers. Importantly, this progress validates many of the structural and operational changes we have been implementing. We are now beginning to see tangible evidence that these actions are improving performance across key areas of the business. While there is still work to do, we are encouraged by these results and the direction of the business. From a category perspective, our Gourmet Foods and Gift Baskets segment performed better than our Consumer Floral and Gifts segment. As James will discuss in more detail, this reflects the Easter timing shift and the heavier level of inefficient marketing spend in our Consumer Floral and Gifts segment a year ago, combined with our focus on improving marketing contribution margin. As part of our efforts to broaden our customer reach, we also continue to expand our presence across third-party marketplaces. Ahead of Valentine's Day, we launched a new partnership with Instacart. This builds on our strategy to meet customers where they are already shopping and to expand access to our floral and gifting value proposition. Through this partnership, our offerings are now available on the Instacart app, supported by our network of local florists. This increases speed and accessibility, particularly during peak occasions while also supporting our florist partners and introducing our brands to new customers. At the same time, we're strengthening our focus on the customer experience across our digital platforms. During the quarter, we fully implemented AI-powered sorting and ranking on 1-800-FLOWERS.com. This brings customer selected best sellers to the top of our product rankings and reflects a more AI-driven customer-first approach. This is an important step in modernizing the business. Historically, product placement was more heavily influenced by merchants. Today, we are prioritizing the products customers choose, which improves the overall shopping experience and results in higher sales. We are simplifying the shopping experience by reducing choice in certain areas to make it easier for customers to find the right gift. In addition, we are evolving how we operate our floral business, including how we balance florist-fulfilled orders with shipments fulfilled from our distribution centers. We are now operating these areas in a more coordinated way with our florist-fulfilled product team and direct shipment team working together on assortment decisions. This approach has multiple advantages. It improves the overall value proposition for our customers by simplifying the shopping experience, improving conversion and better aligning pricing for similar bouquets. Importantly, we made significant progress on our cost savings initiatives, achieving our previously announced $50 million in savings 2-year target in less than a year. This reflects the discipline and execution across the organization and strengthens our ability to reinvest in the business while continuing to improve efficiency. As we realize these savings, we are beginning to thoughtfully reinvest a portion back into the business to support our strategic priorities, including marketing and customer experience. These results are driven by the continued progress we are making on our cost and efficiency initiatives. As part of our transition to a function-driven operating model, we have streamlined the organization, improving alignment, driving synergies and enabling more efficient decision-making across the business. Since January 2025, we have reduced core headcount by approximately 20% as we align resources with our strategic priorities and improve efficiency across the organization. We are beginning to see cost savings from these actions, although in the short term, they are partially offset by consultant costs, incentive compensation and tariffs. Looking ahead, as our strategic initiatives take hold, we are beginning to shift toward a more balanced approach that includes targeted marketing investments to support future growth. Last year, our marketing efforts were heavily focused on bottom of the funnel activities, primarily focused on driving transactions, and we did not have the systems or infrastructure in place to effectively drive customer retention. Over the past 9 months, we have made meaningful progress in developing those capabilities. We are now in a position to begin rebuilding our brands. We're also expanding our reach to younger customers through top and mid-funnel initiatives, including influencer marketing and platforms like Instagram and TikTok. At the same time, we're improving our ability to retain customers. As I mentioned earlier, we have significantly enhanced the customer experience by improving areas such as delivery fees and overall customer satisfaction, which are key drivers of long-term retention. Beginning in the fourth quarter, we're accelerating and testing these targeted marketing investments. While these efforts are expected to take time to translate into revenue, they are an important step in rebuilding demand in a more sustainable way. As part of this shift, we expect marketing spend in the fourth quarter as a percent of sales to be approximately flat compared to the prior year period. In addition to these marketing investments, we're also beginning to invest in building out our Martech stack. These investments will begin in the fourth quarter and continue into the next fiscal year as we strengthen the capabilities needed to support long-term growth. More broadly, while cost discipline remains a priority, we believe these actions, combined with our structural improvements are strengthening the foundation to stabilize the business and enable long-term growth. Now I will turn the call over to James for the financial review. James Langrock: Thanks, Adolfo, and good morning, everyone. During the third quarter, revenue came in line with our expectations, reflecting continued execution against our disciplined marketing approach and the ongoing impact of changes in search engine results and pressure on direct traffic. Valentine's Day was consistent with our expectations, particularly given the difficult day placement as the holiday fell on a Saturday and during President's Day weekend. As we progressed into March, we began to see a moderation in the rate of revenue decline in our Consumer Floral and Gift segment as we anniversaried some of the strategic shifts in our marketing approach. From a category perspective, our Gourmet Foods and Gift Baskets segment performed meaningfully better than our Consumer Floral and Gift segment during the quarter. Gourmet Foods and Gift Baskets segment benefited from an approximate 5% revenue lift from the timing of Easter. This performance also reflects the more pronounced impact of prior year inefficient marketing spend in our Consumer Floral and Gift segment, along with ongoing changes in search engine results and pressure on direct traffic. During the quarter, we recorded a noncash goodwill and trade name impairment charge related to our Consumer Floral and Gift segment and the Personalization Mall trade name. While this impacted earnings, it did not affect cash flow. From a profitability standpoint, we saw improvement in our ad-to-sales ratio and marketing contribution margin compared to last year. Overall, our contribution margin improved year-over-year, reflecting stronger pricing discipline and improved marketing efficiency. Our efforts to streamline operations and manage costs are beginning to have a positive impact on the business. As of the third quarter, we have achieved the full $50 million in annualized run rate cost savings that we had initially targeted across fiscal year 2026 and fiscal year 2027, ahead of plan. Building on this progress, we are now targeting an incremental $15 million to $20 million in additional run rate cost savings over the next fiscal year. This brings our total identified cost savings opportunity to approximately $65 million to $70 million, spanning both cost of goods sold and operating expense reductions, reflecting continued opportunities to streamline the business and improve efficiency. Importantly, we are being thoughtful about how we deploy these savings. As we move into the fourth quarter and into next fiscal year, we are transitioning from a primary focus on marketing contribution margin toward a more balanced approach that includes strategic investment. This shift is expected to impact our fourth quarter performance. As part of this shift, we are accelerating and testing targeted marketing investments, including top and mid-funnel initiatives, which are intended to support longer-term demand generation and may take time to translate into revenue. Consistent with this approach, we expect total marketing spend as a percentage of sales in the fourth quarter to be approximately flat compared to the prior year period. In addition, we are beginning to invest in enhancing our digital experience and expanding our Martech capabilities, which will support improved customer acquisition, retention and overall marketing effectiveness over time. Investments will begin in the fourth quarter and continue into the next fiscal year. This approach reflects our focus on building a stronger and more sustainable operating foundation by balancing profitability with the investments needed to stabilize the business and position it for future growth. Now let's review our third quarter performance. Consolidated revenue for the quarter decreased 11.6%. Our Gourmet Foods and Gift Baskets segment was essentially flat. Our Consumer Floral and Gifts segment declined 18.7% and our BloomNet segment declined 5.9% for the reasons discussed earlier. Excluding the impact of system-related issues in the prior year period, our gross margin improved 10 basis points to 33.2%, reflecting benefits from our cost reduction initiatives, partially offset by tariffs, commodity costs and fixed cost absorption. Excluding items affecting period-to-period compatibility and the impact of the company's nonqualified deferred compensation plan in both periods, operating expenses declined $16.4 million as compared to prior year to $144.3 million. As a result of these factors, our third quarter adjusted EBITDA loss was $31.2 million compared with an adjusted EBITDA loss of $34.9 million in the prior year period, reflecting a modest year-over-year improvement. Now turning to our balance sheet. At quarter end, net debt was $94.3 million, compared with $75.3 million a year ago. Our cash balance was $51 million at the end of the third quarter. Inventory was $146 million, compared with $160 million a year ago. In terms of our debt, we had $145 million in term debt and no borrowings under our revolving credit facility as compared with $160 million a year ago. As we look ahead, we continue to view fiscal 2026 as a foundational year focused on stabilizing the business, improving execution and building a stronger platform for long-term growth. Our strategic priorities remain centered on enhancing our customer-first approach, expanding third-party distribution, improving marketing efficiency and driving structural cost savings. We believe these actions are strengthening the foundation for sustainable revenue and profit growth over time. Fiscal year 2026, we expect revenue to decline by approximately 10% to 12% as compared with the prior year and adjusted EBITDA to be approximately breakeven within a range of plus or minus $2 million, which includes approximately $22 million of anticipated incentive compensation and consultant costs incurred during the fiscal year. These expectations reflect our more disciplined marketing strategy, ongoing changes in search engine results affecting organic traffic and our transition toward a more efficient demand generation model. Now we'll open the call for Q&A. Operator, please provide instructions for those interested in asking a question. Operator: [Operator Instructions] Our first question comes from Anthony Lebiedzinski with Sidoti & Company. Please go ahead. Anthony Lebiedzinski: Good to hear that you had a successful Valentine's Day even with an adverse calendar day placement. So I guess, first on that topic, I guess, can you share any additional details as far as the customer experience metrics that improved? And what are some of the learnings from that holiday that you're looking to apply towards Mother's Day, which is coming up in a few days? Adolfo Villagomez: Anthony, this is Adolfo. So there are a lot of learnings coming out of Valentine's Day. We're literally transforming the business from a merchandising perspective, a digital perspective and marketing. So let me -- and by the way, also our post-purchase experience has significantly improved. Before I go to the learnings, I also want to be mindful that between Valentine's Day and Mother's Day, there is not a lot of room to make a lot of changes. I mean you need to buy flowers ahead of time. So you can make some changes, but not all of them. So Mother's Day, it's going to do better across those metrics, but don't expect the full performance impact just yet. But as we think about the changes we're making, let me start with digital. It used to be that the merchants would place a buy and they decided, "Hey, you're buying roses," or "You are buying lilies." And they would be at the top of the product page, which most customers make a decision on those products. 65% of the sales come above the fold on any website. So if you don't have the right product, your conversion declines. As I mentioned, we are now using AI-driven sorting and ranking. So number one, conversion is improving. But most importantly, we are also finding out what customers really want and what they are willing to pay, not only from a type of spend, but also from delivery method and delivery fees they are willing to pay. So we learned a lot from that perspective. From a marketing perspective, I want to remind everybody that, I mean, the reason Flowers did worse than Food is our marketing spend there last year was heavily unproductive. As an example, we were buying transactions for $40 and making $20 margin on each transaction, then you would say, well, that's great because we are acquiring a customer. Well, yes, that's true if you retain the customer. But if you don't retain them, then you are just wasting dollars. So we're working on both is lowering our customer acquisition cost and improving our retention. The second one requires the Martech stack. We're making improvements, but we are not 100% there yet. But on the first one, the team started experimenting going top of the funnel and mid-funnel. In the past, the company just wouldn't like that because there was so much focus on the -- they were so focused on the transaction and the measurement capabilities we have would lead you to believe that buying clicks was the most effective marketing method. What we are finding out as we have more, I would say, better measurement capabilities, is that's not true. If you do it right, top of the funnel and mid-funnel investments also drive customer acquisition. By the way, it allows you to acquire younger customers, which also longer term, it's better. So the team was experimenting with podcasts, TikTok, Instagram, all of them with huge success and which will be expanded in the future. From an assortment perspective, one of the things we started testing was just first, our mix between florist delivered and direct from our warehouses. In the past, the team, because they had already made the purchase and we own the inventory, using this manual sorting and ranking would favor the direct delivery, which combined with the assortment we were offering there, led to lower conversion. And by the way, then at the end of the event, because we had a lot of inventory, they would do heavy discounting. We are managing through that. There were huge learnings during Valentine's Day. Again, some of those are being applied on Mother's Day. And we continue to learn in Mother's Day. I'm actually super excited about the learnings and the implications for assortment. But it's a process. The other thing we -- I think on our operations, this is the type of stuff you don't see in the short term on the balance sheet. But our customer satisfaction post-purchase increased. Our calls to the call center declined on a per order basis. And now that we're also using AI on the call center, we're able to be significantly more productive with a better customer experience. So all in all, again, it was one event, one of the multiple businesses we have. But a lot of learnings that some of them are being applied during Mother's Day. But certainly, they will be fully applied during the upcoming holidays. So very optimistic about the improvements to the overall experience in the future. Anthony Lebiedzinski: Just switching gears to the cost savings program. So you talked about completing the $50 million cost savings program, but you're also looking to reinvest some of that into the business. So how should we think about cost savings on a net basis? And maybe you could just talk about OpEx versus the cost of goods, how to think about that? James Langrock: So Anthony, to answer the second question, right now, the $50 million savings is probably split equally between cost of goods sold and SG&A. So that's on that front. As we -- as you think of the cost savings, as we mentioned on the call, some of those savings will be reflected, but not all of those will flow through this year. Near term, we have the consulting costs for implementing initiatives. And again, we still have some of the headwinds around tariffs and commodity costs. So that's offsetting some of those benefits. So we'll see the consulting costs starting in FY '27. We'll no longer have those consulting costs. So more of that will flow through. But we're being very thoughtful on how we deploy those savings, Anthony. So as you look to going into '27, those savings give us more flexibility in the model, but we're going to be very deliberate on how we deploy those and start investing back in the business. So it's not going to be a dollar-for-dollar flow-through through EBITDA. So we're not -- we haven't given guidance yet for FY '27, but think of it in the context, we have the savings, but we are going to deploy those. So it will not be a dollar-for-dollar flow-through on the EBITDA side. Anthony Lebiedzinski: Right. Okay. And can you just remind us about the consultant costs, how much for this fiscal year? James Langrock: So the consultant costs will be the total between incentive compensation and the consulting costs, Anthony, it's about $22 million that's in this year's current P&L. The consultant costs are about $12 million to $13 million of that. Operator: And the next question comes from Michael Kupinski with NOBLE Capital Markets. Michael Kupinski: With your changes in marketing, have you kind of opened the door to competitors? And I was just wondering if you can talk a little bit about whether or not you have seen increased marketing from competitors, especially during Valentine's or certainly around Mother's Day, particularly like from low-cost providers like Bouqs or any impact from them, for instance? Adolfo Villagomez: Short answer is yes. Flowers, it's a very competitive business, especially during those events. And I think Google makes it very easy for anybody just to buy other people's brands. So which was, I think, primarily the reason why if you only focus on buying clicks, your customer acquisition cost becomes significantly higher. What we are doing now is leveraging the brand awareness of 1-800-FLOWERS.com. Anywhere I go and I talk to people, they tell me, say, "Hey, Adolfo, I think your company is the only one that gets, I'm going to call it, natural or direct traffic, and everybody else needs to buy the clicks." The way you do more of that is you need to continue to build the brand. And that's what we are doing. And in general, the bottom-of-the-funnel transactions do not build a brand. They just lead to transactions. Middle and top funnel build the brand, build awareness so that you're in the subconscious of the customer and eventually, when they have a need, they think about you. We have been, as I mentioned, successful on that. But as James mentioned, you need to make investments. And sometimes this top-of-the-funnel, you will invest now and you won't see the benefits until next month or next quarter. That's why we are being cautious about how we invest, how we learn about the business. But the idea is that the most important asset we have, it's our brand. And unfortunately, we hadn't invested in the brand for a while. We are reversing that. We're reinvesting in the brand. And as I mentioned, we are reinvesting on the digital experience. Our product discoverability in the website is improving. I think every day, we have new enhancements, and we are also improving our ability to retain customers. That flywheel is what will allow us to differentiate ourselves versus our competitors. Personalization to the customer, a better experience, AI to drive reminders, to drive recommendations to the customer to increase conversion. And as I mentioned, we're modernizing the brand to continue building that brand awareness. Michael Kupinski: Got you. And I know that the business is heavily correlated to consumer confidence. I was wondering if you can determine whether or not there was an impact by the war in Iran. And then also, I was just wondering if you can just talk a little bit about your third-party platforms like Amazon, DoorDash. And I was wondering if you can just kind of talk a little bit about what percent of revenue do you expect to achieve from marketplaces like, let's say, over the next 2 to 3 years? Adolfo Villagomez: Got it. So let me start with the first one. Impact of the Iran war, very difficult to see that in the numbers. What we are seeing is, I think, what this country has seen for a while, which is higher income spenders are doing okay, lower income are not. You can clearly see that in the numbers, the AOV that it's selling and what's not selling. honestly, that hasn't changed much since I joined the company. So whether there was an impact from the war or not, it is very difficult to say. What was the second one? I'm sorry. Marketplace. So marketplace, the way I think about it or the way we are thinking about it as a team is it's a way -- it's a twofold strategy. Number one, by selling to, I would say, professional e-commerce marketplaces like Amazon, you do learn a lot. You learn a lot about your own operations. You learn a lot about what's working on websites, what drives conversion. So that one will have a second level impact on everything we do. It's fascinating what we have learned in the last 6 months since we started selling on Amazon. Now to -- okay, how much should we expect on that? I mean if you are talking about 3 years from now, I think the sales from our -- sales outside our own e-commerce site should definitely be double digits of the company. And again, when I think about these, keep in mind, we are doing marketplaces like Amazon, Walmart and Etsy. And we're also doing delivery service providers, especially for our flowers business. We announced Instacart, but we're also doing DoorDash and Uber Eats. The intention here is we want to be where the customers are shopping. We do have a website, but we also have operations. We manufacture product and we represent our florists. So I think there was a huge miss from our side not to be in those channels, which we are trying to correct. It's early days, but we are -- it's growing really, really fast from low numbers, but we're optimistic about that. Michael Kupinski: And as we kind of think of the inflection point and coming out of the -- more of the growth phase of the company, I was just wondering what would be now the true baseline growth rate of the businesses now? Like historically, we had looked at 3% to 5% revenue growth and about 8% EBITDA growth. And I was just wondering if you had any thoughts in terms of the baseline growth rate coming out of this inflection point. James Langrock: So Michael, we're not giving guidance yet for FY '27. So we believe longer term, further out, we would get back to those growth rates. Adolfo Villagomez: And let me build on that, Michael. It's a process and we are sequencing. I think -- I mean, I've been in this role, I think to this day, it's a year. When I joined, we were declining at a rate of 20-plus percent. From there, you need to suddenly stop declining, you get to 1 or 2 days of positive comps, then you get to a week in one business and then you want the entire company to drive growth. We are seeing those positive days and those positive weeks in businesses. But I mean, it's a process. We -- at some point, we want the company to grow. And then it's going to be or we're building a very different business model. The previous one was manually driven. And the new one is going to be AI technology-driven. So I'm cautiously optimistic about what this company can deliver in the future, but it is a process. And the only thing we can tell you at this point is we are ahead of where we thought we would be, but there's still a lot of work in front of us. Michael Kupinski: It sounds like you made a lot of progress. Operator: Okay. The next question comes from Doug Lane with Water Tower Research. Douglas Lane: Just staying on the whole margin cost side of things. It looks like your EBITDA outlook this year improved a little bit despite the fact that you have $10 million more of the incentive comp and consulting costs running through it than you had last quarter. So it looks like the underlying margin outlook has improved pretty decently since you last reported results. So where are the 2 or 3 key areas that you're seeing the improved margins on the EBITDA level? James Langrock: So Doug, it's -- part of it, as you mentioned, part of it is we are starting to see some of the cost benefits flow through on the gross margin. So we're seeing that. And as Adolfo mentioned, with -- on the floral side, with the florist-fulfilled versus direct, we're seeing much more pricing discipline, more targeted promotional activity, as we mentioned, a better coordination between the florist-fulfilled and the direct shipment. So we're seeing that overall improve the gross margin and improved AOV. So we're being more consistent with our pricing decisions and again, reducing discounts, which is improving our overall margin quality. Now part of that's still being offset, Doug, by the higher tariff and commodity and shipping costs. But overall, our gross margin on a year-over-year basis was up about 10 basis points. So we are starting to see that flow through and the strategy is working. Douglas Lane: Well, that's what I wanted to probe because you got the $10 million more of the consultants and incentive comp, and you've also got a commodity cost environment that arguably has deteriorated since you last reported results. And then I don't even know what cocoa prices are doing these days, but are the commodity inputs actually down? Is that another thing that you're trying -- that you're having to offset here? I'm just trying to get an order of magnitude of what you're really seeing from your internal cost savings efforts. And it sounds like it's a little bit more than it's obvious by the numbers on the surface. James Langrock: So I just want to be clear, Doug, that the $22 million is an annualized number, just wasn't for the quarter, right? So I want to make sure that I'm clear on that. So on a -- from a commodity perspective, obviously, cocoa prices are still elevated on a year-over-year basis. What we are seeing is butter, flour and eggs are down on a year-over-year basis. So we're starting to see a little relief on that. As you mentioned, obviously, we are starting to see a little bit of the impact on the fuel surcharges on our outbound shipping because of the increase in the oil prices. Inbound, we're not -- there's no impact yet on inbound from a fuel standpoint because we have the contracts in place for the remainder of the year. So yes, we have commodity headwinds with cocoa starting to see some relief on the other commodities, still have the impact of tariffs, but we are getting the benefit of the cost savings as well as I just talked about the pricing discipline that we have. So that's what's flowing through. And that's why you're seeing gross margin up slightly this year versus last year. Douglas Lane: And are you still expecting the consultants to roll off at the end of June? Or are they going to be spilling over into '27? James Langrock: The costs roll off at the end of June. So we will not have that starting July 1, Doug. Douglas Lane: And then tariffs as well, you've got some tariff relief here and then you start to anniversary the implementation of tariffs in 2025. So the tariff impact should begin to recede in the first part of fiscal '27 as well, right? James Langrock: Yes. We still have -- right now, there still are tariffs in place. But yes, we will start to anniversary that, and we'll start to get the benefit of the lower tariff rates in 2027, Doug. Douglas Lane: Okay. And just one last one for me. You raised the flag that marketing spend as a percent of sales -- not a flag, but just to let us know that marketing spend as a percent of sales will be flat in the June quarter. But going forward, the base case should be improved marketing spending lowers as a percent of sales because it will be more efficient. Is that still the base case? I know you're not giving guidance for '27, but just directionally. James Langrock: Doug, I would say, potentially, we're planning with some of the savings that we're getting in cost of goods sold and SG&A. Part of that savings is going to be redeployed in marketing. So it's not necessarily that you're going to see marketing percentage as a percentage of sales going down in FY '27 as we make strategic investments in marketing. Adolfo Villagomez: Let me build on that. James Langrock: But longer term, Doug. So in the short run, as Adolfo mentioned, we need to invest back in the brand and some of the top-of-the-funnel and mid-funnel. So in the shorter term, you may not see that. But longer term, absolutely, you will start to see the improvement in the spend becoming more efficient. Adolfo Villagomez: The other thing I would say, building on that, Doug, is 1-800-FLOWERS.com, it's a very different company right now because every investment we make, it's being evaluated and measured versus a control group. So we are making investments. And if there is a lift, whether it's sales of margin, it goes through. If it doesn't -- if we don't see a lift, we can just declare a victory by failing fast and move on. So we are not going to make crazy investments, but we are making investments and we are experimenting. I'm convinced, and I think we all are convinced in this company that really our future is we need to find a way to drive growth. So the investments that I mentioned on marketing, on the Martech stack, on digital capabilities and so on and so forth are targeted towards that, is how do we invest to drive efficiencies on conversion on the website, traffic from a marketing perspective, conversion from an assortment perspective. And every investment we make is being tested, measured and we decide whether it goes forward or not. So the $50 million in run rate that we already have in our pocket, some of that will flow through the bottom line. Some of that is going to go through investments. But rest assured that when we invest, it's because we want to see a return on that. So that should help the company in the midterm. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Adolfo Villagomez for any closing remarks. Adolfo Villagomez: Thank you all once again for joining us today and for your continued support. Fiscal 2026 continues to be a year of stabilization for the company. During the third quarter, we continued to make progress on the initiatives that matter most, and we're beginning to see tangible evidence that these actions are improving execution, strengthening the customer experience and driving more disciplined performance across the business. We're also taking the next step in our transformation as we begin to balance cost discipline with targeted investments, supported by the progress we have made on our cost savings initiatives. These investments, including marketing and digital capabilities, are beginning in the fourth quarter and will continue into the next fiscal year to support stabilization and future growth. While we recognize that progress will not be linear, we remain focused on executing our strategy with discipline and consistency. The actions we are taking today are intended to stabilize the business and build a strong and durable foundation to support improved performance over time. We appreciate your continued interest in and support of the company, and we look forward to keeping you updated on our progress. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for holding, and thank you for joining us. Welcome to Warby Parker Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Jaclyn Berkley, Head of Investor Relations. Please go ahead. Jaclyn Berkley: Thank you, and good morning, everyone. Here with me today are Neil Blumenthal and Dave Gilboa, our Co-Founders and Co-CEOs, alongside Adrian Mitchell, our Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings release and slide presentation are available on our website at investors.warbyparker.com. During this call and in our presentation, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled Risk Factors in the company's latest annual report on Form 10-K. These forward-looking statements are based on information as of May 7, 2026, and except as required by law, we assume no obligation to publicly update or revise our forward-looking statements. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of our non-GAAP measures to the most directly comparable U.S. GAAP measures can be found in this morning's press release and our slide deck available on our IR website. And with that, I'll pass it over to Neil to kick us off. Neil Blumenthal: Thank you, Jaclyn, and good morning, everyone. In the first quarter, we delivered top and bottom line results that exceeded our guidance. Revenue reached $242 million, representing 8.3% year-over-year growth, and adjusted EBITDA was $30 million, reflecting a 12.2% margin. We achieved these results in a dynamic operating environment. As we shared on our last call, the quarter was impacted by periods of extreme winter weather, store closures, and continued softness in category traffic and unit demand. Against this backdrop, our performance underscores that customers continue to choose Warby Parker for our compelling value proposition, exceptional products, and differentiated shopping experiences, a combination that positions us well to continue to drive sustained market share gains over time. As we outlined in February, we have 3 strategic priorities for 2026. First, we are focused on scaling our industry-leading omnichannel model while consistently delivering remarkable customer experiences. Second, we are preparing for the launch of our AI glasses. And third, we are continuing to invest in brand awareness and customer acquisition, including advancing our efforts to capture vision insurance spend. We are encouraged by the progress we are making across all 3 of these priorities as well as the momentum we are seeing quarter-to-date. We are driving strong performance in several key areas, including eye exams, online glasses after sunsetting our Home Try-On program, average revenue per customer, and insurance penetration. Before looking ahead, I want to express my gratitude to our team. Their unwavering commitment to delivering exceptional patient and customer experiences is the foundation of everything we do, whether they are welcoming customers with a smile after digging out from a snowstorm or embracing new technology that our team has developed. Their dedication and agility make Warby Parker unique. That same combination is exactly what positions us to redefine the eyewear category when we introduce intelligent eyewear. 16 years ago, Warby Parker reimagined how consumers shop for glasses.?Today, we are developing products that will fundamentally transform the role glasses play in our lives. Working closely with our partners, Google and Samsung, we expect to launch our first line of intelligent eyewear later this year. We're designing a product and shopping experience that feels distinctly Warby Parker, one that is seamless, fun, easy, and always centered on our customers. We believe they will be the world's first truly intelligent AI glasses designed for all-day and everyday wear. AI glasses will redefine personal computing, moving technology off the screen and seamlessly into our daily field of vision. Instead of reaching for a device, wearers will stay present in the moment, while the technology works alongside them, providing contextual real-time assistance. Dave and I are actually wearing our prototypes right now. As part of our rigorous testing program, these glasses have already become essential to our daily routines. We're reviewing our schedules and adding meetings to our calendars, checking cross-city travel times, and working through complex math problems right off the whiteboard. I even had them help me review my son's Spanish homework. The best part is that they integrate seamlessly with the apps we and billions of other people use every day. Building a category and a product that customers will incorporate into their everyday lives requires a high degree of precision across every detail. We've contemplated every millimeter and curvature of the product itself while evolving our supply chain to incorporate our most complex lens fulfillment process yet. We're progressing this work with intensity and focus. Our ambition is to help define this category in a way that creates value on day one for our customers, our partners, and our investors. We look forward to sharing more updates closer to launch. Turning to the balance of the year. We're pleased with trends quarter-to-date while continuing to take a disciplined and prudent approach to our outlook. Consistent with the framework we outlined previously, we are reaffirming our full-year 2026 guidance. We're encouraged by what we're seeing in the business today, and we have a number of initiatives underway that we expect will build as the year progresses. This outlook does not include any revenue contribution from AI glasses, but it does reflect the known operating expenses and investments required ahead of launch. With that, Dave and I will walk through the drivers of our Q1 performance before Adrian provides more color on our financial results and guidance. I'll start with our first strategic priority, scaling our industry-leading omnichannel model and delivering exceptional customer experiences. We focus on 3 initiatives in this area in Q1. First, we expanded our retail footprint. We opened 14 net new stores in the quarter compared to 11 in the prior year period and remain on track to open 50 stores in 2026. These openings included entry into a new market, Baton Rouge, Louisiana, as well as continued expansion in 9 existing markets. Consistent with our strategy, the majority of these openings were in suburban locations as we continue to broaden access to our brand. Importantly, this expanded footprint also positions us well for the future introduction of intelligent eyewear, allowing us to bring the product to customers at scale through a retail experience that supports discovery, education, and service. Next, we drove growth within our existing fleet, particularly through eye care and higher-value products. Exams were a bright spot in the first quarter, growing 30% year-over-year with demand rebounding as weather normalized, highlighting both the needs-based nature of this category and the progress we're making in scaling this part of our business. We are still in the early innings of this opportunity.?During the quarter, we expanded exam services to nearly 90% of stores, rolled out retinal imaging across all active exam lanes, and introduced new tools that reduce the administrative burden for our optometrists and allow them to focus more fully on clinical care for our patients. On the product side, we saw strong customer response to our new collections, including our sport collection, which launched in late April. This has been one of the most requested categories from our customers and represents our first entry into this growing segment of the eyewear market. We designed this collection to seamlessly bridge everyday style with sport-specific functionality, aiming to reach customers looking for products that can keep up with their multidimensional lifestyles. This is our most advanced performance offering and is built in partnership with leading Italian manufacturers that specialize in flexible, lightweight nylon production. It includes performance polarized lenses and wrap prescription capabilities, which we believe is a key area of differentiation. We also focused on delivering value by offering an accessible price point for prescription glasses with prices for our sport glasses starting at $195 for nonprescription and $295 for prescription, compared to competitive products that can exceed $800. During the quarter, we also introduced several new core collections, including Spring 2026 and The New Deco 2.0. These assortments lean into current trends such as 90's inspired oval silhouettes, which are resonating well with younger customers and are helping to drive engagement with that audience. Our $95 frames continue to outperform expectations, reinforcing our ability to deliver exceptional value while also driving mix towards higher-value products like progressives, lens enhancements and other add-ons. Finally, we continue to invest in e-commerce through an increasingly personalized online experience. E-commerce revenue was down 4%, in line with our expectations as we lapped a period that includes our Home Try-On program, which was sunsetted at the end of last year. We expect this headwind to diminish as the year progresses and excluding Home Try-On, underlying demand in the channel was healthy. We are driving engagement and conversion by introducing AI-powered tools like Photo Booth, a feature that leverages our Virtual Try-On technology to allow customers to see themselves as the model directly on product pages. We also unveiled a new personalized recommendations engine to further enhance discovery and relevance. The year-over-year online growth in non-Home Try-On glasses, driven in part by these features reinforce our confidence in the underlying trends of the channel, and the bets we have placed for the future. As we discussed on our last call, contact lens demand moderated late last year. In response, we've taken a more deliberate and disciplined approach to contact customer acquisition, reallocating marketing spend towards the growth of glasses, an area where we can continue to showcase the strength of our brand and grow more profitably. In the quarter, contacts revenue grew mid-single digits with penetration consistent at around 10% of revenue. This year, we are focused on building deeper customer relationships across our holistic vision care offering with exams and glasses serving as the key entry points. Our store footprint and doctor network remain a durable competitive advantage and a sustainable engine for long-term growth, and we have seen strong year-over-year growth in contact lens orders that follow an exam. Ultimately, customers who engage across glasses, contacts and exams generate the highest lifetime value, reinforcing our strategy of serving more of their vision care needs over time. I'll now turn it over to Dave to walk through the remaining two strategic priorities. David Gilboa: Thanks, Neil. Our second strategic priority in 2026 is organizational readiness for our intelligent eyewear launch later this year. This is a massive cross-functional effort. We are building the capabilities and infrastructure required to support both the initial launch and the long-term scaling of this category. We are making targeted investments across our omnichannel shopping experience to support how customers discover and engage with AI glasses.?This includes enhancements in our stores, such as dedicated display bays and improved acoustics alongside a tailored digital experience that enables customers to explore and interact with the product online. At the same time, we are expanding capacity at our optical labs and upgrading business systems to ensure we can scale this complex fulfillment process seamlessly. Marrying the standardized processes of consumer electronics with the precision and customization of prescription lenses isn't trivial, and we're investing to build the systems and infrastructure to do this reliably at high volumes. We are also investing in our brand and go-to-market strategy. We're treating the launch of our AI glasses as a milestone moment to redefine our category just as we did 16 years ago when we first introduced Warby Parker to the world. You can expect to see that same inventive spirit and creative ambition just at a larger scale. These investments are designed to not only support our expansion into the intelligent eyewear category but also establish a solid foundation for growth as we continue to scale our core business. Our third strategic priority is driving brand awareness and customer acquisition, including capturing vision insurance spend. We ended the quarter with 2.7 million active customers, up 4.8% on a trailing 12-month basis and average revenue per customer up 6.9% year-over-year, driven by a favorable mix of progressives, lens add-ons and higher insurance utilization. While we continue to see healthy long-term customer and spend trends, our priority is driving further acceleration in active customer growth, which I'll touch on in a moment. Looking back, Q1 was impacted by a few factors, including weather, tough comparisons against strong prior periods, broader industry softness and flat year-over-year marketing spend. We stayed disciplined on marketing spend as demand fluctuated throughout the quarter. As trends have improved, we are leaning back in with confidence in our ability to deploy that spend efficiently. This includes increased top-of-funnel investment to build awareness. Our recent campaigns, including those featuring Arch Manning, have driven meaningful gains and aided brand awareness. We continue to see a significant opportunity to reach new customers and further educate existing ones, many of whom still think of us as an online-only glasses company. We complemented these broader efforts with more localized activations. In the first quarter, this included community and influencer events in New York with partners such as Happy Medium and Fashion Fiction during New York Fashion Week, helping us engage customers in a more targeted way. As we look to the future, we have several initiatives underway to accelerate customer growth this year. First, we're reallocating marketing spend toward higher return categories, including shifting investment from contacts to glasses. At the same time, we're expanding efforts across additional channels such as YouTube, Reddit and TikTok to broaden our reach and drive higher customer engagement. We also see opportunities to expand our efforts across existing digital channels and direct mail. Second, we're building on the momentum we achieved in Q1 by further integrating insurance into the customer experience. We're increasing insurance-focused messaging in our marketing and are equipping our store teams with ways to better educate customers on how to use both in-network and out-of-network benefits at Warby Parker. In Q1, we delivered strong growth from in-network insurance, which reached approximately 10% penetration, up from approximately 8% in the prior year. We also saw increased adoption of our automatic out-of-network submission tool, which we rolled out to all stores in early March. This is improving the customer experience by making submissions more seamless at the point of sale and facilitating reimbursements.?Since we've rolled this out, we've seen strong early adoption and found that customers using this feature spend more than customers who don't. Our insurance strategy complements our broader marketing efforts and serves as an additional customer acquisition lever. Our pricing philosophy has always been to offer fair, transparent pricing, whether a customer pays out of pocket or uses an insurance. While customers at traditional optical retailers often still pay more than $200 out of pocket even when using in-network benefits at Warby Parker, they can purchase a complete pair of prescription glasses starting at $95.?We've always focused on delivering compelling value regardless of how a customer chooses to pay. At the same time, we recognize that many customers have vision insurance benefits, and we're making it easier for them to apply those benefits when shopping with us. Importantly, insured customers remain among our most valuable, spending more on their initial purchase, selecting progressive lenses at higher rates and returning more frequently over time. Third, we're driving newness across the business to attract new customers and reengage existing ones. This includes recent collection launches like sport as well as preparing for the AI glasses launch later this year. In total, across marketing, insurance and new product innovation, we expect these initiatives to build momentum as we progress through this year. Finally, before handing it to Adrian, I want to highlight our recently released 2025 impact report. Since our founding, we have believed that a business can scale while creating meaningful impact, and this report demonstrates how we're delivering on that commitment. In 2025, we surpassed 25 million pairs of glasses distributed through our Buy a Pair, Give a Pair program, expanded Pupils project to reach more students and continue to grow the Warby Parker Impact Foundation. But what matters most is what those numbers represent, millions of people with improved access to eye care and a model that continues to demonstrate the power of aligning purpose with performance. As we grow, our ability to deepen that impact grows alongside it. This commitment to mission continues to resonate deeply with our team, strengthening engagement, helping us attract exceptional talent and reinforcing the kind of company we're building for the long term. Thank you, team Warby for living our values every day. And now I'll hand it over to Adrian to cover our financial results and guidance. Adrian Mitchell: Thanks, Dave. Good morning, everyone.?After a full quarter on the job now, I continue to be incredibly impressed with Warby Parker's brand leadership, relentless focus on the customer shopping experience and its healthy pipeline of product, service and customer experience innovations. I'm even more excited about the long-term and sustainable growth trajectory for this business. Today, I'll review our first quarter results in more detail and our guidance for the second quarter as we reaffirm our full year guidance for 2026. Let's start with the first quarter. We are pleased to have delivered top and bottom line results that exceeded our guidance in the first quarter. First quarter revenue was $242.4 million, up 8.3% to last year despite early quarter disruption from extreme winter weather and temporary store closures. Retail revenue increased 13.6% year-over-year and e-commerce revenue was $63.6 million, down 4.1% year-over-year due to lapping a period that included Home Try-On. We continue to expect full year e-commerce growth to be in the low single-digit range as the headwind from Home Try-On diminishes throughout the year and underlying trends in the channel remain healthy. Turning to gross margin. In the first quarter, adjusted gross margin was 54.2%, 220 basis points below last year. As expected, the decrease in adjusted gross margin was primarily driven by deleverage in the fixed expenses portion of gross margin, which includes doctor headcount and occupancy as well as the impact of tariff costs related to glasses and increased optical lab and shipping costs. This deleverage also reflects the number of store openings in the quarter and continued investment in exam capacity, which drove 30% year-over-year growth in exams. These investments position us for future growth and support the rollout of AI glasses across our retail footprint. These impacts were only partially offset by selective price increases taken earlier last year in glasses and increased penetration of higher-margin progressive lenses and other lens enhancements. Looking ahead, we expect gross margin tailwinds from more favorable tariff dynamics year-over-year, and we've already seen early results from recent actions. For example, we're driving customers toward higher-margin products and made changes to our Pair and Save offer that are delivering higher average order values. Shifting to SG&A. As a reminder, adjusted SG&A excludes noncash costs like stock-based compensation expense. First quarter adjusted SG&A expenses were $117.1 million, or 48.3% of revenue, 100 basis points lower than last year. This reflects disciplined spend during the quarter as we navigated weather-related disruption and broader demand volatility. The leverage was primarily driven by the sunset of our Home Try-On program, which drove a year-over-year decline in marketing of 90 basis points to 11.6% of revenue. Adjusted non-marketing SG&A was 36.7% of revenue, 10 basis points below last year as we saw leverage from corporate expenses and our customer experience team, partially offset by increased retail compensation as a percent of revenue. For the remainder of the year, we expect marketing spend to increase as a percent of revenue, but still within our low-teens range as we lean into customer acquisition pilots and investments while continuing to drive efficiency in non-marketing SG&A. Importantly, our model continues to demonstrate strong flow-through from revenue to adjusted EBITDA, which gives us the confidence to lean into growth investments while maintaining our profitability targets. First quarter adjusted EBITDA was $29.6 million, which was above our guidance. As a percent of total revenue, it was 12.2%, 90 basis points below last year. Now shifting to capital allocation. We ended the first quarter in a strong cash position of $288 million, up $23 million from the first quarter of 2025. We generated approximately $8 million in free cash flow in the first quarter. We continue to prioritize reinvestment in the business while maintaining flexibility through our $100 million share repurchase authorization. As a reminder, we have a $120 million credit facility expandable to $175 million, which remains undrawn other than $4 million outstanding for letters of credit, providing us with additional liquidity and flexibility. Our partnership with Google also reflects a shared commitment to building the intelligent eyewear category, including a $75 million reimbursement that supports our ability to invest behind AI glasses as we scale the platform together. Now let's turn to our outlook for 2026. We are pleased with trends quarter-to-date yet remain disciplined and prudent relative to our outlook for the balance of this fiscal year. So, after one quarter of results, we are reaffirming our guidance for 2026, which does not include any revenue from AI glasses, but includes the known expenses we expect to incur before and after launch. For the full year 2026, we are reaffirming our prior guidance, which is revenue of $959 million to $976 million, representing approximately 10% to 12% year-over-year growth. Adjusted EBITDA of $117 million to $119 million, which equates to an adjusted EBITDA margin of 12.2% across our revenue range and 130 basis points of expansion year-over-year. Turning to the second quarter. We are guiding to revenue of $235 million to $238 million, or growth of approximately 10% to 11% year-over-year. Adjusted EBITDA of $27 million to $29 million and an approximately 12% adjusted EBITDA margin at the midpoint of our range. This outlook takes into account a recovery from weather-related impacts in the first quarter and a continuation of current trends in the business while maintaining a prudent stance. It also reflects investment in certain growth initiatives that we expect will build momentum and drive greater growth and profit contribution in the second half of the year. We've made solid progress so far this year and are continuing to take share, reflecting the strength of our brand and the value we offer our customers. Looking ahead, we're focused on executing against a clear set of priorities for the rest of the year. With that, I'll now pass it back to Neil for closing comments. Neil Blumenthal: To wrap up, we're encouraged by the strength we're seeing across the business and the progress we're making against our strategic priorities. We look forward to sharing more about our AI glasses closer to launch. Above all, Dave and I want to thank the incredible Warby Parker team for their continued dedication and outstanding contributions to our mission. With that, operator, please open the line for Q&A. Operator: [Operator Instructions] Your first question comes from the line of Mark Altschwager with Baird. Mark Altschwager: To start out, I was hoping you could help us unpack the drivers to the revenue acceleration that's embedded in the annual guide. You mentioned a few initiatives that will build through the year, but you're also lapping last year's price increases. So I just want to understand those puts and takes a bit better. Second, separately, you indicated you're pleased with the start of the quarter. Can you clarify if April is tracking ahead of that plus 10% to 11% Q2 guide? Neil Blumenthal: We're seeing positive trends quarter-to-date, but staying prudent in our guide. Where we're seeing strength is in our e-commerce business, in particular the non-Home Try-On portion of that business. Obviously, we're lapping our Home Try-On program, which we sunsetted at the end of last year. We're also seeing the benefits of some recent initiatives that we expect to continue to bear fruit in the quarters ahead. So that includes some new features around out-of-network reimbursement that we've rolled out to all stores that make it easier for our customers to check the eligibility of their vision insurance coverage and that enables us to file for reimbursement on their behalf. Also the launch of our sport collection, which is sort of our first in the category and some of the efficiency we're seeing in our marketing spend. From a customer perspective, we're seeing stable growth and anticipate acceleration throughout the year. Mark Altschwager: And to follow-up there, can you talk about the AUR trends you're seeing within glasses? It sounds like there's maybe a mix shift towards premium frames. And you just discussed the sport launch as well. How do you expect that to impact glasses AUR for the balance of the year? Neil Blumenthal: So we have a few tailwinds here as well. One is around progressives. As we know, that is an area where we continue to see strength. Also over time, we continue to introduce new collections, whether they're made in Italy or have complex constructions as we sort of leverage the expertise of our internal design team. We also continue to introduce more lens options, including various tents that we introduced towards the end of last year. That all benefits us. We've also made some changes to our Add a Pair and Save program that is expanding average revenue per customer and also has a positive benefit on our gross margins. Operator: Your next question comes from the line of Brooke Roach with Goldman Sachs. Brooke Roach: Neil, Dave, I was hoping you could unpack the results that you're seeing as you look to accelerate your active customer count? How are active customer counts trending on a per store basis as you open new stores versus the active customer count that you're seeing online? And what plans do you have for marketing and store activation plans as you move throughout the year, particularly as you get into the AI glasses launch time line? David Gilboa: Thanks, Brooke. I think it's important for us to provide some context around Q1. As you've heard from many other consumer and retail businesses, Q1 was a challenging macro environment with extreme weather that drove twice as many store closures as last year, lots of negative headlines for consumers, which resulted in consumer sentiment hovering near record lows. And so, we're, while we're pleased with how we exited the quarter and recent trends, it's worth noting that all of our metrics, including customer growth were impacted by these abnormal events in Q1. And when you look at our active customer growth, we report a trailing 12-month metric and over that time frame, the broader optical industry has faced significant pressure on traffic units, customer growth and really growth in the category coming from price. So our mid-single-digit active customer growth coming in spite of those Q1 headwinds, some tough comps and the sunsetting of our HTO program, Home Try-On program, I think, stands out relative to the rest of the category. That being said, we believe that there's lots of opportunity to drive more growth in the future. And those drivers to reaccelerate customer growth come from a few areas. The first is marketing spend. During Q1, we remain disciplined on marketing spend and given demand volatility and ended up with marketing dollars flat on a year-over-year basis and down as a percent of revenue. And given the trends that we've seen recently, we're confident we can deploy marketing dollars efficiently to fuel growth, and we're actively investing behind the highest return areas of the business. As we've mentioned, including allocating more dollars towards glasses where we're seeing some strength and unlocking some new channels. The second factor, as Neil just mentioned, but worth reiterating is that the Home Try-On and e-com dynamics will become more favorable as the year goes on with Home Try-On headwinds abating, and we're continuing to see strong non-Home Try-On-driven e-comm glasses sales. And then we're also benefiting from a number of newer initiatives like insurance expansion, exam strength, new launches like sport. And of course, we believe the AI glasses will drive a lot of traffic and momentum across the entire business. And so taken together, we remain confident in the customer growth assumptions embedded for guidance for the rest of the year and continue to see that when we open stores, they tend to perform in line with our high expectations and continue to be the primary drivers of customer growth for the business. Brooke Roach: Great. And then just one quick follow-up. Can you quantify the headwind that you saw in 1Q from weather and Home Try-On for the audience? Adrian Mitchell: When we think about the headwind with regards to Home Try-On, what we've actually seen is a pretty healthy growth without Home Try-On. Obviously, now that we've actually sunsetted it, we've definitely seen that benefit. Obviously, there's a bit of challenge with regards to weather. But with regards to Home Try-On, we're not lapping it this year. We're seeing pretty healthy growth with regards to year-over-year on the web side of the business. Operator: Your next question comes from the line of Anna Andreeva with Piper Sandler. Anna Andreeva: I wanted to follow-up on the active customer growth. You had previously talked about that younger demo that was pulling back. I don't think you mentioned that this morning. So has that improved? And then secondly, I guess, to Adrian, on the gross margin guidance, I think you still said flat for the year. Can you talk about what's implied for the second quarter? And what kind of a tariff rate are you embedding for the year? David Gilboa: Thanks for the questions. Yes, on the active customer growth front, we've seen consistency within the younger demo. Overall, the category continues the trend of traffic in units. And the younger consumer has been trending in line with kind of our previous commentary. Neil Blumenthal: I would add on the young customers, this is a segment of consumer that, as we all know, is under more stress, whether it's higher-than-usual unemployment rates, high consumer and student debt, that being said, we've never been more competitive for this consumer. Our opening price point of $95, which include premium acetate frames with polycarbonate lenses with anti-reflective and anti-scratch coating remains at that $95 price point from where we priced it when we launched the business in 16 years ago. And again, if we look at industry trends where growth has come almost exclusively from price as our competitors year after year have been increasing price, especially in the last few years, we are more competitive than ever at that price point, which we find that our customers really appreciate. Adrian Mitchell: So let me speak a little bit to gross margin. Let me set the context with regards to the first quarter, and then we'll talk about margin improvement as we actually get through the balance of the year. The main driver of the margin, gross margin rate decrease was really around cost deleverage. So as you saw, we had 30% growth plus in exams, which was driven by our doctors' compensation. Retail occupancy is a bit of a fixed cost in addition to opening 14 stores. But we also saw some compounding additional expenses as we were in a position where we had to close labs and stores, but also spend money in our recovery efforts. As we look ahead, the key thing to keep in mind here is that there are two drivers of margin going forward, but let me focus on gross margin in particular. The biggest thing is that we have a number of healthy initiatives that we're actually introducing. So on the gross margin side, the first thing we would say is that we're lapping more favorable rates this year versus last year. That will be a contributor that you start seeing in April. The second thing is we have a number of gross margin initiatives that are already in flight and already showing benefits as we look at quarter-to-date. As Dave and Neil mentioned, there are some changes to out-of-network states that's improving our gross margin position. The mix towards higher-margin products is what we're seeing in our data. And obviously, the momentum that we've seen in sport, which starts at $195 nonprescription and $295 prescription is definitely accretive to our business. The new dimension that we're also adding in are some operational initiatives that will improve our gross margin as we progress through the year. So efficiencies in our labs would be one example where we some of that up on the gross margin line. As we think about EBITDA margin, we'll continue to see leverage in terms of leverage against non-marketing SG&A. But overall, we're really focused on a number of profit-driving initiatives that will impact both gross margin as well as EBITDA margin for the balance of the year. Operator: Your next question comes from the line of Oliver Chen with TD Cowen. Oliver Chen: Hi Neil, David and Adrian, regarding your use of the glasses, what have been your biggest surprises? And what would you say might the top three use cases be? And related to this, there's been a lot of demand in the marketplace already. On fulfillment, on the AI glasses and the supply chain, what are you doing to prepare for that? Because some of the items components could be in shortage. And would love if there's a framework, Adrian, for the margin parameters because these glasses have unique characteristics in terms of cost as well as what you're thinking in terms of the service levels, I'm sure you'll add. A follow-up question, Adrian, on the traffic and unit as well as the interplay with your strategies regarding marketing and demand creation. How are you thinking about that interplay in order to just try to future-proof the business to that kind of volatility that you've been discussing? David Gilboa: Thanks, Oliver. I'll take the AI glasses question first. I'd say in general, we're super excited about the progress that we're making and our teams are working around the clock with our partners at Google and Samsung to build really incredible products. And as it relates to supply chain, we feel like we're in a well-positioned given the strength of the partnership that we have with those companies and the foresight and the access to components as a result. And as Neil mentioned, we've been wearing these glasses internally. And the moment you put them on, it becomes immediately clear that they offer a fundamentally more natural and human way to experience and interact with the world rather than looking down at screens in your hands. And for most of human history, interaction has revolved around voice, eye contact and shared context with those around you, screens and keyboards are a massive anomaly to how humans are used to interacting. And we're most excited that intelligent eyewear will move us back to a more natural human way of interacting. I checked my screen time the other day, and it was down 60% since I started wearing these AI glasses. And so underneath the hood, there's really incredible technology and some really magical use cases that we and our partners will talk about and demonstrate as we approach launch. But really the human element of bringing our attention back to the real world and away from screens is probably what we're most excited about. And of course, for that vision to become a reality, it means that the product has to look great, feel comfortable for all day wear, accommodate a range of prescriptions and work seamlessly from day one. And so we're working hard to achieve all that, which means that we've been deliberately investing in everything from supply chain capacity to advanced lens fulfillment and just making sure that all the elements line up for a very successful consumer launch later this year. Adrian Mitchell: Great. Oliver, great to be with you. My two use cases: one, math equations, which is actually pretty amazing. And the second is really around translation, given all the languages that can be translated. With regards to AI glasses economics, we'll share a bit more about the economics later in the year. So, I won't be able to speak to the margin impact at this point. That being said, our current guidance does not include AI glasses. So just a quick reminder there. To your point on demand, as we think about the balance of the year, I'll actually point you to kind of three things that we're focused on. The first is, as Neil described, is continuing to build on the progress that we've already made. We see momentum in exams. We see momentum in average revenue per customer, insurance, our Add a Pair and Save has actually driven higher AOV. But I think the biggest driver that we're seeing is just the continued newness, the new collection. Sport is doing well. Deco 2 is doing really well. So we're very pleased with the newness that's actually driving momentum in the business, and we've seen that quarter-to-date. The second thing that Dave pointed out is we no longer have the HTO headwinds as high as they were in the first quarter because we expect that to abate over the course of the year. We do expect e-commerce to have low single-digit growth this year, and we're definitely on track to achieving that. But the third thing, I think, to your point around demand is we're being very deliberate in the second quarter around piloting and investing in new tools and new tactics to build awareness, which ultimately will actually help us continue to build demand. And this is both in our digital channels as well as our direct channels. And so that experimentation really positions us well for the back half of the year. Operator: Your next question comes from the line of Paul Lejuez with Citigroup. Brandon Cheatham: This is Brandon on for Paul. I wanted to follow up on the active customer growth. Just do you view the first quarter as a low point for the year? Neil Blumenthal: You're a little bit hard to hear. We're having trouble hearing you. Brandon Cheatham: Is that better? Can you hear me? I want to follow up on active customer growth. Do you view 1Q as a low point for the year? And I understand weather was a factor, but how should we think about that with eye exams up 30% in the quarter? Are you seeing a shift in the eye exam customer converting? Or was there a timing issue there? I guess just any more details you can share on some of the offsets? Neil Blumenthal: Yes. We are expecting active customer growth to accelerate throughout the year. As we discussed earlier, we have a bunch of marketing initiatives underway and are already seeing green shoots this quarter. Brandon Cheatham: And anything on the eye exam customer converting up 30% is pretty strong growth, but your active customer growth wasn't quite as strong. So just are there timing issues there? Are they not converting like you expected? Neil Blumenthal: We're still in our early days of holistic vision care. So as we think about our consumers, we're still letting people know that we have stores. And then once they know that we have stores that we have a store near them and then that we offer eye exams. We have 90-plus percent of our stores offering eye exams, which is great. And we've been building out capabilities from our techs that help support our optometrists to the technology that our optometrists use to increase efficiency and exceptional patient care and experiences. There sometimes can be a lag between an eye exam and a purchase, but our conversions tend, are what we consider same-day conversions tend to be at or exceed industry norms. Brandon Cheatham: Got it. That's helpful. And to follow up on the increased costs related to your AI glasses rollout that's included in the guidance. I guess, should that build as we get closer to launch? Are those onetime in nature or kind of ramp? And then are you training your staff now or adding labor hours? Or does that come closer to launch as well? Adrian Mitchell: I'll take that. As it relates to the cost, the key thing to keep in mind is that those costs are actually shared between Google and Warby Parker. But to your point, we are investing in training. We are investing in labs. We're investing in our stores. We're investing in systems. We're investing in R&D. We're investing in branding. And we do expect a number of those expenses to show up, obviously, prelaunch, but also there will be some additional costs post launch. But at that point, we would certainly have demand in our favor. So when you think about some of the expense items that we've reflected in our guidance for Q2, to your point, Brandon, that's really the investments in preparation for a launch later this year. Operator: Your next question comes from the line of Dylan Carden with William Blair. Dylan Carden: Adrian, were those costs at all in the first quarter? Is that some of the add-back from an EBITDA from a system standpoint? Or is that just all the optometrist system support? Adrian Mitchell: It's really the cost in the first quarter, especially when you think about the deleverage was really around our doctors and recovery efforts. And so when you think about closing our labs, closing our stores, the recovery efforts, some of the additional costs with snow removal and those sorts of things, that certainly added cost as we think about the first quarter. But the cost with regards to AI glasses was more moderate like what we expect and what we saw in previous quarters. Dylan Carden: More so in the guide for the second quarter from a cost standpoint. Is that fair to assume? Adrian Mitchell: We elevated in the second quarter. That's why you see a little bit of additional expense in the second quarter guide. But obviously, we'll benefit from those investments in the back half of the year. Some of those investments also include some of the brand awareness efforts that we referenced a bit earlier in terms of some pilots and investments around building brand awareness in preparation for later this year as well. Dylan Carden: My actual question is, you're seeing an absolute explosion in demand for this category. Clearly, that's tax refund related and on the heels of 5 years of sort of a low in the repurchase cycle. And so I'm just curious, I get that there might be hesitation to kind of fully invest in that trend given that it could be pull forward. Are you seeing that? And if there's that level of volatility out there in the market, how do you navigate that? Neil Blumenthal: In regard to kind of the explosion in demand, I think there are a few different data sources. I'm not sure which one you're referring to that kind of track category demand. Certainly, we've seen a lot of consumer demand for AI glasses that exist in the market, and that's been driving a lot of excitement and adoption and that makes us even more eager to have our own product in market later this year. And we believe that our offering will be differentiated and have unique features and properties that we're excited to unveil. In the past, we really haven't seen tax refunds have a material impact on our business, the same as it may on others in the category. So we don't view that as kind of a material factor in the trends that we're seeing and aren't anticipating kind of a significant pull forward as a result. Dylan Carden: And then just to be clear about this, when you speak to efforts to reignite actives, is that code for sort of marketing deleverage? AI or smart glasses should presumably have some, if not significant, traffic effect. Are you kind of baking some of that even though you're not baking in the revenue? And just remind us the relationship between store growth and active customer growth as far as sort of what we should expect from where we sit, right? I mean you've been growing stores high teens for 3 years straight. I get it's a trailing metric, but it continues to kind of come in. And you're getting this question. Is there a potential need, effort, willingness to adjust the store strategy to some extent if you kind of see that disconnect continue? Adrian Mitchell: Let me go ahead and take that. With regards to the investment in active customer growth, there are really two dimensions: the amount of marketing spend, which we remain committed to be in the low teens, and the way that we actually deploy our marketing tactics, both in the digital channel as well as the direct channel. We are experimenting with some different digital channels. We're looking at some different tactics in order to really grow that active customer number. And we'll be able to speak more to that as we get into our next earnings call and speak to the results that we've seen in Q2. With regards to store growth, the reality is there are a number of dimensions that you have to think about. So when you think about street locations, which tend to be super high-volume locations versus grocery-anchored, very different volume profile. So the actual store count is probably not a good indicator of the actual dollar volume because different stores are going to have different volume profiles. Our stores are meeting our expectations. We're very pleased with what we're seeing with regards to our new stores. They're certainly benefiting from the elevated average order values. They're benefiting from increased conversion, which we've seen over the course of the year. But it's really a little bit of apples and oranges, even though we do focus on our new stores really providing access to customers in a physical dimension in new markets and in different neighborhoods in existing markets. Neil Blumenthal: Yes. The other factor there is e-commerce and our Home Try-On program, where if you look at the blended customer number that's across channels. And as we've noted, we sunset our Home Try-On program after kind of spending a few quarters winding that down. And so that has served as a headwind that will abate as we move throughout the year. Operator: We have time for one more question. This question comes from the line of Janine Stichter with BTIG. Janine Hoffman Stichter: Just want to dig into the vision insurance side of things. Nice to see the growth. I think you said 10% penetration, whereas I think you said 60% of your customers have insurance. What's the realistic target penetration? And maybe speak to some of the initiatives as you bridge that gap? And then I would also be curious if you have any stats on how much the insurance customer spends versus the uninsured consumer. Neil Blumenthal: Sure. We think about insurance sort of in two ways. One is how do we capture more lives in network. And then of that pool of in-network lives, how do we get them to spend with us? And right now, we have 35 million lives that are in network at Warby Parker, and they can come and seamlessly use their insurance. And as we expand that, it then takes time for those individuals to know that we're in network and then actually need glasses or primary eye care. Second, we think a lot about how do we make it easier for people to spend their out-of-network benefits with us. And that's where we've made tremendous progress over the last 6 months as we've made it easy for individuals in store to check their eligibility and then for us to file for reimbursement on their behalf. With both in-network and out-of-network insurance customers, we do see higher average order values and higher customer satisfaction as well. Adrian Mitchell: Just to build on that very briefly, we're very pleased to see the increased penetration of insurance usage. And we believe, to your point, Janine, that there's tremendous headroom still ahead of us. As we think about our branding and awareness efforts, this dimension of being able to use your insurance with Warby Parker is certainly a dimension that we want to lean into in order to really take advantage of closing the gap on that headroom. The one thing that we're very pleased with also is we did scale to all stores the out-of-network option, and we've seen tremendous traction. So we're very pleased with that. But as Neil said, when you look at a cash-pay customer versus a customer either using in-network or out-of-network benefits, the average order value is meaningfully higher. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to Scholar Rock's First Quarter 2026 Conference Call. [Operator Instructions] This call is being recorded on Thursday, May 7, 2026. I would now like to turn the conference over to Scholar Rock. Please go ahead. Laura Ekas: Good morning. I am Laura Ekas, Vice President of Investor Relations at Scholar Rock. With me today are David Hallal, Chairman and Chief Executive Officer; Akshay Vaishnaw, President of R&D; Keith Woods, Chief Operating Officer; and Vikas Sinha, Chief Financial Officer. During today's call, David will provide introductory remarks and a business update. Akshay will review our R&D progress. Keith will provide an update on our commercial readiness activities, and Vikas will provide a financial update. We will then open the call for questions. Before we begin, I'd like to remind you that during this call, we will be making various statements about Scholar Rock's expectations, plans and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any future date. I encourage you to go to the Investors and Media section of our website for our most up-to-date SEC statements and filings. With that, I'd like to turn the call over to David. David? David Hallal: Thank you, Laura, and good morning. Thanks to everyone for joining our first quarter earnings call. Scholar Rock is positioned for a pivotal year ahead. To that end, today, I am very pleased to announce that the FDA has accepted for review our biologics license application for apitegromab for the treatment of children and adults living with SMA. The agency has assigned a PDUFA action date of September 30. Importantly, the accepted BLA includes 2 fill-finish facilities, Catalent Indiana and a second U.S.-based facility, providing Scholar Rock with 2 independent paths to apitegromab approval. As a reminder, the sole approvability issue for apitegromab noted in the complete response letter last September was related to observations identified during a routine general site inspection of the Catalent Indiana fill-finish facility, which is owned and operated by Novo Nordisk. Since our in-person Type A meeting with the FDA in Q4, we have continued to work constructively and collaboratively with the agency, and we have made steady and rapid progress. During the first quarter, we made meaningful advancements at Catalent, Indiana and our second fill-finish facility. And with our ongoing open communication with the agency, we resubmitted our apitegromab BLA in late March in complete alignment with the FDA to include both facilities. This approach underscores the shared understanding between the FDA and Scholar Rock of the unmet need in the SMA community and the shared urgency to bring apitegromab to children and adults in the U.S. as quickly as possible. I would like to now provide an update on the status of each of these 2 sites. As it relates to Catalent Indiana, we are pleased that following acceptance of our BLA, the FDA completed an unannounced reinspection of the facility. This timing was in line with our expectations as the FDA had noted following multiple engagements with Novo in Q1 that they would conduct an unannounced inspection following routine manufacturing activities, which resumed in late February. We are pleased that the inspection was completed in early Q2 and in accordance with FDA guidelines, the agency has up to 90 days to classify the facility. As it relates to the second fill-finish facility, we continue to be pleased with our ongoing meaningful progress. Importantly, the entirety of the apitegromab drug product required for FDA review and potential approval has been filed. From a commercial supply standpoint, we are well positioned as we expect to have ample commercial apitegromab available from the second facility in early Q3, well ahead of the September PDUFA date. We remain committed to the SMA community, and we are grateful that significant progress continues to be made at a rapid pace. Our U.S. commercial team continues to advance the critical activities and capabilities required to deliver a seamless launch and support patients from day 1. Importantly, the team stands ready to launch apitegromab immediately upon approval at any time prior to, and including the September 30 PDUFA date. In addition to the U.S., we continue to look forward to serving children and adults with SMA in Europe. The review of our MAA is progressing very well, and we expect a CHMP opinion near midyear. We are building momentum with launch readiness activities, and we continue to anticipate a launch in the second half of the year, beginning with Germany. We know it is not a matter of if, but when apitegromab will be approved for children and adults with SMA, and Keith will discuss the continued progress we are making with commercial preparations and our disease awareness initiatives shortly. We continue to advance our world-leading anti-myostatin pipeline with enrollment in our Phase II OPAL study evaluating apitegromab in infants and toddlers with SMA, the anticipated initiation of our randomized Phase II study in patients with FSHD and progress with subcutaneous apitegromab and a novel high potency anti-myostatin antibody, SRK-439 currently in Phase I. Akshay will discuss these programs in greater detail shortly. Turning now to the balance sheet. We are pleased to have ended the first quarter of 2026 with $480 million in cash, cash equivalents and marketable securities. This cash balance includes the drawdown of an additional $100 million from our debt facility, which we took in March. Our cash balance also reflects net cash proceeds of $98 million from our ATM program during the quarter. Vikas will provide more details later in the call. We are building on a solid foundation for our company's growth, which we believe will be steady and consistent through the end of this decade and well into the next as we prepare to serve up to 35,000 children and adults living with SMA around the world who have received at least one SMN targeted therapy. Beginning with SMA, we are excited to be shaping the future of treatment for patients living with rare and devastating neuromuscular diseases. And with that, I'll now turn the call over to Akshay. Akshay? Akshay Vaishnaw: Thanks, David, and good morning, everybody. We're very pleased with advancements in our world-leading anti-myostatin pipeline during the first quarter. Turning first to apitegromab for children and adults with SMA. We're delighted to share that the FDA has accepted the apitegromab BLA. As a reminder, the BLA was resubmitted in alignment with the agency to include both Catalent Indiana and a second U.S.-based fill-finish facility. The approach provides Scholar Rock with 2 independent path to apitegromab approval by the PDUFA action date of September 30. We're gratified by the agency's continued support since the CRL last September from the constructive and collaborative in-person Type A meeting in November to the early March Type C meeting and the current acceptance of the BLA. Throughout, the agency has appreciated the high unmet need in the SMA community, and we now look forward to the final steps in the U.S. regulatory process. Reflecting the agency's vigorous efforts, we were pleased most recently with the timing of the FDA's unannounced reinspection of Catalent Indiana. For FDA guidelines, the agency now has up to 90 days to classify the status of the facility. I'd now like to turn to our second fill-finish facility, where we continue to make meaningful progress. As David noted, the apitegromab drug product required for FDA data review and potential approval has been filed, and we expect to have ample commercial apitegromab from the facility in early Q3 ahead of the September PDUFA date. Based on the significant progress at both facilities, we anticipate approval of apitegromab for children and adults with SMA, which could be supported by either or both facilities by the end of the third quarter. Turning now to Europe. Our MAA for apitegromab for the treatment of children and adults with SMA continues to progress well through EMA review. As evidence of the progress, we have planned to be with the EMA recently for an oral explanation meeting. However, because we and the EMA were able to align prior to the scheduled meeting, we mutually agreed that the oral explanation was no longer necessary. As we highlighted previously, approval in Europe also requires FDA clearance for the Catalent Indiana facility. Based on our discussions with EMA, they're aware of the progress at Catalent Indiana and are comfortable with the review time line that accounts for the FDA's classification as site. We continue to be very pleased with how the review is progressing, and we anticipate a CHMP opinion in the middle of the year. Turning to our pipeline. Let me start with the Phase II OPAL trial. We continue to enroll and dose patients in this study, which is evaluating apitegromab in infants and toddlers under the age of 2. As a reminder, this trial is enrolling participants who have been treated with an SMN1-targeted gene therapy, or who are receiving ongoing treatment with an SMN2-targeted therapy. This study is important because it is anticipated to expand the impact of apitegromab to the full spectrum of patients, including those treated with Zolgensma. In addition, we believe early intervention with apitegromab could support muscle during a critical early development phase, potentially improving motor outcomes in the youngest of patients with SMA. Turning now to our next indication for apitegromab, facioscapulohumeral muscular dystrophy or FSHD. FSHD is a rare, devastating neuromuscular disease with significant unmet need. More than 30,000 patients are diagnosed in the U.S. and Europe alone, and there are no approved therapies. We prioritized FSHD as the next indication for apitegromab for 3 key reasons: First, the significant unmet need; second, the compelling preclinical data from the gold standard FLExDUX4 mouse model that provides mechanistic rationale for apitegromab in FSHD. And finally, as shown on Slide 11, data from randomized studies in FSHD, which suggests muscle mass can increase and has the capacity to show functional benefit. For example, in studies of either rigorous physical therapy or treatment with anabolic agents, patients with FSHD demonstrated increases in lean mass and muscle function. These data suggest that apitegromab as a monotherapy may have the potential to bring important benefit to FSHD patients. We're very pleased with the progress of activities to support the initiation of our Phase II study called FORGE in the middle of this year. Enrollment will commence soon in this randomized, double-blind, placebo-controlled trial, which has a sample size of 60 patients. We're also advancing 2 additional programs in our world-leading anti-myostatin pipeline, a subcutaneous formulation of apitegromab and SRK-439. In our subcutaneous apitegromab program, we showed some very exciting data from a Phase I study in January, which demonstrated that subcu apitegromab appears to have favorable bioavailability and a pharmacodynamic profile comparable to IV administration. Additional development activities are ongoing, and we continue to plan for engagements with U.S. and European regulators later this year following approval of apitegromab. Turning now to SRK-439, our high potency, high affinity subcutaneously administered myostatin inhibitor, which we discovered by leveraging our world-leading expertise. We're very excited about this program and dosing in our Phase I healthy volunteer study is progressing well. We expect to have top line data from this study later this year. In closing, we're executing with urgency to bring apitegromab to children and adults with SMA, whilst in parallel working to maximize our impact for patients with apitegromab and our world-leading anti-myostatin pipeline across a range of rare devastating neuromuscular diseases. With that, I'll now turn the call over to Keith to discuss our commercial launch preparations. Keith? Robert Keith Woods: Thanks, Akshay, and good morning, everyone. With the BLA accepted by the FDA, our team continues to operate with urgency as we prepare for the launch of apitegromab immediately upon approval, which may be granted at any time through September 30, 2026. Nearly a decade after the introduction of SMN-targeted therapies, muscle strength and motor function remain the top unmet need with 95% of patients continuing to experience persistent and progressive muscle atrophy. That limits function and independence. As further evidence of the unmet medical need, data shared with us by Cure SMA show that an estimated 1/3 of people living with SMA in the U.S. have received 2 or more SMN-targeted treatments, either sequentially or in combination. This data again underscores the significant opportunity we have with apitegromab, the world's first muscle-targeted therapy. Our U.S. customer-facing team continues to make significant progress in the field with disease education, awareness around the unmet medical need and reinforcing a broader understanding of SMA as a disease which consists of both the motor neuron and the muscle, the principal organ impacted by the disease. In the U.S., we have achieved significant reach across the approximately 140 SMA treatment centers, 2,600 prescribing physicians and their multidisciplinary care teams. Through these engagements, our field team is working to establish case flows on a center-by-center basis to ensure we are well positioned to support the SMA treatment centers once a treatment decision is made. This includes preparations to launch our patient services program, Scholar Rock Supports. This program is designed to provide comprehensive and individualized support to patients, caregivers and providers. In the first quarter, we had a meaningful presence at the Muscular Dystrophy Association meeting in March. During this meeting, our team further engaged with health care professionals. As one example, we hosted a very well-attended industry forum called going beyond the motor neuron to the muscle, expanding the focus of SMA care. We also remain highly focused on patients and community activation. We are building on our disease awareness campaign called Life Takes Muscle, and we continue to have numerous in-person patient and patient advocacy group engagements. Turning to U.S. reimbursement. Our market access team is advancing discussions with national and key regional payers as well as Medicare and Medicaid. With this extra time, we've been able to go deeper and broader across the range of payers. We are ready and well positioned for a successful launch of apitegromab in the U.S. immediately upon approval. Scholar Rock is also making significant progress in Europe. We have established our European headquarters in Switzerland. Also in Germany, where we expect to launch apitegromab upon EMA approval, our local leadership is on board. We have hired our medical and commercial field teams, and we are actively enrolling patients in our compassionate use program. We are making meaningful progress with reimbursement planning to enable rapid patient access. In the broader region, we are advancing reimbursement dossiers in multiple countries, strengthening our distributor relationships and building our EMEA infrastructure to support future commercialization. Additionally, we had a significant presence at the SMA Europe meeting in March in Budapest. Among other high-impact activities, we hosted an SMA disease education workshop and a health care professional symposium, where the attendance reflected a high interest in further understanding SMA and the unmet needs in this disease. In closing, we are investing with discipline to build the commercial foundation necessary to support a world-class launch and to achieve our long-term ambition to bring apitegromab to the estimated 35,000 patients living with SMA around the world who have received at least one SMN-targeted therapy. We are ready to usher in the next phase of innovation for children and adults with SMA, one patient, one caregiver and family at a time. With that, I'll turn the call over to Vikas. Vikas? Vikas Sinha: Thank you, Keith. As we have shared previously, our financial objectives for 2026 remain focused on supporting our commercial build to deliver a strong apitegromab launch, funding R&D activities to advance our pipeline and expand our leadership in the myostatin and muscle space and continuing to evaluate opportunities to strengthen our balance sheet in a way that supports long-term shareholder value. In keeping with these objectives, I'm pleased to provide our first quarter financial results. For the first quarter, we reported $102 million in operating expenses, which included $80 million in noncash stock-based compensation. Excluding stock-based compensation, operating expenses were $84 million. Turning to our balance sheet. We are very pleased to have ended the first quarter with $480 million in cash, cash equivalents and marketable securities. During the quarter, we strengthened our cash position with the drawdown of an additional $100 million from our existing debt facility, which we took in March. We also had net cash proceeds of $98 million from our ATM program during the first quarter. Looking ahead, upon FDA approval of apitegromab, we will have an option to draw down an additional $150 million from our existing debt facility, and we plan to monetize a priority review voucher to further strengthen our balance sheet. We continue to operate with a tight financial plan and our prioritized investments remain focused on our apitegromab commercial launch readiness in the U.S. and Europe, strengthening our supply chain to support our expanding pipeline and our anticipated growing global commercial demand for apitegromab over time and advancing our highly innovative clinical programs that Akshay discussed earlier in the call. With that, I will turn the call back to David. David? David Hallal: Thanks, Vikash. Scholar Rock is poised for a transformative year in 2026. Our priorities are clear, and we are executing with focus, discipline and urgency as we seek to deliver the world's first muscle-targeted therapy to children and adults living with SMA, while also laying the foundation to realize our ambition to develop life-transforming therapies for patients with additional rare and severe neuromuscular diseases globally. We are ready now more than ever to usher in the next phase of innovation forth SMA community, and we look forward to updating you on our continued progress. And with that, we'll now open the line for questions. Operator? Operator: [Operator Instructions] And the first question comes from Eric Schmidt with Cantor. Eric Schmidt: Congrats on all the progress. Maybe just a couple of quick questions on apitegromab approval time lines in the U.S. Team, I know it's not your facility, the Catalent facility, but are you aware of any field notes that were provided to Novo following the reinspection? And then I guess I'm also curious about the statement that you reiterated a couple of times now that approval may come at any time. I know that probably reflects the shared understanding and communication you have with the FDA, but just curious about the intent of that statement. David Hallal: Thanks, Eric. I'll take both. And look, we were obviously very pleased today to have announced that the FDA accepted the BLA with 2 fill-finish facilities. And to be clear, it was a Class II resubmission with a PDUFA action date of September 30, which is sort of per protocol for manufacturing-related issues. So we anticipated that. And of course, as a reminder, we submitted that BLA in complete alignment with the FDA ahead of the reinspection of Catalent Indiana commencing. Look, like since that in-person Type A meeting that we had back in November, all the way through the Type C meeting that we had in early March, we have just been really pleased with the high level of engagement from the agency and sort of the consistent pace and progress across this period of time. So look, what I would note about the reinspection is we were pleased with the timing -- we think the FDA has done their job. We believe that Novo has done their job. And per FDA guidelines, it's really now a 90-day period of time for the FDA headquarters to do their work and make a determination on the classification of the facility. And I think, again, underscoring sort of the 2 paths to approval. I am gratified that our team has made massive amounts of progress with our second fill-finish facility. As noted today, all of the drug that is required for the FDA's review in this BLA at that second facility has been filed. And that product would be available in early Q3. So what you kind of see here, Eric, when we talk about we have to be ready at any time prior to and including September 30, is that let's just do a little bit of math together. The FDA is now in a 90-day period of time to determine classification of Catalent Indiana. We have product that's going to be available in early Q3 from the second fill finish. That sort of brings you to something that is well advanced from the September 30 PDUFA date. And so we just know that we need to be prepared because many times, Class II resubmissions and action can be taken by the agency well ahead of that PDUFA date. And that's really what we mean about it any time prior to. We'll continue to work with the FDA collaboratively, and we continue to be really excited with their level of engagement, again, as I noted from our Type A meeting right through this moment today. And we'll keep you guys apprised on that progress. Operator: [Operator Instructions] And the next question will come from Mani Foroohar with Leerink Partners. Lili Nsongo: This is Lili Nsongo on for Mani. Congratulations on the progress. So now that the reinspection has occurred for the Catalent facility, how much risk -- or maybe I should say, how much confidence do you have in a successful non-experimentated classification for the facility? And how should we think about the capacity split between the 2 facilities in, say, the first year of launch? David Hallal: I didn't get the second part of that question, Lili. On the first part, like as I noted to Eric, we feel like through this process, really since the sole approvability issue with our initial file was the general site inspection that the FDA had at Catalent Indiana. We know that Novo has been working really hard on that site with their initial remediation plan and then subsequently, their follow-up remediation with the FDA. And with a lot of engagement in Q1 with the FDA, as we previously noted, they had an early Q1 meeting that was then followed by a site visit and then subsequently in early Q2, the reinspection. So I think we just need to respect that the FDA has really worked diligently, which we think is a rapid time line given the situation at Catalent Indiana to reinspect that facility. Based on their work, Novo has done their work, and now we want to be respectful of the time that the FDA will now take to make a classification decision. I think importantly, what Akshay and I were noting today is that we have a lot of drug vials from both facilities. And I think if any one of those 2 were to be the basis of the approval, each is going to have plenty of product to launch with. So I think that's great news. I think one thing that maybe isn't lost on us is when you take a 90-day time line for up to a 90-day time line for the FDA to reclassify the Catalent Indiana facility. And then you think about an early Q3 timing of having product available commercially from the second fill-finish, there's definitely an opportunity also that our file could be approved with both fill-finish facilities. And I think that, that was one of the things that Akshay and I wanted to communicate as well. So a lot of optionality here, a lot of good news for patients, a lot of good news for the SMA community. I am really grateful to our internal team at Scholar Rock for doing something pretty remarkable here with our second fill-finish facility, but also grateful to the FDA and Novo for the continued progress at Catalent Indiana, and we will keep you guys apprised at the updates across the board on our application. Lili Nsongo: Great. The second part of my question was about commercial supply capacity split between the 2 facilities, which you also answered. So thank you. Operator: And the next question will come from Tess Romero with JPMorgan. Tessa Romero: I actually wanted to ask a commercial question this morning. Now that Itvisma is fully approved for ages older than 2 years old, how are you thinking about apitegromab being able to be used in combination with that therapy if and when you are approved? David Hallal: Yes. Thank you, Tess. Keith can address how we're thinking about that opportunity. As you noted today, really important information from Cure SMA -- in general, we are prepared to launch apitegromab at any time between now and up to September 30. And I think the incredible work that Akshay has done with our team and engaging the FDA there's going to be a very significant opportunity to serve patients with SMA. So Keith, do you want to comment on really more than anything else, the dynamics in the marketplace and your preparations for launch? Robert Keith Woods: Sure. Thanks for the question, Tess. I guess what I'd say, first of all, is we believe that regardless of the therapy, but any type of a therapy that an SMA patient can potentially benefit from an SMN-targeted therapy, we're agnostic as to which one the treating physician choose because we think that they go hand-in-hand along with our muscle-targeted therapy with apitegromab. Now specifically with Itvisma, in our SAPPHIRE study, we did not study patients that were previously on Zolgensma. As Akshay has noted several times, we are studying them in our OPAL study. And we also shared with you that we do have post Zolgensma patients in our EAP program. So there's some experience out there with it. But as far as being able to utilize apitegromab with it, I think it's going to depend upon the label and where the policies come out with the payers. Operator: And our next question will come from Cory Kasimov with Evercore. Cory Kasimov: I wanted to ask you about the ongoing CHMP review. Coming out of the recent oral explanation, have the questions there have been largely similar to what the FDA has inquired about during its review and now just really boils down to CMC? Or are there other nonmanufacturing items that EU regulators are still trying to get their arms around? David Hallal: Thanks, Cory. Akshay? Akshay Vaishnaw: Yes. Thanks. So obviously, we don't get into the back and forth of regulatory reviews, FDA or EMA. The one thing I can say is that, that oral explanation that was scheduled led to a very good dialogue in advance of the meeting, and we were very happy with the pre-meeting alignment, which led to mutual agreement that there was no need for the meeting. And in fact, as a result, we obviously look forward to continued progress with the review and ultimately to launching the drug in Europe for children and adults with SMA. As to the remaining time line, I commented in the formal remarks that the Catalent Indiana facility continues to support the application, and we look forward to a decision around midyear. But I think overall, the progress has been excellent. David Hallal: And then just tagging on, Cory, just to tag on to Akshay, and Akshay has mentioned this multiple times. We've been having very good open dialogue with the European regulators about what's been happening here with the FDA and Catalent Indiana. So it's been very collaborative, like everything going on here has been a topic of discussion in Europe, and they've really been very flexible in working with us on timing. Operator: And the next question will come from Michael Yee with UBS. Michael Yee: Two questions, really quick. One is a follow-up, just in terms of the fill-finish facility, the second one. Can you remind me -- previously, I recall there was different stability testing and things that had to be completed, but it sounds like this site had sort of been pulled very much forward and was filed earlier, which was fantastic. And so it's the understanding that either of these sites can support approval by September 30, and that's why there's definitely increased confidence and there's not necessarily such a reliance on the Indiana site. And so I have that correct. And the second question is regarding a potential approval and indications. I know previously, there has been some discussion around the broadness of the label, type 1 versus type 2 in different age groups, given the primary endpoint was on a certain age group definition. Can you just remind us about your confidence around general broadness of the label and how we should think about that? David Hallal: Michael, great questions. I'll start on the 2 fill-finish facilities and then Akshay will take up the label. So yes, I mean, I guess at the end of the day, we have an enormous amount of confidence in our BLA as the headline news of what's changed from late last year to this year is really the fact that we have 2 fill-finish facilities in our BLA. One of those, we expect reclassification within a 90-day window from the closeout of the inspection. And subsequently, in that second fill-finish facility, as you aptly noted, we have made massive amounts of progress in accelerating that where all of the drug that is required for the FDA's review and approval has been filed and that drug would be available commercially in early Q3. So when you kind of take that 90-day window, the up to 90-day window per FDA guidelines for the Catalent Indiana facility, when you look at that window of commercial apitegromab being available in early Q3 from the second facility, we are very confident in this window that we're talking about within Q3 and up to the September 30 PDUFA. And I think that what I'm most gratified about is we try to live here at Scholar Rock by a deep commitment to the patients and families that are impacted by SMA. And I'm grateful to the team that we took it upon ourselves to say, okay, let's do better this time than we did last time. Let's not rely on a single fill-finish facility. Let's have multiple paths to get to that point where we can deliver the first ever targeted therapy to patients who are living with this disease and the families that are impacted by this disease, and I think we've been able to do that. And tying -- dovetailing nicely into that is the question that you had on the label and our opportunity to serve a meaningful percentage of the community that is impacted by this disease. And I'll turn it over to Akshay to comment on that. Akshay? Akshay Vaishnaw: Yes. Thanks. Mike, vis-a-vis the label, of course, it's premature to comment on the exact nature of the label before the regulatory deliberations are finalized here in Europe. What I would say is that, generally speaking, the regulators have taken a very important approach to the labels for SMA products. They look at the enrollment criteria of the pivotal studies, which exactly is the population. They look at the portability of the mechanism across the spectrum of disease, and they look at the unmet need. And so I feel like they've been very good with those principles to serve the community. We've been working with them. As you know, when we got the CRL, the draft label was completed. The one outstanding issue was the manufacturing issue. And both in U.S. and Europe, all I can say is we've had constructive regulatory dialogue throughout the period last year and this year, and we look forward to launching this product for children and adults with SMA. David Hallal: And Michael, Akshay and I would just note that as we previously have disclosed that where we were towards the tail end of our last BLA review, we were pleased. And that's where we picked up this new application is exactly where we were at the tail end of the last one on the label, and we look forward to continuing to work with regulators to bring us to the point of approval and delivering apitegromab to the community. Operator: And the next question is going to come from Tazeen Ahmad with Bank of America. Wesley Yon: This is Wesley on for Tazeen. Congrats to the team on all the progress really. I had a question on sort of the game plan going forward now that you have a PDUFA date in hand. So are there any sort of new types of discussions you can have with payers or other like commercial bodies now that apitegromab is officially under review? And is there any sort of new, I guess, strategies or ways that Keith and the commercial team are sort of laying out the groundwork for potential approval? Or is it just kind of just chugging along and doing what's been done already? David Hallal: Well, Wesley, as I think you guys all know Keith very well. You would imagine as disappointed as we were to not launch late last year, we had to look at the opportunity that we had to prepare ourselves to be even better to serve the SMA community. That was our obligation. One such piece of that under Akshay and under Lisa Wyman and team was to make sure that this application was even stronger than the last one, and that's inclusive of now the 2 fill-finish facilities and 2 independent paths to approval. The other obligation that we made is to be better from a commercial perspective. How do you use that time to make sure that you can meet the moment for the SMA community. And I think your question is a good one now with the September 30 PDUFA, but yet being ready for an approval at any time. And with that, I'll hand it over to Keith to talk about the things that he has been doing and what this means for him and the team. Keith? Robert Keith Woods: Yes. Thanks, David. And Wesley, thanks for the question. What I can tell you is that joining the company 4 months prior to the PDUFA date, we were scrambling for that PDUFA date. We would have been able to launch successfully, but we have really been able to take advantage of the additional time that we have. Some specific examples that I've shared in the past, first of all, with payers, we are able to meet with the payers and with our medical team to really discuss apitegromab and the data. So those discussions are ongoing. We've just been able to take them to a much broader range of payers and really deepen the discussions that we have with them specifically around this. Additionally, we built out how our site of care plans will be. I've shared with you before that we now, through our partners, have over 10,000 home infusion nurses available around the U.S. that would be able to provide apitegromab to patients shall they choose to go through home infusion. We've expanded our specialty pharmacy network so that no patient has to go to multiple specialty pharmacies to get their different meds that they may be on for SMA treatment, whether it's their SMN targeted therapy or that apitegromab. And just we continue to really move forward with patient engagement activities. And that's through our program to really have patients demand better treatment for themselves with light takes muscle. And so I can tell you this. I want you to know that the team has been working very hard all the way through this delay, but we are clearly ready to launch now. So whatever that time frame that will be between now and September 30, I want you to know that the team will be ready to be out there the next day, and we will have supply in the channel very rapidly after approval. Operator: And the next question will be coming from Marc Frahm with TD Cowen. Marc Frahm: A lot has been asked already on the PDUFA and apitegromab itself. Maybe just looking at the subcu version. I mean you mentioned you have that data in hand. And once you get the approval for the IV formulation, you'll look to meet with the FDA to discuss it. Just what are the kind of key issues you think you need answers from the FDA on? And kind of what are the range of time lines for when you think you might be able to kind of launch that product depending upon the outcome of those discussions? David Hallal: Thanks, Marc. Akshay? Akshay Vaishnaw: Yes. Thanks, Marc. So I would say there are no issues as such. These things are a matter of just alignment with regulators as to what the optimum path forward to bring another innovation to SMA patients and in this case, it would be subcutaneous apitegromab. The Phase I data were excellent, showing a very good bioavailability and pharmacodynamic overlap between 2 routes of administration. And what we have to do now is to share those data following the approval and align on the path forward in terms of any further development that we needed. So that could be PK/PD data and consideration of any additional safety or efficacy. However, from a safety perspective, obviously, the exposure is maximized with IV apitegromab. And so with the very large database we have in hand already from the studies we've done, we feel very good about safety via additional routes of administration. And so we just want to get on and have those conversations and finalize the path. Once we've done that, obviously, we'll guide you on the time line, premature to speak to that in advance of those conversations. Marc Frahm: Okay. And if I can squeeze in also just on the FORGE trial. Just can you kind of walk through what's different about that trial or maybe the supporting data that apitegromab has been able to generate relative to the efforts that Roche had in FSHD and which ultimately, as of a few weeks ago, they disclosed did not lead to moving into pivotal development. David Hallal: Yes. 3 or 4 points here. Number one, we're obviously very proud of the innovations that have occurred at Scholar Rock with our leading anti-myostatin pipeline. It still remains apitegromab, the only validated anti-myostatin antibody make it through Phase III and delivered the kind of risk and benefit profile that we saw in the Phase III with the SAPPHIRE study in SMA. Whilst we await that approval, obviously, many others are interested in this target. Roche and Chugai are world-leading company. It was sad to see that antibody drop out. We've never really seen any Phase I data or the FLExDUX4 mouse model data from the Chugai-Roche antibody. So we don't quite know the nature of those data, and we await to see how strong they were. We know our data apart from the positive Phase III study, of course, we have very nice data in the FLExDUX4 mouse model with an anti-myostatin approach showing increase in muscle mass and talk and additional function. We know that there are, within FSHD normal fibers that can be boosted by means of an anti-myostatin approach. We know other clinical trials in FSHD that have shown increase in muscle mass and function. So we're very encouraged by our data and our diligence. And finally, we believe the Phase II design is different from the Roche study, specifically the inclusion/exclusion criteria and the severity of the disease that we're enrolling relative to what they enroll, which appears to be quite advanced. And based on our diligence with the experts, we decided because of input from them to go towards the milder end in terms of the Roche scores with patients with established disease where we felt we could still show benefit. And so we remain confident with our validated asset going into that Phase II study and look forward to kicking off very soon. Operator: And the next question will come from Geoff Meacham with Citigroup. Geoffrey Meacham: I had another commercial kind of reimbursement question. Just given the range of options in SMA today, how are you guys thinking about incentivizing switches or maybe deploying a more novel outcomes-based pricing strategy just to help the early stages of the launch? And are the strategies different when you look to the EU and the early launch in Germany versus the U.S. launch? David Hallal: Thanks, Geoff. I think as Keith noted, a cornerstone of our sort of campaign thus far around the disease itself has been an acknowledgment, and we see that the community gets it, that this disease is -- the hallmark is not only the motor neuron, but the resulting muscle atrophy. And so all of this innovation over the last 10 years has been on motor neuron survival and motor neuron health. And this has been needed innovation for the community. And yet, as Keith noted, nearly all patients are wanting their muscle atrophy to be addressed. And this will be the first and only muscle-targeted therapy that's approved. So we don't necessarily really think about switches, Keith, right? We really think about no matter what you choose to do for motor neuron health, we applaud. And we're going to deliver something that addresses the organ that is the principal organ affected by this disease is the muscle. And that's what's been left behind over these 10 years of innovation that we're finally able to address. And putting that into practice, I know, Keith, has been the cornerstone of what you guys have been talking about with the community, and I'll let you take it from here. Robert Keith Woods: Yes. No, Geoff, we're really not going to be focused on any type of switches because what we've shared before is that in our own market research with treating physicians, we know that 3/4 of them have already said that they believe dual modality is the future standard of care for treatment in SMA. So that's directly targeting the motor neuron and directly targeting the muscle -- so we believe that, that will be how this is viewed. And then additionally, from a payer point of view, we did share the data that Cure SMA shared with us in the prepared remarks with roughly 1/3 of patients already receiving more than one SMN targeted therapy. It just continues to drive home the unmet medical need that exists with these SMA patients. But as David just referenced, the principal organ that's impacted in this disease is the muscle, and we look forward to bringing forward the world's first muscle-targeted therapy. Operator: And the next question is going to come from Amy Li with Jefferies Company. Amy Li: David, congrats on all the progress. Just wanted to get a sense of the next steps and time lines for the Catalent site. Based on feedback from the FDA after the reinspection and the Novo closeout meeting, do you expect a Form 483 related to reinspection? And does the speed of your BLA filing acceptance, which was around 30 days compared to the standard 60 days, indicate any FDA urgency or prioritization? And then finally, on the second manufacturing side, I just wanted to clarify, are you maintaining it primarily as a hedge against Catalent? Or is there a potential for approval of both sites? David Hallal: Yes. Thanks, Amy. I'll take that last point first. As we noted when Catalent Indiana was acquired by Novo, we knew that Novo was acquiring that facility really for its own internal purposes, and they would have this transition phase into moving "customers" out because they're not a CDMO. That's not their business model. And so all along, we've recognized that we would want to have and would require to have an additional or more than one fill-finish facilities that are outside of Catalent. So all of that, right, was part of our plan even prior to the Form 483 observations that the FDA had in their general site inspection last year. So I think it's important to note that we see this second fill-finish facility is absolutely vital for all of our global demand. Now we also see Catalent is important. We have drug vial there. We would anticipate that they would be part of our supply chain. And in due time, they're going to phase -- we would phase them out if they're going to be phasing us out. So more than anything else, we see them both as being important. And yet we do think having 2 independent paths to an approval under this BLA is a very significant enhancement to our BLA in 2026 versus the one that we had last year in 2025. And we also think timing is really good. You note the FDA's urgency and how they've been working expeditiously with us. We do think that was really anchored by a very constructive in-person Type A meeting in Q4 that Akshay led with our team down there, and we are just grateful that the FDA has continued to show a sense of urgency and understanding the needs of the community. So more than anything else, we see a world in which apitegromab gets approved with one or the other or both, and we think that, that's a wonderful spot to be in. We'll let the FDA do their work on the review of the second fill-finish facility and the data that has been generated by us on that second fill-finish facility with drugs becoming available in early Q3. And we'll also let the FDA do their work expeditiously and thoroughly on their inspection as well as the inspectors concluded that reinspection recently. So we're excited for what the future brings and more than anything else, I think you guys can see these time lines of the 2 facilities have really come pretty much together. And I think that that's a key takeaway to recognize. Operator: And the next question will come from Gary Nachman with Canaccord. Gary Nachman: My congrats as well on all the progress. So David, just to follow-on the last point you were making there. If everything ends up being fine with Catalent with the classification, are you still considering pulling the second fill-finish facility from the BLA to simplify it for the FDA? Or you'll just keep it in there regardless to have that better supply chain, even if it would potentially delay the approval and push it out a little bit? And then just a follow-up. Someone asked before on pricing, but just, I guess, to ask it a little differently. Is there a strategy that would make more sense of launching first in Germany or in the U.S.? Or regardless, it would just be one global price and you're not anticipating any MFN issues. So pricing isn't really a consideration in terms of how you'll stagger the launches? David Hallal: Yes. These are great -- really great questions, Gary. I'll just make one comment and then hand it over to Akshay. When Akshay and I hosted a call, late in Q1 on the resubmission of our BLA, we did actually talk about the alignment that we've had with the FDA, the dialogue that we had with the FDA throughout Q1 about the submission with both fill-finish plants and the optionality that, that really provided us. And so Akshay, do you want to comment on that? And like if there is a meaningful difference in time line, the flexibility that we may or may not have here? Akshay Vaishnaw: Yes. I mean just repeating what you said, I think this has been so important to all the progress that's occurred that there's been very constructive collaborative approach between us and the FDA and indeed with the EMA throughout this whole period. And based on that, we submitted both facilities in the BLA with the full support and alignment. And the most straightforward thing is Catlin Indiana is reclassified, is in compliance, and we can start getting drug out of the pending approval. And the second facility would be withdrawn from the BLA. However, given all the constructive approach that's occurred with the FDA, we'll be guided by them. And in the long run, we clearly want redundancy in the supply chain. And so we look forward to bringing on an additional finish sites. So I think all the options are open for us and the really great position we're in now to serve patients is that by September 30, we're going to be approved by one or the other facility. But in the long run, of course, we'll have established in supply chain. David Hallal: Yes. So Gary, let's just say the FDA has up to 90 days, but they make a decision faster than that. and they still need to review some information on the second fill-finish. As Akshay had even described about a month ago, we would certainly have that flexibility of then just moving that second fill-finish to an sBLA, which was always an option that we had considered as well. So lots of flexibility and optionality there, and it was a very good question. On sequencing and pricing, Keith? Robert Keith Woods: Yes. So first of all, Gary, as I mentioned in the prepared remarks, the team is ready to launch here in the U.S., but also the team is built in Germany. And so if you think about -- is there a preference for one before the other? No. We want to get this across the finish line, both in the U.S. and in Europe. You mentioned how does this overall affect pricing. We go out with our list price here in the U.S. We go out with our list price in Germany and in Europe. Remember, Germany is the only place that we can proactively promote right after EMA approval. And so you're promoting and selling at your list price while you go through the AMNOG process and you go through the reimbursement and establishing that price. So it really wouldn't have an impact. And the bottom line is we're going to be prepared to serve patients in whichever market comes first, and there shouldn't be a substantial impact to our ability to price, negotiate in an overall impact on most favorite nations because we won't be at a point right away that we would even trip the cause of most favorite nations. Operator: And our next question will come from Kripa Devarakonda with Truist. Alexander Xenakis: This is Alex on for Kripa. Congrats on the great news today. We have one about the Roche discontinuation of Emugrobart in FSHD. I wanted to know have you seen any uptick in investigator interest in working with apitegromab for your FSHD trial. David Hallal: Yes. Thanks for that, Alex. So the whole neuromuscular space is very excited about the apitegromab program after in SMA. You're right, the intensity of interest increases. Obviously, everyone is looking forward to the approval in SMA. But the neurology world looks with anticipation towards what a validated anti-myostatin approach like apitegromab can do not just in FSHD, but in a range of diseases. And so we're looking forward to the start of the study, which will be very soon now, Phase II study in FSHD and with additional indications to follow where we'll study this drug. But you're absolutely right. There is plenty of interest and very constructive input as we think about triaging through these indications. Operator: Thank you. This does conclude the question-and-answer session and also concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good morning. Welcome to Lantheus' First Quarter 2026 Conference Call. This call is being recorded, and a replay will be available in the Investors section of the company's website approximately 2 hours after the completion of the call and will be archived for at least 30 days. I'll now turn the call over to Mark Kinarney, Vice President of Investor Relations. Mark? Mark Kinarney: Thank you. Good morning. With me today are Mary Heino, our CEO and Executive Chairperson; Amanda Morgan, our Chief Commercial Officer; and Bob Marshall, our CFO. We will begin with prepared remarks and then take your questions. This morning, we issued a press release, which was furnished to the SEC under Form 8-K reporting our first quarter 2026 results. The release and today's slide presentation are available on the Investors section of our website. Any comments could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties, which are detailed in our SEC filings. Discussions will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included in the Investors section of our website. I will now turn the call over to Mary Anne. Mary Heino: Thank you, Mark, and good morning, everyone. We had a strong start to the year with solid performance across PYLARIFY, NEURACEQ and DEFINITY. These results reflect our ongoing commitment to focus and discipline across the organization. As we said last quarter, 2026 is a year of commercial execution and regulatory milestones. We're making deliberate choices about where we focus our commercial efforts and deploying capital so we're positioned to deliver solid results in 2026 and accelerate growth in 2027. Our corporate focus is centered on radio diagnostics and our priorities for 2026 are clear. First, maintain our market leadership in PSMA PET while preparing for a seamless transition to PYLARIFY TRUVU, our newly approved PSMA PET formulation beginning in the fourth quarter. Second, continue to build momentum for NEURACEQ through deeper penetration within existing accounts, leveraging the breadth of the Lantheus portfolio to unlock incremental growth opportunities and expanding our manufacturing footprint, increasing supply availability. Third, advance our late-stage clinical portfolio through key regulatory milestones and ensure launch readiness aligned with coding, coverage, payment, customer preparedness and market opportunity. And finally, allocate capital with discipline, prioritizing radio diagnostics while evaluating value-maximizing alternatives for our radiotherapeutic assets. In addition to effective commercial execution, we advanced several key programs during the quarter that support our long-term growth strategy. On March 6, the FDA approved PYLARIFY TRUVU, our new PSMA PET imaging agent. PYLARIFY TRUVU offers the same proven diagnostic properties as PYLARIFY with a similar safety and efficacy profile. The value add of this product will be the larger batch sizes that can be enabled at manufacturing sites with high energy cycle times. This creates the potential to serve more patients and support a broader geographic reach. We estimate that more than 70% of PYLARIFY supply today is produced at PMF sites equipped with high energy cycle times, giving us confidence that through our broad PMS network, we are well positioned to optimize the benefit that PYLARIFY TRUVU can provide. We also announced during the quarter, the FDA extended the PDUFA date for Actinium by 3 months to June 29, 2026, to allow additional time to review manufacturing-related information. Similar to our efforts with PYLARIFY TRUVU, we remain focused on advancing launch readiness, including securing coding, coverage payment and customer preparedness through the second half of 2026 with the objective of a full commercial launch in early 2027. On March 2, we announced that the FDA had offered tentative approval for PNT2003, the first radio equivalent to Lutathera for the treatment of gastro entero pancreatic neuroendocrine tumors or Gep/NET. Tentative approval confirms that the FDA has completed its substantive review and that our application meets the requirements for approval. The timing of our launch will consider the following factors: timing of final FDA approval, the expiration of the 30-month Hatch-Waxman stay and disposition of the related legal proceedings as well as manufacturing and commercial strategy to ensure launch success. As outlined last quarter, our strategy and related investments are centered on radio diagnostics and the progress we made this quarter reflects that focus. We are selectively prioritizing first and best-in-class PET radio diagnostic assets that complement our existing commercial portfolio and align closely with our nuclear medicine customer base. I will highlight a few key pipeline updates. MK-6240, our registrational stage tau-targeted PET radio diagnostic for Alzheimer's disease represents an important asset within our Pharma Solutions portfolio and is the leading imaging agent supporting late-stage Alzheimer's disease-modifying therapy or DMT development. It is currently the most widely used imaging agent in beta amyloid and tau-targeted therapeutic candidate clinical programs. MK-6240 serves as an imaging agent for treatment eligibility in 17 current pharma-sponsored AD therapeutic programs and has a PDUFA date of August 13 of this year. Lantheus 2401, our gastrin-releasing peptide receptor or GRPR targeted PET radio diagnostic for prostate cancer is advancing towards its planned registrational program this year. GRPR is a differentiated target from PSMA and Lantheus 2401 has the potential to complement PSMA PET imaging by identifying disease in patients who may be PSMA negative or equivocal, extending this addressable prostate cancer population while fitting naturally within our existing prostate cancer franchise. Across the pipeline, we remain disciplined in strategically deploying investments based on stage gate and long-term opportunity. With robust mid- and long-term revenue drivers, a promising late-stage pipeline and a clear strategic road map, we are confident in our ability to drive meaningful performance gains that support a compelling outlook for our shareholders, and we're executing against that plan. Our strong first quarter results reinforce that 2026 will be a year of commercial execution and regulatory progress, laying the groundwork for growth acceleration beginning in 2027. I also want to provide a brief update on our CEO search. The Board's process is progressing well, and we have narrowed the search to a small number of highly qualified candidates. In the meantime, our leadership team and I remain fully focused on execution as the first quarter results fully demonstrate. I will now hand the call over to Amanda to provide additional detail on commercial performance across our oncology, neurology and cardiology assets. Amanda Morgan: Thank you, Mary Heino. First quarter performance demonstrated continued commercial execution across our portfolio with solid volume growth and disciplined performance across each of our three core products. PYLARIFY, our market-leading PSMA PET imaging agent, delivered a solid quarter with U.S. volume increasing approximately 5.8% year-over-year. Performance was driven by consistent demand across our established customer base and continued pricing discipline in a highly competitive environment. Net ASP and volume for PYLARIFY remained stable sequentially despite ongoing competitive activity, we are well positioned as we continue to execute on our portfolio-based strategy. This evolution strengthens our presence across sites of care and our PMF network and reinforces our market leadership in PSMA PET. Together, these factors support a seamless transition to PYLARIFY TRUVU, accelerate NEUROCEQ growth and prepare the organization for future launch opportunities. Overall, PYLARIFY remains a core contributor to our radio diagnostic strategy, supported by disciplined execution, deep customer relationships and continued usage and expansion of PSMA PET. The FDA approval of PYLARIFY TRUVU marks the next chapter of our flagship PSMA PET portfolio and reinforces our ability to serve the market reliably and at scale. With approval secured, we are now executing against our transition plan with meaningful revenue contribution expected in 2027. We have submitted our application for a HIC6 code and are preparing to apply for transitional pass-through status. In parallel, we are working closely with our PMF partners to secure necessary FDA approvals for each manufacturing site ahead of the planned conversion, targeted to begin in the fourth quarter of this year. Our approach is deliberate. We will initiate conversions only once reimbursement coding is in place and customers and payer systems are ready to submit and process claims. Our PMF partners are preparing to transition to the new formulation and recognize the operational advantages that PYLARIFY TRUVU offers, including enhanced stability at higher radioactive concentrations, which provides greater supply flexibility. This creates the potential to serve more patients within a given market or support delivery to sites that are further from the manufacturing location or potentially both, depending on demand in a particular area. Now turning to the rest of our commercial portfolio. NEUROCEQ, our beta amyloid PET imaging agent for Alzheimer's disease, generated $35.4 million in the first quarter revenue, representing 14.3% growth compared to the fourth quarter of 2025. As the second most utilized and fastest-growing beta amyloid PET imaging agent in the U.S., NEUROCEQ addresses a large and expanding market opportunity. Growth was driven by increased utilization within existing accounts, supported by broader adoption of Alzheimer's, DMTs and clinical guidelines that favor earlier diagnostic use, particularly in patients with mild cognitive impairment and early Alzheimer's disease. We are leveraging our existing nuclear medicine relationships across the Lantheus portfolio, supported by continued expansion of our NEUROCEQ PMS footprint, which is now up to 22 sites to drive execution and incremental growth as additional locations come online. Together, these factors further build on the momentum exiting 2025 and reinforce our confidence in NEUROCEQ's long-term growth potential. DEFINITY, our market-leading ultrasound-enhancing agent, remained a steady contributor to our overall performance and delivered $84.6 million in first quarter revenue, representing year-over-year growth of approximately 6.8%. Growth was primarily driven by increased volume demand. With more than 80% market share, DEFINITY continues to demonstrate the durability of a long-standing market preferred product supported by deeply embedded clinical workflows and consistent utilization across sites of care over its 25-year history. I'll now turn the call over to Bob to provide more detail on our first quarter results. Robert Marshall: Thank you, Amanda, and good morning, everyone. I will provide highlights of the first quarter 2026 financials, focusing on adjusted results with comparisons to the prior year quarter, unless otherwise noted. Revenue for the first quarter was $377.3 million, an increase of 1.2% compared to the prior year and increased 8.6% when adjusted to exclude $25.2 million of spec revenues from the same period prior year, which was divested on January 1. Before I begin with the details, I would like to note that we have reconfigured our revenue reporting into new categories to reflect the diversity of our portfolio. The 4 main groupings include oncology, neurology, cardiology and strategic partnerships and other as well as one additional for the divested spec business to reflect prior period results. Our SEC filings reflect this change, and we have grouped prior period comparisons accordingly. Now starting with oncology. Consisting of PYLARIFY, it contributed $240.9 million of revenue, down 6.5% from the prior year. Neurology revenue, consisting of NEUROCEQ was $35.4 million for the quarter. Cardiology revenue consisting of DEFINITY was $84.6 million, up 6.8% year-over-year. Strategic partnerships and other revenue was $16.3 million, up 52.1% due to the strength of our Pharma Solutions portfolio in addition to adding the Evergreen CDMO business. MK-6240 represented over half of the revenue in this category. Gross profit margin for the quarter was 67.0%, flat to first quarter 2025, favorably impacted by the SC divestiture, PYLARIFY and DEFINITY volumes as well as DEFINITY price. offset by a decrease in PYLARIFY net price and inclusion of the Evergreen manufacturing facility and a near-term margin dilution of NEUROCEQ relative to the company average, both of which were not in the comparative period. Operating expenses at 32.8% of net revenue were 455 basis points unfavorable from the prior period, but favorable to previously guided spending levels. This increase was mainly due to the acquisitions of Evergreen and LMI operations across each spending category, which are not reflected in the prior period. Increases in research and development expense, which was due largely to planned investments to advance our expanded clinical stage portfolio. Sales and marketing increases reflect the inclusion of the NEUROCEQ sales team and launch activities, mainly focused on PYLARIFY TRUVU. G&A was up slightly in the period due to higher professional fees and employee-related costs in the quarter. Operating profit for the quarter was $129.1 million, a decrease of 10.5%. Other income and expense was $0.8 million of expense. Total adjustments in the quarter were $28.1 million of net adjustments before taxes. The company recorded a gain on the sale of SPC of $59.3 million and unrecognized gain of $16.6 million attributed to its equity investment in Perspective Therapeutics, offset by an unrecognized loss of $1.7 million on Radio pharm Theragnostic. Also offsetting these gains, the company incurred $16.0 million and $16.7 million of expense associated with noncash stock and incentive plans and acquired intangible amortization, respectively. The company recorded $6.4 million of other acquisition, integration and divestiture costs. The remaining $7 million is related to other nonrecurring expenses. Our effective tax rate was 25.3% in the quarter. The resulting reported net income for the quarter was $118.4 million and a profit of $95.8 million on an adjusted basis, a decrease of 12.5% from the prior year period. GAAP fully diluted earnings per share for the first quarter was $1.80 and $1.46 on an adjusted basis, a decrease of 4.6%. Now turning to cash flow. First quarter operating cash flow totaled $125.1 million as compared to $107.6 million in the prior year quarter. Capital expenditures totaled $3.2 million, $5.5 million less than the prior year quarter. Free cash flow, which we define as operating cash flow less capital expenditures, was $121.9 million, an increase of $23.1 million from the prior year period. Taken together, cash and cash equivalents net of restricted cash were $498.6 million as of the end of Q1. We have $200 million remaining on our Board authorized buyback program and have access to our $750 million undrawn bank revolver. Now turning to expectations for full year '26. The strong start to the year across the portfolio reinforces our confidence to deliver on the outstanding guidance for both revenue and adjusted EPS. We remain steadfast in our strategies to protect the long-term value of our PSMA franchise, especially ahead of launching PYLARIFY and TRUVU beginning later this year and also remain ever mindful of potential competitive dynamics. As such, our full year forecasted revenue remains at $1.4 billion to $1.45 billion for 2026. Our first quarter results underscore the disciplined execution of our strategic priorities and commitment to streamlining our cost structure to drive operational efficiencies, enabling us to support sustainable long-term value creation. We are making progress to evaluate alternative opportunities for the therapeutic assets to rebase the company's earnings profile and growth trajectory as was noted on last earnings call. We continue to balance strategic investments and cost management across the organization and expect to deliver solid bottom line results with EPS in a range of $5 to $5.25. With that, let me turn the call back to Mary Anne. Mary Heino: Thank you, Bob. In the first quarter, we accomplished what we set out to do. PYLARIFY, NEUROCEQ and DEFINITY all performed well, and we achieved two important regulatory milestones with the FDA approval of PYLARIFY TRUVU and tentative approval of PNT2003. Looking ahead, our priorities are unchanged: maintain our market leadership in PSMA PET by sustaining PYLARIFY volume growth and executing a seamless transition to PYLARIFY TRUVU, continue to build momentum for NEUROCEQ and successfully advance our registrational stage products towards regulatory milestones. All of these will position Lantheus for the growth acceleration we expect beginning in 2027. We are driving forward through the rest of 2026 with confidence in our strategy and in the Lantheus' team's ability to deliver. The first quarter was a terrific start, and we remain focused on the work ahead. With that, I'll turn it over to Q&A. Operator? Operator: [Operator Instructions] And our first question comes from Anthony Petrone of Mizuho Financial Group. And our next question comes from Richard Newitter of Truist. Congrats on the progress this quarter. Richard Newitter: I've got -- I guess the first one, maybe for Bob on guidance. You had a pretty nice beat in the first quarter across the board, just about every product line. I guess the reiteration of the guide assumes some step down in the 2Q to 4Q, presumably for all the businesses. I'm assuming that's just conservatism on your part. I just wanted to make sure, one, that's the case. And then was there anything -- is there anything you're seeing that would lead you to be incrementally cautious as we move forward into the remainder of the year? Or is this just good old-fashioned prudence on your part, you still have a few more quarters of transitional pass-through disadvantage to get through? And then also, if you could just comment on what your assumption is for PSMA PET imaging diagnostics market growth in 2026 for the remainder of the year? And what did it grow in the first quarter? Robert Marshall: Okay. So I'll start with the -- obviously, with the guidance. So to your point, we had a very solid start. And we saw that in terms of volume growth, in terms of pricing dynamics, fairly steady state from what we've seen over the last number of quarters, in fact, almost delivering exactly the same number for each of the last 3 quarters in a row. But it's early in the year. And so we're going to remain vigilant to the market, the competitive environment out there. We still have one competitor who is maybe find some footing with their new products, launch themselves as well as one that will be losing pass-through later this year, call it, October 1. So for us, we're going to -- to your point, we're going to be prudent with this. The other thing that I think that plays into this a little bit is the fact that, as Mary Anne noted in her prepared remarks, that we do see a new CEO in the near future. And I think it's right to allow that person to own the balance of the year. So our assumptions really haven't changed in terms of expecting what we had said earlier in terms of gross to net as the year progresses. And I still continue to model modest volume growth looking forward. So I wouldn't have you model Q1 forward in that sense. So our strategy remains the same. It's intact. We're watching our competitors and talking with our customers, remaining disciplined. And again, the focus for the year is on launching PYLARIFY TRUVU and protecting that franchise on a going-forward basis. Mary Heino: It's Maryann, and I'll step in on your second question around the PSMA PET market growth. I think the market continues to play out exactly as we anticipated. If we look back and look back to '25, we saw high teens to low 20s percent growth for the entire market over the course of the year prior -- relative to the prior year. And this year, as we -- I think we shared in our last quarter's discussion points, we were backing off and saying that we expected for '26, that growth would be in the low teens. And I think that is what we're seeing. I'm not being specific because this is a market that from a data perspective, truly has to be triangulated. Unlike the pharmaceutical prescription market, there are no clean third-party data sources to kind of bring these estimates together. So what we do is we look at our own results We, of course, monitor what our competitors are reporting. However, as you can imagine, there's not a lot of talk track from Novartis on locomotes and PostLuma is offered by a private company. So I'm offering you that just to say, I'm not trying to avoid giving you a direct numeric answer, but it is a triangulated figure that we arrive at, and we're very pleased with what we're seeing in the market. Operator: And our next question comes from Anthony Petrone from Mizuho Financial Group. Anthony Petrone: Sorry about that. I was muted, hopping across calls here, but congrats on the strong start to the year. Maybe just on TRUVU into the TPT ruling and just launch, how that's going to sort of work out from a contracting perspective? When do you think TRUVU will be completely adopted? And at what point does PYLARIFY Gen 1 get phased out? That will be my question. I'll hop back in queue. Mary Heino: Terrific. Anthony, thanks for the question. I'll take that. First, let me offer for clarity. It's not a -- PYLARIFY won't be phased out. PYLARIFY will be transitioned directly to PYLARIFY TRUVU. So in any market, only one of the products will be available at a time. And that's very purposeful on our part because as you can imagine, if our PMF partners had to run 2 different batches, which they would have to, it would take up too much of their manufacturing time, and we prefer to have a single product in each market that we can focus on. So just I wanted to offer that for clarity. It will be geographically a site-by-site conversion. As we've offered before, I'll share again that we plan to begin that conversion in Q4 of this year. It's very carefully thought out, and I'll explain why. These products as a class, PET diagnostic products are uniformly prior authorized. You require prior authorization for insurance to cover them. We must ensure that insurance coverage is in place and that the systems are fully operational with the coding and the coverage requirements for TRUVU before we take that product into any market. In like fashion, and you're aware of this from the comments we've offered, we also have to make sure that we have our HCPCS code and that we have PPT in place, transitional pass-through payment. Those have slightly different schedules of what the application process is for applying and receiving it. But from our perspective, the one piece that's clear is all must be in place before we ask our customers to start ordering TRUVU. -- we have worked long and hard to make sure that this will be a seamless transition, and we're really confident in it. But that's why you've seen already we got the approval date, but we're not yet in the market. This is carefully thought through and will be exceptionally executed once we take it into the market. Operator: And our next question comes from Roanna Ruiz of Leerink Partners. Roanna Clarissa Ruiz: I have a follow-up question about TRUVU. I was curious what strategies do you plan to use in terms of enabling customer readiness and prepping hospitals and imaging sites to potentially switch and get really comfortable with TRUVU? And I was also curious, given what you've learned from the original PYLARIFY launch, is there anything you want to get ahead of and proactively mitigate in terms of possible hurdles to adoption? Mary Heino: So Ron, I'll take your question as well, and I'll kind of bounce up of what I just shared from Anthony's question. This is a master piece of preparation because before the first dose and from our customers' perspective, all we want them to see is that their dose shows up and that the coverage and payment, the reimbursement for it has already been fully approved. And so we want it to look invisible to them as to which of the Lantheus PET franchise products they're using, TRUVU or PYLARIFY. And again, they'll only be using one at a time. There's lots we can do to get ready. And you heard Amanda and Amanda's comments her repeatedly referring to our prostate cancer franchise. It is actually in the nuclear medicine customer base, it's actually more than that. We are a full portfolio of products that we bring them in addition to our prostate cancer PET products. And all of our communications with our customers really center on one thing. Do you have the access you need? Does the product show up when you need it? And do you get fair reimbursement and coverage for it? And that is what we work continuously to ensure for our patients. We also will have some work done in order to contractually prepare our customers for TRUVU versus PYLARIFY. And that is also something that we're very experienced with. From a nuclear medicine perspective, we have been doing this for 60-plus years with the nuclear medicine department. So we're also confident that we'll be able to handle that. I will say just operationally, there is a set of functional steps that we'll go through with each PMS to ensure that they are -- that they can manufacture and that they're approved to manufacture. As we've shared in the past, PM as a network and as an individual site are individually approved as GMP manufacturing sites by the FDA. So we also have a very carefully thought through plan as to how to secure region by region to ensure that the FDA approvals are in place for all of our PMF sites. And as with any other manufacturing site, there's a set of steps you go through with what's called validation batches, which kind of proves out the manufacturing process and that you can consistently replicate that process. Let's remember, PYLARIFY was a first. We -- not only in PSMA PET, but in the scale of a new launch that had not been seen in many decades in a PMF network. We did it then. We're very confident we can do it again with PYLARIFY TRUVU. Operator: And our next question comes from Matt Taylor of Jefferies. Matthew Taylor: On TRUVU, I was wondering if you could talk a little bit about the pricing strategy with TPT and how much in the initial transition period can you realize? And can you give any high-level thoughts on how that could impact 2027? Mary Heino: So Matt, it's Mary. Thanks for your question. I will share what I always share. We don't talk about pricing strategy. What I will say and what I think all of you from working so closely with us over the years are aware of is that transitional pass-through is a reimbursement mechanism that's available only in the hospital outpatient setting and only applies to traditional fee-for-service Medicare patients. And so we're very cognizant of how to ensure that, that the possibility and the opportunity of that coverage being available for that patient group is something that our customers are very aware of. And I don't think I need to say that it's certainly from our learnings with PYLARIFY, it's something we're very focused on to ensure that, that reimbursement status is clear and available to all of our hospital-based customers, especially those who have larger patient populations of traditional fee-for-service Medicare. What I -- we will not give forward guidance, obviously, to 2027. Yes, you have to wait later in the year for that, Matt. But as we said repeatedly throughout our script, we do see 2027 as a year of growth acceleration. So you can probably infer from that. Operator: And our next question comes from Yuan Zhi of B. Riley. Yuan Zhi: Maybe a question to Marianne or Amanda. On your radar, do you see any other F-18 or Gallium-68 PSMA imaging agent entering the market in the next couple of months? And which market or geographic areas do you anticipate some meaningful impact? Mary Heino: I'm going to let Amanda take that for you. Amanda Morgan: Sure. Thanks for the question. So as you can probably imagine, we continuously monitor the marketplace, and we're watching for all types of agents that could enter the market. We remain steadfast on the franchise that we have set up through our prostate cancer franchise and PYLARIFY and the follow-on asset of PYLARIFY TRUVU. So we will continue to monitor the marketplace, but we remain confident in the franchise that we've established, and we remain confident in the relationships that we have with our entire portfolio as well as within our nuclear medicine relationships. Mary Heino: So I'll just add there. I think as anyone who follows the space is aware, we follow there are 2 copper-based products that are in development, late stage that have the potential to enter the market at some point in the future. We don't see any of that occurring in 2026. And -- but we continue to follow their progress and their programs. We're also aware that there are 2 other gallium-based products worldwide, PSMA gallium-based products that could then have potential for application into the United States. But again, we don't see those as imminent on our high. We have and have purposely developed a portfolio approach to our nuclear medicine customer base, we feel that, that will keep us highly competitive and successful in our interactions with not only our prostate cancer franchise, but our neurology franchise and any other therapeutic areas that we enter with that customer base. Operator: And our next question comes from Paul Choi of Goldman Sachs. And our next question comes from Andy Hsieh of William Blair. Tsan-Yu Hsieh: Maybe just a kind of an educational one for us. Mary, you mentioned about the high-energy cyclotron that's required for Truvu. So can you give us a sense of what percentage of your PF network is equipped with such equipment? And do you foresee longer term, all of them will be transitioned to the high-energy versions? And just maybe comment as you go through the hardware transition, any sort of supply -- maximum supply versus what you expected for the original PYLARIFY. Just kind of get a sense of the ramp-up and also from a production perspective. Mary Heino: Sure. And it's a great question. I did address a little bit of this in my remarks. But when we look out at what the current PMF network is that services PYLARIFY and will service PYLARIFY TRUVU in the future, we estimate that already 70% of that, and I'll call it a fleet. It's a fleet of manufacturing sites. We estimate that 70% of our fleet is already serviced by high energy cyclotrons. And therefore, that gives us confidence that what we see as the value add of PYLARIFY TRUVU is directly transferable into the market. I do want to address operationally something you mentioned about transition of hardware to PYLARIFY TRUVU. If you understand the operational basis of PMF, they essentially use a cyclotron to produce isotopes and the predominant isotope is obviously F-18. But then F-18 then is run through a manufacturing process that's called a synthesis box. And it is on the synthesis box that the product-specific elements are added in to form the final product. And so it is a different -- and they call them -- this is the synthesis boxes have different names, but for all intents and purposes, they call the objects cassettes that they attach to the synthesis boxes to complete the final production of the F-18 labeled isotope imaging agent. In this case, they will use a different set of cassettes to produce PYLARIFY TRUVU compared to what they were using for PYLARIFY and compared to the other types of cassettes they use to produce other F-18-based isotopes like SEG or the other isotopes that they're producing. To the other part of your question, I'll say that the incredible success of PSMA PET imaging agents as well now as the emerging building success of PET-based Alzheimer's disease agents has incredibly invigorated the PMF network chain that service the United States medical market. And it's a clear opportunity to them and for them to invest in their operational readiness with higher energy cyclostomes. I can't speak to their -- to what their capital plans for investment are, but I can speak to what has clearly been a renaissance of PMF-based products in the United States and what that means for their business case. Again, just to reiterate the first part of your question, the PMS that produce PYLARIFY, 70% of our dose volume currently comes from PMFs that have high energy cyclotones in place. I hope that was clear and helpful. Operator: And our next question comes from Paul Choi of Goldman Sachs. Kyuwon Choi: Apologies for fumbling the question earlier. My question is on gross margins, which looked better this quarter than it has in a little while, and this is ahead of your potential switch to Truvu down the line and getting to scale. So my question is, is this sort of a more normalized run rate? Or is this sort of a one-off for this quarter as we think about sort of the margin profile over the short to intermediate term? Robert Marshall: Paul, I appreciate the question. When we gave guidance, I don't know, back whenever it was end of February, I think I noted that we would be between sort of 65% and 66%. We're probably going to end up trailing towards the higher end of that particular range. So there is a little bit of a one-off. I mean we did have a lot of benefit coming from PYLARIFY and DEFINITY volumes. We had the spec divestiture, which is the majority of the year-over-year change, but that was offset by the PLA pricing headwind and as well as the inclusion of LMI and Evergreen into the mix. So that was intentional that was with the spec divestiture in the sense that, that gives us sort of the tailwind to offset the PYLARIFY pricing headwinds that we see. So I would still have you model more like where I had guided, but maybe towards the higher end of the range. Operator: [Operator Instructions] And our next question comes from Justin Walsh of Jones Trading. Justin Walsh: I'm wondering if you can comment on the process for turning PNT2003's tentative approval into a potential full approval in June. And wondering if you can remind us if PNT2003 is included in the current guidance. Mary Heino: I'll start with your question about approval, and then Bob can speak to what he is included in the guidance or not. As I mentioned in my comments, PNT2003 did receive tentative approval in March from the FDA. And for them having offered tentative approval, what they convey with that is that essentially their review is complete and they find the basis of approval for the product. However, because there is a Hatch-Waxman stay with this product, the final approval will require, let's call it, 3 different things. The first is either the expiration of or the resolution of the Hatch-Waxman stay. And what that means is that is -- it's essentially a challenge about whether the original product patents are being violated by your application. And to the extent that if it's not, if you need to have 1 or 2 things happen, the 30-month period can expire or the FDA can rule ahead of that, that they'd be finding that there is no infringement for the product. There's also then related to that, there is the disposition of kind of related legal proceedings, which again, is more of a legal issue. And we will, of course, wait for that. There was the Citizens petition also filed by Novartis and their request for reconsideration of that citizens' position, that was a 150-day period from when it was first filed. So all of that together, I think what we're saying and what we're trying to communicate is that once we have final approval from the FDA, we can technically launch the product. And we see that occurring again, either at either the expiration of the Hatch-Waxman period or the resolution of it and then the related legal findings. Having said that, what I would also like to communicate is our decision on ultimate launch date will follow the comments you've heard me say repeatedly throughout my remarks, and that is we will ensure that there is launch readiness, customer preparedness and that all coding and reimbursement related benefits are in place for the product before we take it to market. Robert Marshall: And with regard to what's in the guidance, I think we had said during the beginning of the year that any of the approvals that we would be getting for products this year were not considered and we should not be sort of in any material way, embedded into the 2026 total revenue expectation. So I would -- it's not in the model effectively. Operator: And our next question is a follow-up from Matt Taylor from Jefferies. Matthew Taylor: I just had a follow-up on guidance. So I wanted to ask because of the strong start with PYLARIFY, when you guided before, you were talking about the potential for pricing pressure and baking in some conservatism. I guess I just wanted to confirm, it doesn't seem like you're seeing that, are you? And I guess, the -- it sounds like you're being conservative with the new CEO coming in, it makes sense. But would you have raised guidance if not for that? Mary Heino: You know what, Matt, I'm going to give Bob a break on this one and answer your question, which I think in large part, Matt, you may have answered for yourself with the way you phrased it. We're early in the year. We're really happy with our first quarter results. But we're also sitting pretty much right in front of the CEO change, which I've also been fairly transparent about. And I think for all of those reasons, we felt that the most prudent thing we could do was hang with the guidance that we had already offered, which we felt was already a great outlook for our company. Operator: And our next question is a follow-up from Anthony Petrone of Mizuho Financial Group. Anthony Petrone: Popping back and forth, but I wanted to press again on NEUROCEQ for a moment. Maybe just a reset on NEUROCEQ and the landscape there for beta amyloid tests and where is the NEUROCEQ share today relative to competitors? I think GE is out there with Vismo and Lilly has [indiscernible] what is the expectation for a higher attach rate to the 2 disease-modifying agents going forward? And the prescription trends for Alzheimer's disease look bullish. Just an update on that market as we look into the back end of the year. Mary Heino: So Anthony, I'll start with this and then Amanda can jump in if I miss anything. But I think what you've heard us repeat now consistently is NEUROCEQ holds 2 places of note in the beta amyloid imaging market. First, -- it is the fastest agent growing of the 3 agents that are currently present in the market. And second, it holds the second highest share already in that market. Now I'm not going to offer specific market share, again, for the reason that these are estimated figures. We have to triangulate back into them. And I don't think it's germane. I think what's germane to hear from us is that we are investing in NEUROCEQ to ensure that it has expanded availability and availability is key in this market as it is in the other [indiscernible] market. That is our major investment thesis for 2026 that we can accomplish 2 things -- or actually, I'll take it now to a third thing. First, we can use our portfolio approach to have our customers use NEUROCEQ as their beta-amyloid imaging agent of choice based on their relationship with Lantheus and the customer service we provide. Second, that we can drive deeper penetration in existing NEUROCEQ accounts that goes along with the great growth we're seeing in the market because of, as you referenced, the adoption of and the continued adoption of the beta amyloid therapeutic agents. And third, that we can expand the footprint of where the product is manufactured. So that again, it serves number 2, which is deepening penetration in existing accounts, but it also gives us access to new accounts out there. And these are all benefits that we had considered as we considered the LMI acquisition because as a company at their size and their financial capabilities before the acquisition, they just did not have the bandwidth to take on some of these opportunities. We do and we will, and we see that coming back to us not only in '26 already, but certainly in '27 and beyond. Amanda, did I leave anything out of note to that? Amanda Morgan: You did a fantastic job. Maybe I'll just add a few key points that NEUROCEQ is really addressing a large and expanding market. And so it's benefiting from that market. And as Mary Anne shared, the adoption of the Alzheimer's CMT is critical. But also the other point to add in is that the guidelines favor earlier diagnostic usage. So that's an important component. And then finally, I'll just kind of anchor down on the ability for us to work with our nuclear medicine customers from a Lantheus portfolio perspective is really advantageous for us and for our customers. So I would just like to add that. Operator: Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program. You may disconnect, and have a wonderful day.
Operator: Good morning, ladies and gentlemen, and welcome to the DiaMedica Therapeutics First Quarter 2026 Earnings Conference Call. An audio recording of this webcast will be made available shortly after the call today on DiaMedica's website at www.diamedica.com in the Investor Relations section. Before the company proceeds with its remarks, please note that the company will be making forward-looking statements on today's call. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. More information, including factors that could cause actual results to differ from projected results appear in the sections entitled Cautionary Statement Notes regarding Forward-Looking Statements in the company's press release issued yesterday under the heading Risk Factors in DiaMedica's most recent annual report on Form 10-K and most recent quarterly report on Form 10-Q. DiaMedica's SEC filings are available at www.sec.gov and on its website. Please note that any comments made on today's call speak only as of today, May 7, 2026, and may no longer be accurate at the time of any replay or transcript rereading. Please -- following management's remarks, we will open the phone lines for questions. I would now like to introduce your host for today's call, Rick Pauls, DiaMedica's President and Chief Executive Officer. Mr. Pauls, you may begin. Dietrich Pauls: Thank you, operator, and thank you all for joining us today. With me this morning are Dr. Julie Krop, our Chief Medical Officer; and Scott Kellen, our Chief Financial Officer. Given that our last call was only 5 weeks ago, we'll try to keep our remarks short. We are pleased with the progress we've made so far in 2026 as we continue to advance DM199 across both our preeclampsia and acute ischemic stroke programs. Most importantly, for our shareholders, we're poised to deliver multiple clinical milestones between now and the end of 2027, all of which could provide significant validation of the value of DM199. We also weigh the risks and advantages of providing interim updates as clinically meaningful data emerges ahead of formal readouts. We're particularly interested in completing the interim analysis for our stroke program. We've been working diligently on the ReMEDy2 stroke trial for a long time, battling through some significant challenges emanating from the COVID pandemic. With enrollment having surpassed 70%, we expect that the interim analysis will validate all of the hard work that has gone into the program. I now turn the call over to Julie to provide additional detail on our preeclampsia and stroke programs. Julie Krop: Thank you, Rick. In the Phase II investigator-sponsored trial, enrollment is near completion in the extension cohort for the Part 1a dose escalation study in late-onset preeclampsia patients. Late onset patients are planned to deliver within 72 hours. This cohort will allow us to detect the dose or doses we plan to use for the upcoming cohorts of the IST. We expect to complete this cohort and provide a data update later this quarter. As you may recall, the interim results from this study demonstrated DM199's potential to reduce blood pressure and improve placental perfusion without crossing the placental barrier. While we only have data in a relatively small number of patients, the results we observed were highly consistent and encouraging. We look forward to sharing the data from the extension cohort to further support the interim results. Additionally, learnings from Part 1a are guiding protocol amendments for the 2 remaining preeclampsia study groups. The first group referred to as Part 1b is an expansion study with up to 30 additional late-onset preeclampsia patients who will receive DM199 as a continuous IV infusion until delivery. In this cohort, we hope to learn more about the ability of doctors to use DM199 to effectively support blood pressure control management at this late stage of the disease. The second part referred to as Part 2 will study up to 30 early onset preeclampsia patients. Three doses will be evaluated to support dosing for a Phase III trial and an optimal dose level to extend the time mom is able to carry the baby, increasing the gestational age at the delivery. As you've seen in our investor presentations, the medical complications for the baby are expected to decrease significantly the longer mom carries the baby. With the potential for DM199 to help manage blood pressure and improve blood flow to the placenta, we believe DM199 has a chance to be a transformative therapy for preeclampsia. Initiation of these 2 preeclampsia cohorts which will recruit concurrently, is expected to begin after the completion of the ongoing Part 1a extension cohort. The IST also includes a study in women experiencing fetal growth restriction. In this group, we will be evaluating the effects of DM199 on fetal growth restriction in patients without preeclampsia. FGR is a condition with diminished fetal growth due to a poorly functioning placenta, the life support system of the unborn child. FGR is the leading cause of stillbirth and for infants that survive the FGR pregnancy, it is associated with enduring adverse health effects over the child's lifespan. In this cohort, we will evaluate the potential for DM199 to increase placental perfusion and improve fetal development. Enrollment of the first patient for this study is expected in the current quarter. In parallel with the IST, we are advancing our global Phase II study in early onset preeclampsia. We intend to conduct this study in North America, both the United States and Canada and the United Kingdom. In March 2026, we received approval from Health Canada to initiate this study and study sites have been selected. We are working to initiate enrollment in Canada by the end of this year. We expect to file a clinical trial application in the U.K. in the current quarter. With respect to the status of the IND submission in the United States, as we discussed previously, the FDA requested an additional nonclinical 10-day modified embryo fetal development and pre- and postnatal development study in a rabbit model. Results of a non-GLP dose-ranging study in rabbit suggest that the animals developed an adverse immune response to DM199, preventing us from completing the requested modified pre- and postnatal development study in a rabbit model. We have proposed to the FDA performing this study in a second rodent model and are awaiting their response. That said, I would highlight for everyone that we are moving forward in parallel with the study in Canada and are planning to add U.K. sites while we complete any additional preclinical work requested by the FDA. This study will evaluate 3 dose groups of DM199 in patients with early onset preeclampsia to further establish safety, pharmacokinetics and pharmacodynamics in a more ethnically diverse patient group prior to initiating a registration study. Turning now to our stroke program. We are encouraged by the continued progress on the ReMEDy2 trial. Enrollment has now surpassed 70% of the target required for the interim analysis. Site activations and enrollments have recently commenced in Europe as well. In addition to the United States, Canada and the U.K., we've added 6 additional European countries and now have approximately 70 sites activated. In April, we sponsored an investigator meeting for our European study team that was well attended and had many productive sessions and discussions, which we believe are the key to getting the study teams excited about and focused on patient enrollment. And we are reiterating our intention to complete the interim analysis by the end of 2026. As a reminder, in the Phase II ReMEDy1 stroke study, treatment with DM199 was associated with clinically meaningful improvements in functional outcomes for the patient group that most closely resembles the patients enrolling in our ReMEDy2 trial. In the subset of patients that did not undergo a thrombectomy, we observed a 15% absolute increase over placebo in the proportion of patients achieving favorable recovery as measured by a score of 0 or 1 on the modified Rankin Scale. Furthermore, ReMEDy2 is enrolling patients presenting with moderate stroke severity defined as an NIHSS score between 5 and 15. Looking at that subgroup in the ReMEDy1 study, there was a 19% absolute improvement over placebo in functional outcomes. There was also a 50% reduction in the number of patient deaths and a 13.3% reduction in recurrent strokes compared to placebo. These data inform the design and powering assumptions for the ongoing ReMEDy2 trial. I think you can understand why we are eagerly awaiting the results of the interim analysis. Let me now turn the call back to Rick. Dietrich Pauls: Thanks, Julie. I'd like to now ask Scott to review the financial results for the quarter. Scott Kellen: Thank you, Rick, and good morning, everyone. We announced our first quarter 2026 financial results and filed our quarterly report on Form 10-Q yesterday after the markets closed. As of March 31, 2026, our cash, cash equivalents and short-term investments were $51.3 million, current liabilities were $5.7 million and working capital was $46.6 million compared to cash and investments of $59.9 million, current liabilities of $5.1 million and working capital of $55.5 million as of December 31, 2025. We anticipate that our current cash and investments will be sufficient to fund our planned clinical studies and operations through 2027. Net cash used in operating activities for the first quarter of '26 was $9.1 million compared to $7.1 million for the first quarter of 2025. The increase in cash used in operating activities resulted primarily from the increased net loss for the current year period, partially offset by changes in operating assets and liabilities during the current year quarter. Turning to the income statement. Our research and development expenses increased to $8 million for the 3 months ended March 31, 2026, up from $5.7 million for the same period in the prior year. The increase is due primarily to the increased costs resulting from the continuation of our ReMEDy2 clinical trial and its global expansion, the expansion of our clinical team and costs related to additional reproductive toxicity testing being performed in support of our PE program in the United States. These increases were partially offset by net cost reductions in manufacturing development activity related to work performed and completed in the prior year period. We expect that our R&D expenses will moderately increase in future periods relative to recent prior periods as we continue our ReMEDy2 trial and continue to advance our DM199 clinical development program into PE. Our general and administrative expenses were $2.5 million for the 3 months ended March 31, 2026, and 2025. While small changes occurred within a number of expense categories, the differences were not material individually or in the aggregate and the overall net changes offset each other. We expect G&A expenses to remain relatively consistent in future periods as compared to recent prior periods. With that, let me ask the operator to open the lines for questions. Operator: Your first question is from the line of Josh Schimmer with Cantor. Joshua Schimmer: The preeclampsia data updates that we'll get this quarter for the late onset cohort, what incremental observations should we be looking for beyond blood pressure control? Obviously, preeclampsia can affect urine output, kidney function, liver function platelets and biomarkers like sFlt. At what point will you have data to share on those parameters? Dietrich Pauls: Yes. Thanks, Josh. So the expansion cohort that we're running is going to be 12 additional patients. We're almost completing that right now. It's going to be at the cohort 10 from the Part 1a. And so it's really just going to give us additional clarification here, particularly on blood pressure, dilation of the intrauterine arteries. At this point, we're really not expecting any changes in some of the biomarkers like sFlt because these patients really only got 2 doses. It's really we believe that having the drug on board for ideally a week, 2 weeks that we really would see some of those biomarkers improve. Joshua Schimmer: Okay. Got it. So I think at one point, the lead investigators suggested that there was an improvement in edema at the very least maybe might be something that can improve within a short period of time. Is that something you're looking for? Dietrich Pauls: Yes, that's something that if there is an improvement in endothelial health, and it is something that Dr. Cathy Cluver very clearly seen in some of these patients that the edema did resolve even within 12 to 24 hours of getting DM199, which is encouraging. It's a small number of patients, but we'll be looking to see maybe there's some additional insight there as well. Joshua Schimmer: Just a couple of other quick questions, if I may. What are the steps to start initiating enrollment in the early onset preeclampsia study? Why is that not going to occur until later this year? Dietrich Pauls: Yes. Julie, do you want to take that one? Julie Krop: Yes. Are you referring to the IST cohort? Or are you referring to the -- to our sponsored trial? Joshua Schimmer: Sponsored trial. Julie Krop: Yes. We are in the midst of getting our dosing data from -- again, from the IST study before we select our final doses for that protocol as well as getting sites contracted up and running and our CRO selection process, all of that completed and then we'll be initiating. So it's a combination of factors, but we should be again in Canada later this year. Joshua Schimmer: And then last sorry... Dietrich Pauls: Sorry, if I can add. And so importantly, as we mentioned, so we have selected the 2 sites in Canada and one site in particular, is already in our stroke trial. So we're looking forward to leveraging the relationships, the existing contract that we have to basically doing what we can to expedite and get those sites activated as soon as we can. Joshua Schimmer: Got it. And then last question, timelines for completing the second animal toxicology study and then ultimately reengaging with the FDA for IND. Dietrich Pauls: Yes. So it will really depend on the feedback that we get from the FDA. And so it is a rat study that we proposed. And if they agree to that, that's a matter of a few months, probably 3 to 4 months to complete. And so again, while that's all happening, we'll be running the Phase II in Canada and then expanding to the U.K. Operator: Your next question is from the line of Stacy Ku with TD Cowen. Stacy Ku: So we have a couple of questions. So I guess, first, follow-ups. When could you expect to hear from the FDA on the mouse study? And is there a possibility the FDA could ask for another animal model? And how are you looking to prepare for all these different scenarios? It sounds like the rat study is pretty straightforward, but just help us understand how you view the next 2 necessary steps. And again, just to clarify, it sounds like you are expecting a potential study initiation of the global Phase II by year-end. Just want to make sure you're reiterating that time line. And then we're looking forward to the updated preeclampsia results in Q2. But as we think about the early onset preeclampsia or fetal growth restriction subgroups of the IST, could we think about any potential for low-dose updates by year-end for either of these groups? And then, Julie, just a clarification again, what is the timing of potentially starting the early onset preeclampsia IST? And then last, just a reminder, what's the go and no-go decisions on the interim results for stroke? I can repeat some of these questions. Dietrich Pauls: Okay. Great. So we'll try to take those. I'll start off here. Maybe Julie, you can help me out here. So in terms of the -- we did our submission to the FDA over a month ago. And so we're just waiting to hear the feedback. So as soon as we get clarity from the FDA, we'll provide an update. We have looked at alternative kind of backup plans in case they want something different. But we think we've got a very strong rationale for the proposed rat study. And I think it's encouraged that the Health Canada has already approved us to start the trial in Canada. With the PE trial in terms of, yes, potential that we could get some data as soon as we have a cohort that's completed and we see some compelling data, we would look at potentially press releasing or getting that at a late-breaking conference. And the last question that you had with regards to the outcomes of the interim analysis for the stroke program. First, we'll do a futility analysis. So if there's not a drug effect, we'll terminate. Otherwise, there'll be a resample size. And the resample size will be between 300 and 700 patients. And we believe if we see a drug effect comparable to what we see from our Phase II, which is comparable to the data we've seen with the data with the human urinary form in China, and there's about 1 million patients either being treated with that form. We would look at completing the enrollment in the following quarter. Operator: Your next question is from the line of Thomas Flaten with Lake Street. Thomas Flaten: Rick, just following up on that last response, just to clarify, given that you've got 70-plus sites and 70% enrolled, if you -- when you said we're going to complete enrollment in the following quarter, do you mean the first quarter of '27 or the -- which quarter were you referring to on the full enrollment? Dietrich Pauls: Yes. So assuming that we have the interim analysis at the end of this year, then we would anticipate completing the enrollment the following quarter, so the Q1 of next year. Thomas Flaten: And does that assume an upsize in the total population? Because it seems to me it's only May. And by year-end, when the interim analysis reads out, you should be pretty close to full enrollment on the original study size, right? Dietrich Pauls: We will be. So that after patient 200 is dosed, there'll be a 30 -- sorry, a 90-day window here for the primary endpoint and then another approximately 4 weeks for the interim analysis to occur. And during that approximately 4 months, we'll be continuing to enroll. So we'll be getting closer to the 300 patient number during that period of time. Thomas Flaten: Got it. And then just to clarify a prior response. So once you get the Part 1a expansion data out this quarter, there's -- is it reasonable to assume that you would start Part 1b and Part 2 in the third quarter? Or should we expect maybe a fourth quarter start on that? Dietrich Pauls: No, those should be starting here this summer. And so we're just -- we finalized the dosing that will be going into those cohorts. So we'll be doing 3 doses at 5, 10 and 15 micrograms per kg subcutaneous every 3 days until delivery. So those cohorts should be starting very soon. We had some -- we've now got our sites, Cape Town South Africa has had some challenges with some staffing and they've added some new staff. And so they've been very active recently in the Part 1a expansion study. So we feel very good that, that study will be enrolling soon. Operator: Your next question is from the line of Jason (sic) [ Chase ] Knickerbocker with Craig-Hallum Capital Group. Chase Knickerbocker: One for Scott. I appreciate your comments on forward R&D, but maybe just a little bit more color there. You said kind of modest increase. I would imagine kind of enrollment is still picking up on an absolute number for stroke. And then can you just give us an idea kind of what the magnitude of that increase you expect sequentially in stroke and then kind of the incremental costs you expect for PE through the year. Scott Kellen: Sure. Thanks, Chase. Yes, with respect to the stroke, modest increases. I mean the -- and you're correct, it's all going to be driven by the enrollment rates. And to some extent, it depends on whether those patients are enrolled in the U.S. or Europe. U.S. is probably the most expensive followed by U.K., Canada and Europe. And then with respect to the incremental cost for PE, there'll be -- well, we're still working on the estimates for the Phase II trial. The financial support we provide for the IST is very modest. It's an incredible bargain. So again, moderate -- modest to moderate increases, nothing order of magnitude change-wise. Chase Knickerbocker: Could you just define modest or moderate for us, if you don't mind? And then just one for Rick. Just as we think about the resample, should we kind of just expect to receive the number on the resample or anything else at that point that we'll be able to provide? Dietrich Pauls: Sure. For the interim analysis, we'll be providing an update on the expected timelines to complete the enrollments. Scott Kellen: Chase, it's hard to give a specific number because there's movement inside all the different expense categories. I mean I wouldn't expect it to go up more than 10% a quarter. Operator: I will now hand today's call over to Rick Pauls for any closing remarks. Dietrich Pauls: All right. Well, thank you all for joining us today. We greatly appreciate your interest in DiaMedica and hope that you enjoy the rest of the day. This concludes our call today. Thank you. Operator: Thank you for joining. You may now disconnect your lines.
Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, we're recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Mr. Steven Pelayo, Managing Director of Blueshirt Group. Steven, please go ahead. Steven C. Pelayo: Thank you. Good day, ladies and gentlemen. Thank you for standing by, and welcome to ACM Research First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Sorry, I'm repeating that. We released first quarter 2026 results before the U.S. market opened today. The release is available on our website as well as from newswire services. There's also a supplemental slide deck posted to the Investors section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang; our CFO, Mark McKechnie; and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under Risk Factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward-looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain and loss on short-term investments. For our GAAP results and reconciliation between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and on Slide 13. Also, unless otherwise noted, the following figures refer to the first quarter of 2026, and the comparisons are to the first quarter of 2025. So with that, I'm going to now turn the call over to David Wang. David? David Wang: Thanks, Steven. Hello, everyone, and welcome to ACM's First Quarter 2026 Earnings Conference Call. We started the year with a solid Q1 report with revenue up 34% and gross margin above the midpoint of our long-term target range. Revenue growth for the quarter was driven by the continued strength in our ECP and Advanced Packaging business. With a global boom in AI, the market is demanding solution for enabling high-speed, high-density and low-power consumption semiconductor devices manufacturing. Many of which have not yet been invented. It is clear that ACM's focus on world-class differentiated tool based on our own IP is right strategy to win in the global market. We are happy to see 2026 as a big year for new product. Our investment in our proprietary R&D over the past 5 years, together with our fully functioning [indiscernible] at Lingang, is beginning to deliver significant benefit. For instance, we now have industry-leading offering across multiple product categories that enable our global customers to effectively solving their evolving production challenges. As we progress through 2026, we expect to see an increased impact to our financials from new product. With regard to revenue, we anticipate incremental contribution from new product cycle from Tahoe, single-wafer SPM and our vertical furnace product. With regard to the shipment, we expect to increased shipment of our evaluation tool across a range of customers for our panel level horizontal plating, panel low-pressure flux cleaning, high-throughput track and PECVD tools. This quarter, at SEMICON China, we announced the ACM Planetary Family. This organized ACM tool portfolio into a product family, aligned with the key step in the semiconductor manufacturing process. This represents ACM's comprehensive world-class multiproduct offering and the global reach of our company. We encourage you to view the video on our IR website. Now on to our business results. Please turn to Slide 3. First quarter revenue was $231 million (sic) [ $231.3 million ], up 34% (sic) [ 34.2% ]. The ECP category was a primary growth driver with revenue up more than 3x year-over-year. Next, advanced packaging services spare parts category was growing 62%. This was partly offset by cleaning, which declined by 6%. We had a little contribution from new cleaning product in our Q1 2026 revenue. But as I will discuss later in the call, we have a significant ramp ahead for our single-wafer SPM tools, which we delivering in Q1. Shipments for the first quarter were $241 million (sic) [ $240.7 million ], up 54% (sic) [ 53.6% ]. The solid growth reflects strong customer demand and execution across our product portfolio, and it also includes contribution from the initial ramp of single-wafer SPM tools for wafers shipment of the cleaning category grew by 32% for the quarter. I also note that about 15% of Q1 shipments were from catch-up of product that had been rescheduled from Q4 of last year. For 2026, we continue to expect the shipment growing to outpace revenue growth. Gross margin was 46.5% for the first quarter, above the middle point of our long-term range, 42% to 48%. We ended the first quarter with gross cash of $1.3 billion (sic) [ $1.25 billion ] and net cash, $924 million (sic) [ $924.2 million ]. This balance including $110 million of gross proceeds from February sale of ACM Shanghai shares, the capital providing a solid foundation for continued investment in our global operations. Now I will provide detail on product. Please turn to Slide 4. Revenue from single-wafer cleaning, Tahoe semi-critical cleaning tool was down 6%. We continue to believe ACM's full product offering in cleaning is amongst the best in the world. As noted in the prior calls, we believe cleaning technology becomes even more important as the industry moving to more advanced production technology. This trend play directly to ACM's strength, particularly in differentiated technology such as N2 bubbling wet etcher, single-wafer SPM cleaning, Tahoe and others. I'm pleased to announce today that we expect a significant production ramping of single-wafer SPM production product line with more than 15 to 20 units to be delivered by year-end across our customer base. This is a result of many years of R&D by our team to develop a better solution than the current market leader. As I noted for the past several investor calls, ACM proprietary approach delivered excellent particle performance with a fewer than 15 particle at 15-nanometer, much better than market leader, while other players need a periodical DI water cleaning of the process chamber and the surrounding environment to remove residue generated by the hot SPM films. Our system does not. Instead, our unique module design providing a maintenance-free solution as the chamber does not need to be taken offline for periodical DI water cleaning. This not only improved tool uptime but also enhanced particle cleaning performance at 13 nanoparicle and beyond. Such fine particle removal is very critical for manufacturer advanced node GAA logic devices and memory devices such as SPM. It is no surprise that we are also seeing strong interest in our SPM tool from multiple global customers. SPM cleaning process tool has occupied 30% of the cleaning market. We believe our innovative hot SPM tool will take a significant market share in the next few years. Revenue for ECP, furnace and other technology grew 205%. Growing was driven by strong momentum in electroplating, supported by our leading position and expanding engagement across both front-end and advanced packaging applications. In advanced packaging, our panel level horizontal plating solution is gaining additional traction in Asia and with the global customers. We began development of our panel-level horizontal electroplating platform in 2022, well ahead of the industry and delivered world first horizontal plating tool, 515x510 millimeter, to a customer in the fourth quarter last year. Since then, we have continued to expand customer engagements and build a backlog, supporting both 515x510 millimeter and 310x310 millimeter format panels. In April, we presented a keynote at the Taiwan Electronic Equipment Forum on 3D IC packaging technology, highlighting our role in enabling next-generation AI driven packaging solutions. We are confident that a successful customer evaluation will lead to volume production order for 515x510 and additional evaluation of 310x310 later this year. For our vertical furnace business, tools are under evaluation at multiple customer sites, and we continue to expect a more meaningful revenue contribution later this year. We continue to see solid demand across key applications, including PECVD, oxidation, thermal ALD, PLD and ultra-high temperature anneal supported by our ongoing technology development. Revenue from advanced packaging, which excludes ECP, but including services and spares was up 62%. This category including coders, developer etcher, strippers, scrubber and vacuum clean flux tools, supporting a range -- a broader range of advanced packaging applications. We're also providing back-end plating tool, including in ECP category. Last quarter, we announced multiple advanced packaging equipment orders from leader -- leading global customers. In Q1, we shipped our panel-level vacuum cleaning system to a leading global semiconductor packaging manufacturer outside Mainland China. We also completed shipment of multiple wafer level advanced packaging system to a leading OSAT customer in Singapore. ACM is unique -- is uniquely positioned with a comprehensive set of wet process solutions and plating technology to address key process steps in advanced packaging. Our integrated process capability provide valuable insight into next-generation packaging challenges as industry evolves towards 2.5D and 3D integration, including TSV-based architecture and heterogeneous integration, we believe our capability position us to supporting this increasingly complex requirements. We are making good progress with our new track and PECVD platforms. In April, we shipped our first PECVD silicon carbon nitride system to a leading semiconductor manufacturer, now in customer evaluation process. This is a big deal. We achieved a great results in our mini line and the tool is now being evaluated at the customer site. The system incorporate ACM proprietary 3-station rotating architecture and 1 station 1 RF technology, enabling strong film uniformity, interface control, process stability and small footprint. We believe this positions us for growth in back end of the line and advanced packaging. For high-throughput 300 WPH KrF track tool, we delivered our first tool evaluation last September and are progressing towards mass production qualification this year, and we continue to see growing interest from multiple customers for both stand-alone and the configuration integrated with the scanner. ACM culture is deeply rooted in differentiated R&D. We bring innovative solutions to the ever-evolving challenges faced by major global semiconductor manufacturers. Our current success is driven by good decision-making fact and the future success depends on today's innovation. We are committed to our strategy to providing a long-term road map of world-class tool across our growing product portfolio. We remain confident in our $4 billion revenue target and our longer-term goal of becoming a top-tier supplier of capital equipment to the global semiconductor industry. Next, let me provide an update on our production facility. First, on Lingang, please turn to Slide 8. The first building is in volume production, and we plan to open the second building later this year. Together with two facilities, we can support up to $3 billion in annual output. On a strategic note, I will now discuss our Lingang line, which went into full operation in the second half of last year. We now have a fully experiment R&D line in the Class 100 Environment, running our own tool and those of other vendors. This is a big deal. It is accelerating our own R&D effort, and it will also speed up our joint R&D collaboration with our customer in Asia. We expect this to have a meaningful impact on our operating model. For new product rather than delivering multiple tool for extended customer evaluation, we now process custom wafer on our new product in the Lingang mini line to validate the tool to meet the customer specific requirements before shipment. We expect this approach to shorten qualification cycle of a new product at the customer site, shorten the time of conversion to revenue and enhance overall capital efficiency. We are now already seeing early benefit across multiple products. I will give a few examples. Our first shipment of the PECVD silicon carbide nitride system completed customer-specific validation and prior to shipment. We expect this to reduce on-site qualification time and enable faster ramp to production. We tested and improved our single-wafer SPM tool for several months, hand-in-hand with our leading customer and confirm 15-nanoparticle performance. This due to volume orders from numerous different customers. We are confident that we can reproduce each customer-specific production environment in our lab, resulting in shorter qualification and order a few quarters rather than more than a year. Next, our Oregon facility, please turn to Slide 9. We continue to advance investment in Oregon. We remain on track for in-house demo lab with multiple tools and the capability to produce U.S.-made tool in Oregon by year-end 2026. This is important for our global customer, and we believe it will strengthen our position as a key local partner as they scale production. Our global initiatives are beginning to pay off. By the end of 2026, we expect to have more than 20 tools installed outside of the Mainland China market. This including about 10 customers in 5 countries. Although still early days for our global deployment, our engagement team are growing, and we remain confident that our investment in global sales and service team will deliver good results. ACM Shanghai continue to play a critical role in our overall strategy, serving as a leading supplier to the semiconductor industry in Asia and as a key source of capital to support our global expansion. We completed a minority share sale last February, generating approximately $110 million in gross proceeds, and enable the strong on our U.S. accounts. We intend to deploy this capital to support our U.S. expansion and broader global growth initiatives. In April, ACM Shanghai announced a proposed H-share secondary listing in Hong Kong. Now turning to our outlook for the full year 2026. Please turn to Slide 10. In mid-January, we introduced our 2026 revenue outlook in the range of $1.08 billion to $1.175 billion. This implies 25% year-over-year growth at the midpoint. We reiterate this outlook today. We are expecting our annual shipment growth will outpace our revenue growth in 2026. Now let me turn the call over to our CFO, Mark, who will review details of our first quarter results. Mark, please? Mark McKechnie: Thank you, David, and good day, everyone. Please turn to Slide 11. Unless I note otherwise, I will refer to non-GAAP financial measures, which exclude stock-based compensation, and unrealized gain and loss on short-term investments. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the first quarter of 2026 and comparisons are with the first quarter of 2025. I will now provide the financial highlights. Revenue was $231.3 million, up 34.2%. Revenue for single-wafer cleaning, Tahoe and semi-critical cleaning was $122.5 million, down 5.5% and it represented about 53% of sales for the quarter. As David noted, this included very little contribution from new products. We expect significant shipments of SPM to ramp through the year, followed by revenue contribution in later quarters. For the full year 2026, we do anticipate the mix in cleaning will normalize towards the 65% level, similar to the mix in 2025. Revenue for ECP front-end packaging, furnace and other technologies was $84.2 million, up 204.9% and represented 36.4% of sales for the quarter. The majority was ECP front end, and we had very little contribution from furnace. Revenue from advanced packaging, excluding ECP, services and spares was $24.5 million, up 62% and represented 10.6% of sales for the quarter. Total shipments were $240.7 million, up 53.6%. As David noted, this was driven by solid demand and good execution and also cleaning shipments grew by 32%. Approximately 15% of the shipments were catch-up from tools that were originally scheduled for Q4 delivery. For 2026, we continue to expect shipment growth to outpace revenue growth. Gross margin was 46.5% versus 48.2%. Q1 gross margin was above the midpoint of our long-term target model of 42% to 48% and a good recovery from the low 40% range in Q3 and Q4 of 2025. Favorable product mix and a slightly lower impact from the inventory provision led to the recovery. We maintained our 42% to 48% target range and note that product mix can cause fluctuations on a quarterly basis. Operating expenses were $65.8 million, up 38.5%. R&D was 15% of sales, sales and marketing was 8.3% of sales and G&A was 5.1% of sales. For 2026, we plan for R&D in the 16% to 18%, sales and marketing in the 8% to 9% range and G&A in the 5% to 6% range. Operating income was $41.8 million versus $35.6 million. Operating margin was 18.1% as compared to 20.7%. Long-term, we look to grow our R&D spending in line with revenue, but to show operating leverage in SG&A. Income tax expense was $3.8 million versus $2.2 million. For 2026, we expect our effective tax rate in the 8% to 10% range. Net income attributable to ACM Research was $24.3 million versus $31.3 million. Net income was $24.3 million versus $31.3 million. I just said that. I am -- okay. Our non-GAAP net income excluded $5.6 million in stock-based compensation expense for the first quarter. We anticipate SBC will increase in Q2 due to option grants related to ACM Shanghai stock that were granted in Q1. Net income per diluted share was $0.34 versus $0.46. Now on to the balance sheet and cash flow items. Cash and cash equivalents, restricted cash and time deposits were $1.25 billion at the end of the first quarter of 2026 versus $1.13 billion at the end of 2025. Net cash, which excludes short-term and long-term debt was $924.2 million at quarter end versus $844.5 million at year-end 2025. Total inventory was $738 million versus $702.6 million at year-end 2025. Raw materials were $377.9 million, up $28.3 million quarter-over-quarter. We made additional strategic purchases to support production plans and to mitigate potential supply chain risk. Work in process was $81.6 million, up $20.2 million quarter-over-quarter. Finished goods inventory was $278.4 million, down $13.1 million quarter-over-quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM's facilities. Cash used by operations was $29.5 million. Capital expenditures were $22 million. For the full year 2026, we now expect to spend about $175 million in capital expenditures. That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead. Operator: Your first question comes from the line of Suji Desilva with ROTH Capital. Sujeeva De Silva: Can you talk about the cleaning segment and what drove the decline year-over-year in 1Q? And then how it's going to ramp up? What caused that pause? It would be helpful to understand that. David Wang: Okay. Thanks, Suji. Actually, let's put it this way. In 2025 we start to see our cleaning product has been going through the many applications, right, including those mature nodes and all the advanced nodes. So the 2025, we're still facing some difficulty and also problem, right, for those new applications. And with the 12 months, our problem solving with the customer, especially most important in the our Lingang production has started using. So those kind of problems actually we're mostly solving already. And that really show that is, I want to say, last whole year progress also are difficult. That's why we can see impact our Q1 revenue. However, as I said, since we're solving most of the issue, even today, our performance -- some tool performance even outpaced our leading supplier from global. So we see that really growing for our revenue. And you can see that the first quarter, our revenue grow, revenue, I must say our shipment from the cleaning product is a 32% increase year-over-year, right? I give another picture, our project backlog increased from this first 6 months versus last 1 year, first 6 months were almost like 50% increase too for [ the PO receiving ]. So that really shows the momentum continuing. And also in my script, I specifically mentioned about this SPM process. It's really our proprietary technology we are gaining customer interest, especially reach excellent results at the 15-nanoparticle size. That's really show our technology is better than the leading supplier. So we have confidence you can take significant market share in the SPM business, right? We're expecting 15 to 20 tool will deliver to the customer in Asia or in China, too. So anyway, that's, I think, the answer for you. Sujeeva De Silva: Very helpful color. And then, David, just kind of following through on that, with shipments expected to outpace revenue in '26, would we think that '27 should be an above trend year? I mean, obviously, you're not guiding, but just trying to understand the implications of that. David Wang: Well, I mean, '27 is a little bit far away, right? But I want to see that our -- let me put it this way, 2026, we gained a lot of share, I mean, a PO or the customer interest for our cleaning tool, obviously, copper plating tool, right? Copper plating, you can see grows a lot. And also, we see the interest -- people were interested in our furnace and the PECVD and track system. So I want to see that 2027, we see our new product, including, for example, copper plating for panel tools, we're getting into the revenue and shipment picture in 2027. So as I mentioned in a couple of earnings call, with our new product sort of playing into our product line, we see a lot of bigger growth in the next few years and we are supporting ACM's multi-product strategy and continue to grow our long-term revenue. Operator: Your next question comes from the line of Denis Pyatchanin with Needham & Company. Denis Pyatchanin: Just one question from us today. So it looks like the ECP, the front-end packaging, and other technologies segment has been seeing pretty sustained strength, up very significantly both year-over-year and quarter-over-quarter. Can you tell us more about what's doing well in that segment? What kind of customers are adopting, which tools? Just some more color would be great. David Wang: Yes. I want to say that this plating business has been growing a lot, right? Obviously, front end growing and also you can see HBM is also driving. And obviously, advanced packaging for all the 2.5D and application also growing and driving too. So that's really driving factor for the copper plating and also our advanced packaging wet process tool, including coater, developer, wet etcher, PR stripper and cleaning. Operator: Seeing no more questions in the queue, let me turn the call back to Steven Pelayo for closing remarks. Steven C. Pelayo: Great. Thank you. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On June 17, we will present at the 16th Annual ROTH London Conference at the Four Seasons Park Lane in London. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representative to register and schedule one-on-one meetings with the management team. This concludes the call, and you may now disconnect. Take care.
Operator: Good morning. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amylyx Pharmaceuticals First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to Lindsey Allen, Vice President, Investor Relations and Communications. Please proceed. Lindsey Allen: Good morning, and thank you all for joining us today to discuss our first quarter 2026 financial results and business update. With me on the call today are Josh Cohen and Justin Klee, our Co-CEOs; Dr. Camille Bedrosian, our Chief Medical Officer; Jim Frates, our Chief Financial Officer; and Dan Monahan, our Chief Commercial Officer. Before we begin, I would like to remind everyone that any statements we make or information presented on this call that are not historical facts are forward-looking statements that are based on our current beliefs, plans and expectations and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, our expectations with respect to avexitide, AMX0035, AMX0114 and AMX0318, statements regarding regulatory and clinical developments and the impact thereof and the expected timing thereof and statements regarding our cash runway. Actual events and results could differ materially from those expressed or implied by any forward-looking statements. You are cautioned not to place any undue reliance on these forward-looking statements, and Amylyx disclaims any obligation to update such statements unless required by law. Now I will turn the call over to Justin. Justin Klee: Good morning, everyone, and thank you for joining us. The first quarter of 2026 was marked by execution across our pipeline. Most notably, we continue to progress the pivotal Phase III LUCIDITY trial of avexitide, our investigational first-in-class GLP-1 receptor antagonist with FDA breakthrough therapy designation in post-bariatric hypoglycemia or PBH. We are executing on the 3 strategic imperatives for avexitide that we outlined earlier this year. First, we are advancing the pivotal Phase III LUCIDITY trial toward top line data. Randomizing and dosing the last participant in late March was a significant milestone. We have a clear line of sight toward the completion of the 16-week trial, and we remain on track for a top line readout next quarter. Second, we are advancing NDA readiness and regulatory preparations. We are already drafting NDA sections to support a potential submission. And third, we continue to strengthen our launch readiness. We are executing against a comprehensive commercial readiness road map to help ensure we are fully prepared for commercialization of avexitide, if approved, in 2027. In addition to avexitide, we continue to make progress across our broader pipeline. For AMX0318, our long-acting GLP-1 receptor antagonist, IND-enabling studies are underway. We are targeting a 2027 IND filing. For AMX0035 in Wolfram syndrome, we anticipate presenting longer-term week 96 data from the Phase II open-label HELIOS clinical trial at an upcoming scientific meeting. And for AMX0114 in ALS, we fully enrolled Cohort 2 of the Phase I LUMINA trial in March. At the ENCALS Annual Meeting this June, we expect to present early biomarker data from Cohort 1, the first and lowest of 4 doses being evaluated in the trial. We expect these data will provide initial information about the levels of the ALS biomarkers being assessed in the LUMINA trial from the first cohort. As we continue to advance our pipeline, we are simultaneously preparing for the potential commercial launch of avexitide. To discuss our launch readiness efforts, Dan Monahan, our Chief Commercial Officer, is with us on the call today. Dan joined Amylyx in January 2024, bringing more than 2 decades of experience. He was instrumental in the commercialization of Otsuka's Rexulti, Novartis' Cosentyx and Sanofi's Lantus and Actonel, among others. With that, Dan, I'll turn the call over to you. Dan Monahan: Thank you, Justin, and good morning, everyone. I'm pleased to be on the call today to discuss how we have been refining our launch strategies as we prepare for the potential commercialization of avexitide next year. The more we engage with the PBH community, the more we understand the profound unmet need that exists. We are operating with a deep sense of urgency. To date, our commercial efforts have been focused on gaining key insights into the PBH market. This includes gathering direct insights from people living with PBH and the health care professionals who are managing their condition. In addition, we are developing a deep understanding of the patient journey and continuing ongoing claims work to help us determine where patients are being treated. To enable our commercial preparations, we've made key hires across marketing, market access and commercial operations. Ahead of the potential approval and commercial launch of avexitide, our immediate focus is on disease state education. This includes raising stakeholder awareness of PBH with an emphasis on the pathophysiology, the importance of accurate and timely diagnosis and the profound unmet need and burden of the condition. We plan to launch this disease state education campaign this summer. Looking at the market opportunity, our independent claims analysis and ongoing field engagements continue to support our estimate of approximately 160,000 people living with PBH in the U.S. who have undergone the 2 most common types of bariatric surgery: sleeve gastrectomy and Roux-en-Y gastric bypass. Our estimates are firmly rooted in the growing body of prospective and retrospective published literature, including large long-term cohort studies evaluating hypoglycemia in people who have undergone bariatric surgery. Importantly, our ongoing market research indicates that endocrinologists have a high intent to treat PBH if there were to be an approved medicine. To reach appropriate patients, we have initiated our marketplace sizing efforts and continue to identify key centers and endocrinologists that manage this condition. Building up to the potential launch, we will refine these efforts as more insights are generated. Our commercial preparations are advancing in lockstep with our clinical progress, and we look forward to sharing additional details as we move closer to the commercialization of avexitide, if approved. With that, I'll turn the call over to Camille to provide an update on our clinical and medical affairs progress this quarter. Camille Bedrosian: Thank you, Dan. To start, PBH is a chronic metabolic condition driven by an exaggerated GLP-1 response, primarily after food intake, resulting in persistent recurrent and often debilitating hypoglycemia. These events cause an inadequate supply of glucose to the brain known as neuroglycopenia with potential clinical consequences such as cognitive dysfunction, seizures and loss of consciousness. For people living with PBH, this can create a life of perpetual vigilance where a meal with friends or a drive to work carries the risk of debilitating hypoglycemia and its ramification. This fear can disrupt independence and compromise safety, nutrition and overall quality of life. Currently, there are no FDA-approved therapies. Our pivotal Phase III LUCIDITY trial is evaluating avexitide, 90 milligrams once daily, in individuals with PBH following Roux-en-Y gastric bypass surgery using the FDA agreed-upon primary outcome of reduction in the composite of Level 2 and Level 3 hypoglycemic events through week 16. LUCIDITY was designed with the goal of replication. Five prior avexitide trials in PBH, which demonstrated statistically significant results, including reductions in hypoglycemic events directly informed the dose, the primary endpoint, inclusion criteria and surgical subtype for LUCIDITY. Echoing Justin's earlier remarks, our clinical team remains deeply focused on the execution of the LUCIDITY trial, and we continue to work closely with our investigators as we approach our anticipated data readout next quarter. In parallel with our clinical trial execution, we are actively ramping up our field medical affairs team to facilitate on-the-ground engagement with KOLs. I also am pleased to share that we recently launched a U.S. expanded access program to provide avexitide for up to 250 adults with PBH following Roux-en-Y gastric bypass. This program is a direct response to the urgent need we are hearing from individuals who are struggling with the devastating daily realities of PBH and the physicians who treat them. Initial eligible patients include individuals who have either completed LUCIDITY or participated in previous clinical trials of avexitide in PBH. As a reminder, avexitide is an investigational drug and has not been approved by the FDA for any indication. Working directly with the PBH community and seeing the everyday impact of this devastating condition drives our continued commitment to our clinical and medical efforts. And with that, I will now turn over the call to Jim to review our financials. Jim? James Frates: Thanks, Camille. Our financial results for the first quarter were in line with our plans and reflect our focus on the Phase III LUCIDITY trial and targeted investments in advancing our broader pipeline. We ended the fourth quarter with $279.8 million in cash and marketable securities compared to $317 million at the end of the fourth quarter of last year. This capital funds our anticipated cash runway into 2028, including our key expected milestones: the LUCIDITY top line readout expected in Q3 2026, potential FDA approval and potential commercial launch of avexitide in 2027. Turning now to our results for the quarter. Total operating expenses for the quarter were $43.8 million, up 16% from the same period in 2025. Research and development expenses were $27.6 million compared to $22.1 million in Q1 2025. The increase was primarily due to an increase in spending related to the clinical development of avexitide in PBH. This quarter, we also recognized a milestone payment of $4 million to Gubra following the identification of AMX0318 as a development candidate for PBH and other rare diseases. The increase was offset by decreased spending related to the clinical development of AMX0035 for progressive supranuclear palsy. Selling, general and administrative expenses were $16.2 million compared to $15.7 million in Q1 2025. This increase was primarily due to an increase in consulting and professional services as we prepare for the potential commercial launch of avexitide. We recognized $6.1 million of noncash stock-based compensation expense for the quarter compared to $6.8 million of noncash stock-based compensation expense in Q1 2025. Turning to our balance sheet. Our cash usage was slightly higher in Q1 compared to Q4 because of our Gubra milestone payments and the payment of our annual corporate bonus during the quarter. We're in the midst of a pivotal year for Amylyx with the top line data readout for LUCIDITY expected in Q3. The team will continue to focus on scaling our business with discipline, and we're actively laying the groundwork for a potential commercial launch. This focus positions us well, particularly for our work with avexitide. We continue to believe Avexitide has the potential to be a breakthrough treatment for PBH. With that, I'll turn the call over to Josh. Joshua Cohen: Thanks, Jim. To close, we are focused on the execution of the LUCIDITY trial as we track toward our anticipated top line readout next quarter. PBH is a chronic lifelong condition with symptoms that often emerge 1 to 3 years following bariatric surgery. Many people who receive bariatric surgery are in their 40s, suggesting that if they develop PBH, they may have decades of life impacted by this condition. The broader medical community continues to recognize this critical need in PBH. In March, Dr. Colleen Craig and her colleagues at Stanford published the first U.S. prevalence model for PBH in surgery for obesity and related diseases, the official peer-reviewed journal of the ASMBS. And in April, CMS published their annual list of ICD-10 codes to be potentially effective October 1, 2026, which includes an ICD-10 code specific to PBH. The planned adoption of an ICD-10 code shows the growing recognition of this condition by the medical community. We believe that avexitide, if approved, could play a meaningful role in addressing this highly underserved patient population. In parallel with LUCIDITY, we are actively preparing for a regulatory submission following top line results while simultaneously scaling our commercial and medical teams to support a strong commercial launch of avexitide in 2027, if approved. With that, I would like to now open the call up for questions. Operator: [Operator Instructions] Your first question comes from the line of Seamus Fernandez with Guggenheim. Seamus Fernandez: I hope you'll bear 2 for me quickly. The first question is really on the initiation of the EAP. Typically, we see companies sort of waiting for the completion of their Phase III and then the announcement of an EAP in the wake of a positive Phase III. Just wanted to get a better sense of, obviously, how you were able to execute this and get it approved, and then also how you are really responding to the community with the implementation and announcement of the EAP. And then just a quick follow-up question. I wanted to get a sense of just sort of that relative impact that working on the NDA now could actually have from a filing perspective. Typically, when we see biotech companies with positive Phase III data, it will take as much as 6 to 9 months to see that file. So just wanted to get a sense of how working on the NDA now might advance that ahead of those types of time lines. Camille Bedrosian: Thank you very much, Seamus. This is Camille. So for the EAP, indeed, we are responding to the community where there is currently no approved therapies for PBH, and we recognize and have received several requests and demands. Importantly, we're starting the EAP now because we want to be sure there's continuity of treatment for people in the LUCIDITY study who are completing the OLED portion of the LUCIDITY trial. So that drives the timing for the EAP. Now with regard to your question about NDA preparation, Yes, we're sort of not typical for sure. And we are working, as noted, on NDA preparations. And we do hope that, that will allow us to be most efficient as we reach top line data next quarter. And because there is a great sense of urgency, there are no treatments for people with PBH. And if positive, we want to be sure that we're providing the opportunity for access as promptly as possible. Joshua Cohen: Yes. And maybe just -- maybe underscore from Camille as well. I think both of these activities both underscore too, the unmet need in PBH. We know that patients urgently need a new therapy and also our excitement about avexitide. We've had 5 prior trials of avexitide, all which showed very strong results. We have breakthrough therapy from FDA. So we want both to get patients access as quickly as possible, which, of course, is reflected with the EAP, but also, pending positive results, to be able to submit as soon as we possibly can, which is reflected by our ongoing work on the NDA. Justin Klee: And just one more thing to add, thank you, Seamus, is we also have a very experienced team here. Our team has experience with global regulatory approval, certainly a lot of experience with FDA as well. And so that allows us to start working on the NDA documents now. Again, everything is driven by the urgent unmet need for people with PBH, but I think coupled with the strong experience we have here, both for regulatory submissions and process as well as commercialization. Operator: Your next question comes from the line of Joseph Thome with TD Cowen. Unknown Analyst: This is Jacob on for Joe. We were wondering how the baseline for the enrolled Phase III population compare to the patients in the Phase II studies, and then what the expected placebo response in Phase III might be versus what we know about the patients in Phase II and the differences in the run-in periods. Camille Bedrosian: Sure. So the study is ongoing and blinded. And so we will not really comment on the details of this ongoing study. Having said that, we are very much looking forward to top line data next quarter where we'll share the top line data with you and hope you're sharing our excitement as well for this possibility. With regard to the placebo, remind as well, we've had 5 prior highly successful trials. The Phase II trial showed statistical significance and clinically meaningful reductions in the composite as we presented at ENDO. In the PREVENT study, 55% reduction with a highly statistically significant value, and with -- in the Phase IIb with a 90-milligram dose, the dose in LUCIDITY, 64% reduction with a p-value of 0.0031. Those p-values do take into account all aspects of the trial, including the possibility of any placebo effect. We designed LUCIDITY with the goal of replicating these prior successful trials. So -- and we powered -- we're highly powered, 90%, to detect a clinically meaningful reduction in events even under the most conservative circumstances. Operator: Your next question comes from the line of Corinne Johnson with Goldman Sachs. Kevin Strang: This is Kevin on for Corinne. Could you just talk about the steps that you've taken beyond the event rate quota to ensure patient quality in the study for LUCIDITY and then also to ensure, sort of as much as possible, adherence to study protocols for the full 16-week treatment period? Camille Bedrosian: Sure. So we -- again, we're replicating as much as possible the way LUCIDITY is being conducted, mirroring what was done in the successful Phase II and Phase IIb studies. We have training -- extensive training at the clinical sites at the onset of the clinical trial. That training is reinforced throughout the conduct. And we also have materials for the participants to guide them on the study procedures throughout the study as well. And we also do have quality checks on the data overall to be sure that things are moving along well. Joshua Cohen: Yes. And I'd just add too, we have a very experienced team at Amylyx and quality starts from selecting great sites, having strong oversight. And I think throughout the whole course of the study, I've been quite proud of the team's efforts, just kind of continually keeping close and making sure that quality is kind of built in from the start and continues through the whole study. Operator: Your next question comes from the line of Michael DiFiore with Evercore ISI. Michael DiFiore: Congrats on all the continued progress. First one for me is, now that LUCIDITY is fully enrolled, can you help us think through what the top line disclosure will actually look like, what it will contain, beyond whether the primary endpoint is met? What do you think will be the most important aspect of the data for people to understand, again, beyond the primary endpoint in that initial release? And secondly, since you're already preparing for NDA, since the last update, can you share more light on what work remains to be done between top line and potential submission, maybe in terms of QC, any additional studies, et cetera? Justin Klee: Yes. Thank you, Mike. So I think first, in terms of top line disclosure, you know us well. We're a transparent company. So our goal is always to present things as they are. I think what's important in this study is probably 2 things to remind. The first is that the primary outcome, which is Level 2, Level 3 hypoglycemic events, not only is it the primary outcome, it's in FDA guidance, but it's also very well known by endocrinologists and it's inherently clinically meaningful. Level 2 events being less than 54 milligrams per deciliter blood glucose, which is the blood value at which neuroglycopenia occurs. Level 3, of course, means that the clinical manifestations of hypoglycemia have already occurred. So those are inherently clinically meaningful. And then I think a second important point is that there are currently no treatments for PBH. And so what we have heard consistently, not just from people with PBH, but from physicians as well is that any reduction in hypoglycemic events is meaningful. Each one of these events is a medical emergency. And so what we hear from physicians often is that they are worried for their patients, and they have really very few tools to help prevent these medical emergencies. So any reduction in these hypoglycemic events is meaningful. In terms of the NDA, we're working hard on everything we can now. I think the goal would be that the last really substantial piece of work would be everything associated with the Phase III trial. So we're trying to write everything in advance that we can. As I said, we have a very experienced team who's been through many regulatory submissions before. So they're hard at work as we speak. Operator: Your next question comes from the line of Marc Goodman with Leerink Partners. Marc Goodman: This process of adjudicating the claims data, can you give us an example or 2 of just some of these efforts and just so we understand what you have done so far and how confident you are that you're finding these patients in the places that you think they are based on the claims data? And are you only counting, like, the moderate to severe ones, you're not counting the benign ones, right? Dan Monahan: Thanks, Marc. Appreciate the question. Just to talk a little bit about the claims analysis, so within the claims databases, we start with identifying patients that have a presence of bariatric surgery. And then, we look at patients who also have documented hypoglycemia, so nondiabetic hypoglycemia. And then, after that, we'll then apply and we have applied additional signs and symptoms associated with PBH such as fatigue, dizziness, seizures, even blood glucose tests or even ER visits. And then, to add to that, we can look at it from how many of those type of events they've also had within the claims databases. So that's really how we've continued to look at the databases. I'll say we've done it several times. And each time we do it, we are confident in the 160,000 patient population that we've mentioned a few times. Joshua Cohen: Yes. And I might just add, too, some added work the team has done, too, is both speaking to many of the sites and doing kind of market research with many of the sites to validate what we're finding in claims. For example, if the claims are saying a site has 50 patients, actually checking with the site and seeing if they do have 50 patients. And so far, those have been quite confirmatory as well. And I'll also just add from the call today, we also received notification kind of through the CMS manual list that there's likely to be an ICD-10 code for PBH going live in October, which will provide an additional tool kind of to track the claims data as well. Justin Klee: Yes. And directly to your point, too, on excluding benign, based on the coding, both on hypoglycemia, as well as the signs and symptoms, these are people who have severe hypoglycemia. Operator: Your next question comes from the line of Geoff Meacham with Citibank. Geoffrey Meacham: I have 2 quick ones. So ahead of LUCIDITY top line, I know the primary outcome measure is Level 2 or 3 events as a composite. But is there a thought of looking at each one of those separately, in particular, Level 3, just to have a cleaner look at the profile from maybe a more commercial context? And then, the second question. As you guys begin to focus on commercial and further evaluate the PBH prescriber base, how has your thinking evolved in terms of size and scope of sales force and MSL teams? Camille Bedrosian: Geoff, I'll take your first question and then pass to Dan for your second. So, as you say, our primary endpoint, which is FDA agreed upon, we were looking at the reduction in the composite of Level 2 and Level 3 events, and that is well established in the ADA, Diabetes Association, literature and community as well. We do intend as well -- our secondary endpoints are looking separately at Level 2, which is by fingerstick blood glucose level of less than 54 grams per deciliter, and separately Level 3, which is independent of glucose level, signs and symptoms that require individuals to have another individual help or signs and symptoms that would have required someone else to help them if no one else is around. And that is adjudicated by an independent group of experienced endocrinologists who are blinded to the data as well, and they do that adjudication on an ongoing basis. Justin Klee: And I'll just add, too, from the sort of commercial point of view, so you're right, absolutely, Level 3 means the person has had the manifestation of hypoglycemia. And so, of course, that's important. But Level 2 being less than 54 is very well established, too. So I think endocrinologists will be interested in both. And if you think about the outcome, it's really a nice mix. You have a blood value which indicates severe hypoglycemia, so you kind of know what's happening in the body. And then, you have a clinical outcome in Level 3, where you know the person has had the impact of severe hypoglycemia. And then, for your question on prescriber base, I'll turn it to Dan. Dan Monahan: Geoff, thanks for the commercial question. So, on the sales force sizing, we are initiating the go-to-market efforts at this moment. I would say, this is a rare endocrine launch. So from an expectation -- you can expect that the sales force would reflect this particular size of the sales force. I'd also add that on Camille's team and the medical affairs function, we have initiated hiring our regional Scientific Director team, also known as an MSL team, but those hires are in place. Operator: Your next question comes from the line of Rami Katkhuda with LifeSci Capital. Rami Katkhuda: I guess, can you touch on the degree of natural variability there is in Level 2 and Level 3 hypoglycemic events for PBH patients? Do you expect a massive difference from one week to another? And then, secondly, from a commercial perspective, are these PBH patients generally managed at centers of excellence? Or would you need to target endocrinologists more broadly? Joshua Cohen: Sure. Maybe starting with the variability. So all of that's taken into account in our powering analysis, and I think we were quite conservative in our powering, both on the effect size and on the placebo effect, whereas we saw a 50% and 64% effect size at the 60 and 90 mg doses, we powered to a 35% effect, and then, of course, retaining power up to a 50% placebo effect, even though I don't think we expect that in this condition. You can certainly look at the variability kind of from previous studies. But again, that's all kind of accounted for in our powering analysis. And generally, it's a chronic condition. Generally, people are not able to prevent these events from occurring. So often, if people are having events, that will be a continuous thing. They don't kind of come in fits and starts, so to speak, all that often. In terms of the question of how we'll target centers of excellence versus the broader endo community, I'll pass it over to Dan. Dan Monahan: Sure. Thanks, Josh. And I appreciate the question on the potential [indiscernible]. On the -- where the patients are potentially treated, so we have initiated that work, and we are aware, and Josh mentioned this earlier, but there are centers of excellence. There are also key opinion leaders, and that's likely where we'll start from a launch perspective. We know that there's potentially 50 to 60 patients at certain centers, and some centers have even mentioned even more. But we'll start there. We know there's a concentration. And then, as our disease state education efforts take a foothold, we'll expand into the broader endocrinology community. Operator: Your next question comes from the line of James Condulis with Stifel. Unknown Analyst: This is Mark on for James. One for me on Recordati. I believe we should be getting some data this quarter. And just curious your thoughts here as it relates to potential placebo effect and what the implications are for LUCIDITY and whether really this is something that can actually be sort of read through on your trial. Justin Klee: Yes. Thank you, Mark. So I would say, no, I wouldn't think there should be any read-through. They're very different studies. And of course, we're conducting our study and Recordati is conducting their study. As I understand it, I think their study is a Phase II, looking at mixed meal tolerance test. And ours is based on the prior Phase IIs, which is a much more real-world type approach, looking at Level 2, Level 3 hypoglycemic events, which, of course, is within FDA guidance, to support a potential registration. So, no, I don't think there should be any read-through between the studies. Camille Bedrosian: Plus the mechanisms of the drugs are very different as well. Operator: Your next question comes from the line of Graig Suvannavejh with Mizuho. Samuel Lee: This is Sam on for Graig. Maybe switching over to 0114 with the ALS data coming up shortly, can you just remind us of the specific biomarkers potential [indiscernible]? I know there was some prior analysis done by you guys highlighting certain biomarkers. But maybe just a reminder, and then also some of the expectations you guys have or we should be thinking about going ahead into the data. Camille Bedrosian: Sure. Thanks very much. So just to remind, our ALS study with AMX0114, which is an ASO against calpain-2, is ongoing. We announced that we completed enrollment of Cohort 1 in March and that we are recruiting Cohort 2 at the moment. And earlier this year, we reported on the safety data for Cohort 1. And we do anticipate, as you point out, reporting on the biomarker data. Actually, it will be this June at ENCALS in Madrid, Spain. So the biomarkers that we're studying are related to the mechanism of the calpain-2 ASO, blocking this protease, as well as biomarkers that are related also to the ALS disease process. And we look forward very much to sharing those data with you. Joshua Cohen: And just to add as well, as Camille said, the study is proceeding incredibly well. So I think as Camille was mentioning, we've completed enrollment in Cohort 2, and we're now recruiting for Cohort 3 as well. Operator: Your next question comes from the line of Jason Gerberry with Bank of America. Unknown Analyst: This is [indiscernible] on for Jason. Maybe just a couple of commercial questions on avexitide. I think you've mentioned before that the ICD-10 code was not necessary for successful commercialization. But just curious how ultimately having an ICD-10 code kind of alters your confidence in identifying and capturing patients at scale. I know you've outlined the centers you're targeting and what your commercial strategy is, but just curious if it impacts how you're approaching your commercial plan. And then, just a second quick follow-up. I believe you plan to position avexitide as a chronic therapy. I'm just curious what your -- what assumptions you're making around expectations for persistence and adherence in the real world. Dan Monahan: Great. Thanks, [ Tina ]. So, on the ICD-10 question, so in April, CMS, they published a list of ICD-10 codes to be effective October 1. These codes demonstrate a recognition of PBH in the broader medical community. The ICD-10 code, yes, it is helpful for diagnosis and tracking of patients. However, it's not necessarily -- it's not a necessity. ICD-10 codes are often used for epidemiology. So, in implementation of the code, this will enable patients to be tracked across the various electronic medical record systems. It's also important to note that patients, today, they still can be identified via the claims analysis, and that's how we validated the 160,000 patient population. Joshua Cohen: And then, to your other question, too, about kind of chronic therapy and persistence, it's probably early to comment there. We're quite excited about avexitide. And PBH is a chronic condition where the needs do not go away over time. So certainly, we do think that patients will have an ongoing need for therapy. Operator: Your next question comes from the line of Chris Chen with Baird. Christopher Chen: Congrats on the progress. Just a quick one on the OLE. Can you just remind us what the setup is specifically for that? And are you able to kind of share high level how enrollment in that is going? Camille Bedrosian: Sure. So, are you speaking of the OLE or the EAP, just so I'm clear, please? Christopher Chen: The OLE for LUCIDITY, the... Camille Bedrosian: Open-label extension? Christopher Chen: Open-label extension, yes. Camille Bedrosian: Yes. So while I will not comment on details of our ongoing blinded trial, I am pleased to share that LUCIDITY is proceeding well, including participants transitioning from the double-blind period to the OLE portion of the study. We're confident that we're running the right study, and we're very pleased on how the team has been executing on the trial. We have such an experienced team, and they're overseeing the trial with great focus and care. Joshua Cohen: Yes. And you asked the OLE setup. So just to add there as well, so we expect the randomized double-blind study is the study that will -- we expect to use in our NDA to support potential commercialization. The OLE itself, though, also has a Part A and a Part B. During the Part A, we keep the study very similar to how it's conducted during the double blind. That allows to look at kind of data in a similar way to we look at as the double blind. And then later, they enroll in the [ OLE B ] after 8 weeks in the OLE, at which point, it's a little more -- there's less -- it's a less burdensome kind of trial participation at that point. But overall, just to kind of reiterate what Camille said as well, we're very pleased with the conduct of the study. There's a lot of excitement from sites and otherwise as well, and we'll look forward to reporting our data in Q3. Justin Klee: And I think it's obvious, but just to say also, for the open-label extension, I think it's very important when you work in rare debilitating conditions like post-bariatric hypoglycemia that you always try to think about the people we are trying to help. And so, for an open-label extension, if you're on treatment and you believe that you're benefiting in open-label extension, allows you to continue. And if you are randomized to placebo, then allows you to take active medication. So that's something that we always really try to think about in our programs. Operator: Your next question comes from the line of Ananda Ghosh with H.C. Wainwright. Ananda Ghosh: Maybe one question. People have been focusing on U.S. opportunities. So one question would be, have you done work with respect to avexitide on ex-U.S. opportunities? What are you hearing from the KOLs or stakeholders? And then, I have one follow-up question on LUMINA. Justin Klee: Absolutely. Thank you, Ananda. So there's a tremendous unmet need globally for post-bariatric hypoglycemia. Now, our focus is very much on the U.S. right now with 160,000 people in the U.S. with PBH today. That's a substantial unmet need and people to help and address. But our -- first of all, bariatric surgeries occur globally. And also, as we mentioned before, virtually any gastric surgery has the potential to cause the same debilitating hypoglycemia. So, for example, in major Asian countries, gastric cancer rates, esophageal cancer rates are very high. And so, gastrectomy or esophagectomy is often indicated. And so, for people with those surgeries, they also have the potential of developing the same debilitating hypoglycemia, and we have data from the Phase IIb study of avexitide that avexitide may be beneficial for people who had those surgeries leading to this debilitating hypoglycemia as well. The pathophysiology is the same regardless of the surgical intervention. So, our focus is really on the U.S., really on the U.S. population of post-bariatric hypoglycemia. But absolutely, there's a huge unmet need internationally. We get compassionate use requests from people around the world constantly. Ananda Ghosh: Got it. One question on LUMINA. I know there was a question on biomarkers. So given that it's the lowest dose, do we -- are we -- can we expect the preliminary NfL data or target engagement data with respect to calpain-2 levels or other downstream markers like SBDP-145 in the data readout, or that is for later... Joshua Cohen: Yes. I mean, it's hard to know -- sorry to interrupt. It's hard to know until we have the data. I'd say, we do preclinically believe we have a potent ASO. As you look at past ASOs that have been in clinic, usually, they've been studied between the range of generally about 10 mgs to 100 mgs for CSF injection. And we're at the very low end of that range. So we may see signals, but it also may require us to go to a higher dose before we start significantly moving the biomarkers. Justin Klee: But I'll add, too, Ananda, to your point, we really are -- our goal is to have a picture of, first, are we replicating the biology that we saw in the preclinic to the clinic? Are we seeing the implications of calpain-2 knockdown? And then, are we seeing effects on biomarkers that we believe to be prognostic for ALS as well? So that is indeed the goal of the biomarkers in all of these cohorts is to try to get a picture of are we seeing the impacts of calpain-2 and are we seeing potential impacts on ALS as well? Operator: Thank you. There are no further questions at this time. I'll turn the call back to Mr. Klee. Justin Klee: Thank you, operator, and thank you all for your time. If you have any follow-up questions, please reach out to Lindsey. And we hope you have a great rest of your day. Operator: Thank you, everyone.
Operator: Good day, and thank you for standing by. Welcome to the First Quarter Ascendis Pharma Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chad Fugure, Vice President of Investor Relations. Please go ahead. Chad Fugure: Thank you, operator, and thank you, everyone, for joining our first quarter 2026 financial results conference call. I'm Chad Fugure, Vice President, Investor Relations at Ascendis Pharma. Joining me on the call today are Jan Mikkelsen, President and Chief Executive Officer; Scott Smith, Chief Financial Officer; Sherrie Glass, Chief Business Officer; and Jay Wu, EVP and President, U.S. Market. Before we begin, I'd like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the safe harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to, statements regarding our commercialization and continued development of YORVIPATH, YUVIWEL and SKYTROFA, as well as certain expectations regarding patient access and financial outcomes, our pipeline candidates and our expectations with respect to their continued progress and potential commercialization. Our strategic plans, partnerships and investments, our goals regarding our clinical pipeline, including the timing of clinical results and trials, our ongoing planned regulatory filings and our expectations regarding timing and the result of regulatory decisions. These statements are based on information that is available to us as of today. Actual results may differ materially from those in our forward-looking statements. You should not place undue reliance on these statements. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see our forward-looking statements section in today's press release and the Risk Factors section of our most recent annual report on Form 20-F filed with the SEC on February 11, 2026. TransCon PTH is approved in the U.S. by the FDA for the treatment of hypoparathyroidism in adults and the European Commission and the United Kingdom's Medicines and Healthcare Products Regulatory Agency have granted marketing authorization for TransCon PTH as a replacement therapy indicated for the treatment of adults with chronic hypoparathyroidism. TransCon CNP is approved in the U.S. by the FDA for the treatment of hypochondroplasia in children aged 2 years and older. Continued approval for this indication, which is based on an improvement in annualized growth velocity may be contingent upon verification and description of clinical benefit and confirmatory trials. TransCon hGH is approved in the U.S. by the FDA for the replacement of endogenous growth hormone in adults with growth hormone deficiency. In addition to the treatment of pediatric growth hormone deficiency and in the EU has received MAA authorization from the European Commission for the treatment of pediatric growth hormone deficiency. Otherwise, please note that our product candidates are investigational and not approved for commercial use. As investigational products, the safety and effectiveness of product candidates have not been reviewed or approved by any regulatory agency. None of the statements during this conference call regarding our product candidates shall be viewed as promotional. On the call today, we'll discuss our first quarter 2026 financial results, and we'll provide further business updates. Following some prepared remarks, we'll then open up the call for your questions. With that, let me turn it over to Jan. Jan Mikkelsen: Thanks [indiscernible] Good day, everyone, here from Copenhagen. The first quarter of 2026 was [indiscernible] inflection point for Ascendis, with the FDA approval of our third [indiscernible] product, YUVIWEL. Our revenues are growing rapidly. We are profitable. We have a pipeline of high-value product opportunities to support long-term growth. Three elements are cementing our position as a leading global biopharma company. First, our diversified product portfolio in one single therapeutic area. Following FDA approval of YUVIWEL, we have now achieved approval of 3 products in a row across 4 rare endocrine indications. Second, our rapid revenue growth from our existing endocrine rare disease portfolio, [indiscernible], YUVIWEL and SKYTROFA, each highly differentiated with long durability, we expect sustained revenue growth for many years to come. Third, expanding our pipeline. We have proven our ability to create transformative medicines, addressing unmet medical needs using our TransCon technology platform. To date, we have more than 20 ongoing or planned clinical trials, aiming at label and market expansion, including 4 new clinical entities in preclinical development. Turning now to YORVIPATH. Global YORVIPATH revenue in the first quarter reached EUR 197 million. YORVIPATH revenue for the first quarter was impacted by 2 onetime items. A temporary increase of U.S. patients supported by free drug caused by reimbursement disruption and onetime impact of Europe Direct related to expanded market. Scott will explain the financial impact of these two events in his remarks. In the U.S., new patient enrollment in Q1 remained in line with the strong uptake we have seen in Q4 2025, with more than 1,000 new patients prescribed YORVIPATH during the quarter. Through the end of March 2026, more than 6,300 patients have been prescribed YORVIPATH by more than 2,700 unique health care providers. March was our last revenue month ever for YORVIPATH, supported by an increased number of new patients, as well as patients returning to reimbursement from free drug. Importantly, the enrollment trend we saw in Q1 have continued through April, consistent with our guidance. Insurance approval rates and medium time to approval continue to improve. This strong support a strong foundation for revenue growth in 2026 and many years to come. Outside the U.S., YORVIPATH is available commercially or to [indiscernible] patient programs in 35 countries, including full commercial reimbursement in 6 of our Europe Direct markets, with additional launches expected through '26. Looking [ forward ] ahead, we continue to pursue multiple expansion opportunities for YORVIPATH in new markets and indications. This includes doses up to 60 micrograms in the U.S., global expansion to patients 8, 12 to 18 and continued development of once-weekly TransCon PTH for patients on stable YORVIPATH [ process ]. With 70,000 to 90,000 patients living with chronic hypopara in the U.S., and 5 to 10x that number outside the U.S., we remain highly confident in YORVIPATH's long-term global potential. I will now turn to our growth disorder [indiscernible]. With week our once-weekly growth hormone, SKYTROFA, we believe Ascendis is uniquely positioned to strengthen its leadership in those disorders. Our U.S. commercial infrastructure built and refined since SKYTROFA launched in 2021 has enabled a focused and high-impact launch for YUVIWEL, which became commercially available in early April. Since then, YUVIWEL has already been prescribed for more than 60 children by more than 35 unique health care providers. With children approved for reimbursement as fast as a few days, YUVIWEL has shown compelling results compared to placebo across multiple clinical trials in addition to linear growth outcomes. These results include improvements in final [indiscernible] dimensions, body operationality, physical function and health-related quality of life compared to placebo, without compromising safety or tolerability. We believe this outcome reflects YUVIWEL's unique ability to provide continuous systemic [ CMP ] exposure throughout the body over the weekly dosing interval. Looking ahead, we plan to make YUVIWEL available in selected international markets through early access programs using the U.S. FDA approval. As a reminder, our global infrastructure covers over 70 countries and has already generated product revenue for us in more than 35 countries. In EU, a regulatory decision on our marketing authorization application for YUVIWEL is expected in the fourth quarter of '26. We are also pursuing label expansion for YUVIWEL to ongoing trials. These include infants on the 2 years of age with hypochondroplasia and [ 7 with ] hypochondroplasia as well as geographic label expansion in clinical trials. Turning now to SKYTROFA. In the U.S., SKYTROFA maintained consistent performance as a premium product with [ 7% ] share of the overall growth hormone market, reflecting steady demand across pediatric and adult patients as the only once-weekly product delivering on [indiscernible]. With the expected label expansion that could double the addressable patient population in the U.S. and geographic expansion outside the U.S., we believe SKYTROFA will remain a cornerstone product in our growth disorder portfolio. Turning to our pipeline. This includes combination therapy with once-weekly TransCon CNP and TransCon Growth Hormone for children with hypochondroplasia. In our Phase II COACH trial, we have reported unprecedented results that exceeds the already compelling foundation established by YUVIWEL monotherapy. Week 52 data from COACH presented in January showed improvement in hypochondroplasia specific height score that indicates a triple of efficacy compared to TransCon CNP monotherapy, along with improvement in body proportionality. More recently, we shared additional week 52 data that showed improvement in lower limb alignment, as well as an [indiscernible] improvement in spinal can dimensions and an improvement in arm strength, not previously demonstrated with pharmacotherapy within a single treatment. Based on this finding, we believe our unique combination therapy of TransCon CNP and TransCon Growth Hormone could potentially eliminate the need for highly invasive procedure such as [indiscernible] and leg straightening surgeries. We believe that this combination therapy could become the preferred treatment option for hypochondroplasia. I will now briefly turn to oncology. In our Phase I/II [indiscernible] trial, we have elevated TransCon IL-2 beta gamma in combination with [indiscernible] in patients with late-stage [ platinum-resistant ] ovarian cancer or PRC. Median OS improved up to 10 months from 6 to 7 months from historical [indiscernible] with a general well-tolerated safety profile, validated the science on TransCon IL-2 [indiscernible]. As further internal oncology development does not align with our strategic focus, we have decided to discontinue internal development of TransCon IL-2 beta [ gamma ] in oncology and will explore other ways to maximize the value of these assets. Turning now to our partnership. Our once-monthly TransCon semaglutide with Novo Nordisk continue to advance towards the clinic and [indiscernible] TransCon anti-VEGF also remain on track to enter the clinic this year. These programs further highlight the broader potential of our TransCon technology platform to address product opportunities in larger indications. In closing, in the first quarter of 2023, we made significant progress across our business and our ability to make a meaningful difference for patients. We have 3 FDA-approved TransCon products across 4 indications, growing revenues, improving cash generation and a pipeline that supports long-term growth. I will now turn the call over to Scott to review our financial results. Scott Smith: Thanks a lot, Jan, and good afternoon, everyone. I will touch on some key points surrounding our first quarter financial results, which reinforce our confidence for growing operating profit and cash flow into the future. For further details, please refer to our Form 6-K filed today. YORVIPATH global revenue was EUR 197 million in Q1. The first quarter was characterized by steady global uptake and normal seasonality as well as 2 onetime items. Patients temporarily transitioned to free drug in the quarter in the U.S. and a onetime impact in Europe direct related to expanded market access. The combined impact of these 2 items was approximately EUR 15 million. SKYTROFA contributed EUR 44 million in Q1. On a sequential basis, performance reflected consistent underlying demand with the expected drawdown in channel inventory built in Q4. Including EUR 6 million in collaboration revenue, total Q1 2026 revenue amounted to EUR 247 million. Continuing to expenses. R&D expenses in Q1 were EUR 59 million, down from EUR 78 million in Q4 '25. R&D in Q1 was favorably impacted by a write-up of YUVIWEL inventory consisting of EUR 11 million due to U.S. FDA approval and lower clinical activity across the portfolio. SG&A expenses rose to EUR 145 million in Q1 2026, compared to EUR 136 million in Q4 2025, reflecting continued impact of global commercial expansion. Total operating expenses for Q1 2026 were EUR 204 million and operating profit was EUR 25 million, reflecting a 10% operating margin. Non-IFRS operating profit was EUR 55 million and non-IFRS operating margin was 22%. As revenue scales, we expect meaningful improvement in our operating margin, which will be visible over the course of 2026 and beyond. Net finance expense for Q1 2026 was EUR 63 million, primarily driven by noncash items, including remeasurement loss of financial liabilities of EUR 34 million. Net cash financial expense for Q1 '26 was about EUR 1 million. Net profit for Q1 2026 was EUR 629 million, which included recognition of a EUR 679 million deferred tax asset in the P&L. Refer to our 6-K for more detail. Non-IFRS net profit was EUR 18 million, or EUR 0.27 per share. We ended Q1 2026 with EUR 573 million in cash and cash equivalents, which includes the impact of EUR 60 million in Q1 from our previously announced share repurchase program and net settlement of certain RSUs. In April, we successfully completed our transition to a direct listing of our ordinary shares on NASDAQ. We believe this will broaden access to global investment in the company, which has the potential to further enhance institutional ownership and trading liquidity for Ascendis shares. In May, we completed the full redemption of all of our outstanding convertible senior notes. Finally, today, we announced that we entered into an agreement to sell our PRV for USD 187.5 million in cash. The PRV was awarded by the U.S. FDA upon approval of YUVIWEL in February. Turning to our commercial outlook. For YORVIPATH, we expect continued steady underlying increase in patients on therapy and the reversal of onetime factors seen in Q1 to drive strong growth sequentially in Q2. For SKYTROFA, we expect stable revenue throughout the year following a similar seasonal pattern to 2025. Regarding YUVIWEL, as Jan indicated earlier, we are encouraged by the early demand trends and look forward to sharing more with you on our Q2 call. With that, operator, we are now ready to take questions. Operator: [Operator Instructions] And our first question comes from the line of Jessica Fye of JPMorgan. Jessica Fye: I was wondering if you could help us estimate what U.S. YORVIPATH sales were in the quarter. I think in the past, you had run through an algorithm to consider, but I know the press release noted some onetime impact to Europe Direct as well. So just trying to get a better sense of the U.S. versus ex U.S. split this time around. Jan Mikkelsen: I think that Scott will give you just a little bit more background on the financial element, specific onetime in Europe Direct. And it's actually happening when we sometime and specific for one single country because we had an early access program that was running for nearly 15 months, 16 months. And it gave us a onetime event where we needed to write down for this single case. It's not something that really happening in other countries, but it was a single country event, which basically impacted our YUVIWEL, you can say, Q1 results. But Scott, you can give you a little bit more flavor on the financial numbers. Scott Smith: Yes. And just for modeling purposes, it's probably a little bit more of an impact. But I would say the best way to think about it is take the algorithm that we laid out where you add 4 to 5 a quarter. And for Q1, basically that addition was just shifted into Q2. And then from there, the algorithm continues. Jan Mikkelsen: But I think just one of the key element I will take into regard is basically the underlying patient demand. Because I think the key element is really that we continue the same successful, you can say, rollout of the launch, both in U.S. where we now -- as we have provided you the number of indicated new patients on treatment with YORVIPATH. And as we have given in our previous guidance, we're still 100% correct in that, where we really see the same stability. We see the same flow coming in. And Jay can comment about how he's already starting to improve both the time to reimbursement and the numbers. I do not, Jay, will you comment about your effort in really improving what you call the reimbursement situation for the U.S. Jay Wu: Sure. When you think about our reimbursement, we're seeing improved metrics across the board. So first and foremost, we've talked a little bit about our upstream coverage now expanding to about 80% of patient lives, which we're feeling really good about given the time on market. And I think, again, a testament to the compelling clinical value proposition that we have. We're also seeing continued rapidity as it relates to patients being approved for reimbursement upon entering the funnel. So again, over half approved within 8 weeks of enrollment. And we are seeing continued progress against patients moving through the funnel whether it's upstream as the enrollments are coming in, but also supporting patients as they're entering into the funnel. Operator: Our next question comes from the line of Tazeen Ahmed of Bank of America. Tazeen Ahmad: Mine will also be on YORVI, and maybe this is for Jay. Can you talk about the reauthorization rates that you're seeing now that patients are starting to annualize at this time of year? Any things to point out about things that were maybe unexpected or taking a little bit longer? And then can you talk about usage among physicians? So is there a way of providing a split between how much of use is coming from first-time physicians versus an increasing use among doctors who've tried your YORVIPATH before? Jan Mikkelsen: Okay. There was multiple questions. I hope you got everyone down. Will you start on some of them? Jay Wu: Sure. I think I heard a few questions. One, which maybe I'll start with towards the end, which is prescriber breadth and depth, I think, was the question. We're seeing continued traction across both. So as Jan mentioned earlier in the script, we've had over 2,700 prescribers, which again is an addition of about 300-plus quarter-over-quarter, which we're feeling really good about. So that would answer your question around new prescribers. And then within existing prescribers, we're also feeling really good because the average prescription per physician continues to increase as well. In fact, over -- about 10%-ish of prescribers have now over 5 enrollments for patients. Again, as you think about the provider landscape here, they all do have a different patient volume just given how diffuse the patient volume is. But generally speaking, we're seeing not only one additional prescriber sign on to YORVIPATH given the strong patient satisfaction scores that we're seeing. But then because of those positive patient experiences, we're also seeing providers expand their scope of who they deem to be eligible given that lab values alone are not the reason that patients should be treated. Tazeen Ahmad: Okay. And then reauthorization was the last one. Jay Wu: And reauthorization, yes, that was the first part of your question. We're not seeing any meaningful differences in terms of approval rates for re-auth versus necessarily a patient that's coming in at the top of the funnel. We typically, again, have shared that 4- to 8-week time frame. We've seen those numbers continue to increase in terms of speed, which I referenced earlier with the first analyst question, but we're not seeing any meaningful difference with the re-auth coming in versus a new patient coming in. Generally, what you'll see is if it's a re-auth of an existing payer insurance where there hasn't been a change in insurance, you might see some faster time line there. But if it's a brand-new insurance, then you're obviously going to treat it as just a brand-new case, so to speak. Operator: Our next question comes from the line of Yaron Werber of TD Cowen. Yaron Werber: Great. Maybe a quick follow-up and then a question on YUVIWEL. A follow-up on YORVI. So of the [ $15 million ], should we roughly kind of split it like half in Europe and half in the U.S.? I don't know if you can give us any sort of view on that. And then for YUVIWEL, in the ITC case is progressing, the bridge document, the briefs are out kind of back and forth. And it looks like the court is kind of siding with both parties. What -- I know you've been importing drug in the meantime. Any view sort of on how much capacity you might be able to have in the system by the time a decision is rendered? Jan Mikkelsen: First of all, I believe when you see the uptick in the prescriptions of in the U.S. We have more than 60 children being prescribed YUVIWEL treatment in less than 4 or 5 weeks. I think it illustrates the unmet medical need that exists in the U.S. related to an improved treatment in hypochondroplasia. And I believe what we have seen of clinical data in our multiple trials with YUVIWEL just as a monotherapy is really describing the reason why we see this take up. This is not just of having a once-weekly product. This is providing a tolerability profile and documentated effect on benefit beyond linear growth. And I think everyone is aligning with the unmet medical need, the public interest for this to have a product [indiscernible] in the market. We will continue to be in a position that we have such a strong belief that in this case here, too, like it was in Europe, we can prove that this IP case should never have existed and only is built on promises. So [indiscernible] I'm confident YUVIWEL is here to stay, and it will always be a treatment option for patients with hypochondroplasia in the U.S. I hope that answers your question related to that part. The other part, I think you are somewhere in the right estimate when you think about it. Operator: Our next question comes from the line of Gavin Clark-Gartner of Evercore ISI. Unknown Analyst: This is [indiscernible] on for Gavin. We have 2 quick questions. Number one is for the Phase III [indiscernible] and growth hormone combo trial, can you share any update on the enrollment speed? And secondly, what are you seeing in your discontinuation rates over time? Jan Mikkelsen: So when we talk about -- as I understood your question right, it was related to the combination trial, the Phase II trial we call [indiscernible] trial. And we basically are now -- I do not know how many years we are into the trial now, but I think we are 2 years in 1.5 years now. And I think we see basically an extremely high element of retention in this trial. To my knowledge, last time, it was 100%. And I think it's really been harder to get more than 100% in a clinical trial to my knowledge. And I think that's a very, very few trial where you have 100% retention after nearly 18 months. So from that perspective, I think it's really illustrating and addressing the satisfaction with the benefit you see in the treatment compared to the burden of treatment. And I think that is really the key element that we are always looking in the fundamentals. We want to see benefit for patients. This is why we're working, and we will continue to focus on that. Operator: Our next question comes from the line of Li Watsek of Cantor Fitzgerald. Li Wang Watsek: I guess on new patient adds you mentioned, steady growth. Is it reasonable for us to assume 1,000 is sort of the number that we should be looking at for the coming quarters? And will you be sharing new script number going forward? Jan Mikkelsen: That's a great question. Now some going back to the last time I said I will not come up with more prescription data for YORVIPATH because I believe that the revenue progression was so clear. And when I said that there was a big, big, what I call element of some interesting funds that pushed back and saying, I didn't want to come out with numbers because it must be really, really bad. And now we have illustrated for 1 quarter more that they are not bad. They are extremely good and exactly as predictable as we have said in this way. And I expect a steady state enrollment in all the quarters because that is what we expect. We are only touching a small amount of this patient group. We have some more patient that is coming new patients every, every, every year. So I'm somewhat giving up to say that I will not come out 1 quarter more because last time, I said we will not come out with one quarter and then I got basic press because I didn't want to listen to that, that we didn't want to come up with a number because they are bad. I don't hide anything. I always want to be transparent. And this is why I come out with a number, then you can see it. So I think we will continue to be so transparent on everything what we're doing. So you always have the best possible opportunity to see how well we are performing in our fundamentals. Operator: Our next question comes from the line of Alex Thompson of Stifel. Unknown Analyst: This is Patrick on for Alex. Could you guys just talk about the potential impact of the YORVI 60 micrograms being on the label? And maybe what percentage of those 6,300 patients in the U.S. is dose caps at 30 with, maybe less than ideal supplementation levels? Jan Mikkelsen: This is a question which are very difficult for us to answer today because we see different kind of [ up titration ] in both different situation in clinical trials and also sideration in what I call more real world. We are following it a lot. We are now open for enrollment in our trial where we are having 2 arms in our evaluation of dose titration 30 up to 60. And we will enroll that in a decent speed. We only do that in the U.S. because it's the only place where we restricted down to 30 and not have 60. And we believe that even if you are coming up to 30 micrograms, you still have a major benefit to be still on 30 microgram compared to many of the positive effect that YORVIPATH is still providing to it. So I think you can say, yes, there is someone that will benefit to go higher. But today, we're still providing the benefit to the patient that need to stop on 30 micrograms. Operator: Our next question comes from the line of Joe Schwartz of Leerink Partners. Joseph Schwartz: So some physicians we've spoken with have suggested that they might not want to put their office staff through the reimbursement challenges of switching their hypochondroplasia patients to a once-weekly injection only to then later switch them to a once-daily pill in the not-too-distant future. Is this a dynamic that you guys are aware of? And what can Ascendis do to help support the hypochondroplasia patient, or physician community rather and encourage uptake? And then have any -- my second question is, have any physicians prescribed YUVIWEL in combination with SKYTROFA since YUVIWEL was approved? Jan Mikkelsen: Answering your first part of the question, I think the number speaks for itself. When you think about it, more than 10 prescriptions per week [indiscernible] rare disease product. I think they talk about the unmet need and the willingness for basic physician in connection with the parents, in connection with the child to basically to have the desire to take them on a treatment with YUVIWEL. I think it says everything with numbers. You can go out and ask one physician. You can go out and ask one parents. I look at numbers from a statistic. The numbers talks for itself. Related to the last question, I cannot some way discuss an element we cannot promote. We cannot promote anyway [indiscernible] combination therapy. We have disclosed the benefit of the combination therapy. And that is up to the physicians if they really want to prescribe it or not prescribe it. And to my knowledge, and I can be pretty open about it, yes, it happens, and I understand why. This is the only way you basically can be in a position where you basically can avoid any kind of surgeries. Which I think is just a positive element for any child with hypochondroplasia to avoid the invasive surgeries. And I think this is the reason why the physician do it. And sure, we're looking forward to finalize the Phase III trial. We're looking forward to have it on label. So we really also can go and promote it. Operator: Our next question comes from the line of Ellie Merle of Barclays. Unknown Analyst: This is Jasmine on for Ellie. Just kind of a follow-up to the last question. For YUVIWEL, can you say how many of those 60 enrollments were new starts versus switches? And more generally, do you think the initial population is going to see more new starts or switches? And what kind of patients do you think are the most likely to initially want to switch? Jan Mikkelsen: The insight you're asking for is the insight we will develop in the coming months and quarter. After 5 weeks to try to come with a general statement about what kind of patient, what kind of preference they have to go on to YUVIWEL treatment. I think it's too early for us to come with a conclusion but it is such a topic. The only thing I can say, and Jay, you can add on, what we see is basically coming from everywhere. It's not just naive patients. It's not just [ switch ] patients. It's coming everywhere from where we expect it also to come from. And one of the things we have done at Ascendis that Jay has [indiscernible] impact on to help the physician, the patient is really to have a part that can go out and really help the physician, the patients everywhere to get through this journey to be sure they can come on the right treatment. Jay, do you have anything to add? Jay Wu: Yes. I think you summed it up well. The only 2 additional things I would add is, one, to Jan's point, we're seeing across all segments. And we've discussed before the 3 areas or types of patients that we envision coming are. One, patients currently on VOXZOGO that are switching over. Two, patients that were previously on VOXZOGO but since discontinued and were on no therapy. And then three, a patient that perhaps had never made the decision to start therapy at all. And we are seeing anecdotally that it's coming across all 3 of those groups. And I think really what that underscores is the continued and existing unmet need that exists in hypochondroplasia today even with the existing therapy on market, which I think emphasizes the value of having YUVIWEL on the market and the compelling value proposition that it offers patients. I think the second area that Jan was talking about is our continued investment in just making sure that everything we're doing is hand in glove with patients, both as it relates to partnerships with the patient advocacy groups, but also as it relates to our scaling up of our patient access liaison team, which is our patient-facing field group that invest in the support and the journey as they go through the continuum of prescription to ultimately being on therapy. Operator: Our next question comes from the line of Yun Zhong of Wedbush. Yun Zhong: My question is on the monotherapy for hypochondroplasia. I remember that there have been some changes in terms of approach for that program, whether you're going to pursue that indication at all and whether it's going to be mono or combo or maybe just -- wanted to know the -- are you able to share any information regarding the thought process behind the decision if this is the final decision that you are going to just using monotherapy to target hypochondroplasia? Jan Mikkelsen: Yes. I think the strategy that we have applied to [ achondroplasia ] where we started with monotherapy and the addition to combination therapy. I think you will see that there will be alignment between the strategic approach that we have used in [ achondroplasia ], we will likely also use in hypochondroplasia. I can basically tell you that we're using the same principle between the 2 indications. The 2 indication is very much aligned in the fundamentals of the disease. There's only, you can say, different mutation, different severity and other things like that. And we will implement the same thinking in treatment regime between these 2 indications. Operator: Our next question comes from the line of Luca Issi, RBC Capital. Luca Issi: Maybe Jay or Scott, can you educate us on the mechanics of the free drug for YORVIPATH? Who are the patients that got the free drug? For how long do they stay on free drug? And are you expecting any patients still on free drug in Q2? Or is this just a kind of Q1 phenomenon? Any color there, much appreciated. And super quickly, I think AstraZeneca has presented their Phase III data for [indiscernible] this week in the European Congress on Endocrinology. So wondering if you can comment on what are your expectations for that data? Jan Mikkelsen: Yes. I can start from the last question, and then I can move it up and then Jay can take over in the end. The compound we are talking about in the end is the amyloid compound. And we have discussed that on many earnings calls, the lack of information that was related to data. Now that is disclosed some kind of information of the data package 1 year after finalization of the Phase III trial. And for me, and I think the key question, do this data package provide an approvability of any way of this compound? And to my best judgment, I hope this product never will be approved, and I don't see really as possibility that it should be and going to be approved. So I think when we look on the competitive landscape for treatment in hypopara, I see YORVIPATH, our once-weekly approach to stable patient on YORVIPATH is really providing the fundamentals for a 20, 30 years treatment regime where I don't see anything that really can give up to the benefit we will see in the treatment with YORVIPATH or any other product that is currently in clinical development from that perspective. Related to the first part of your question, you're right. We started to take already December a group of patients over to free drug because the essential part of YORVIPATH is that you cannot stop we first have started taking over to basically the element on what we call the conventional therapy. This basically is a disaster for the patient. So if there was a hiccup in the reimbursement that was a hiccup and it's something we have done corrective action to ensure that we can handle it much better next year. We were in a position that we took, and Scott explained the impact of that here in Q1, to take already from December until March and series of patients on free drug, and they are now coming back to be fully reimbursed. And we are in a position that -- and the organization in the U.S. some way have built up network or other things that can help it that we're not ending in the same situation on time. Jay, have you any comments too? Jay Wu: Again, I think you summarized the need for bridge program well. I think just to clarify the earlier question, there is 2 types of [indiscernible] programs. We have bridge program, which again is pretty standard across the industry for those that have experienced a temporary insurance lapse. But we also just have our patient assistance program for patients that are underinsured or uninsured. So I think that's an important point to note because there will always be some patients that qualify for the patient assistance program. So we don't anticipate that, that will ever go away completely knowing that there will always be a certain level of patients that qualify for that. Jan Mikkelsen: Yes. I think that is a clarification. That's great from Jay, where we talk about this number of patients is only what we exceeded as success compared to the base level of patients. We always will help and provide free drug if there is an element of something where there is a disruption of the normal way to have drug. It's a drug for the patients that we are -- always will take our patient focus first. And if there's a patient that gets disrupted, we will do everything to help this patient. And that includes also to take them for a period of free drugs until the disruption getting solved, and we will always be there for the patients. Operator: Our next question comes from the line of Maxwell Skor of Morgan Stanley. Unknown Analyst: This is [indiscernible] on for Max. Given the relatively low treatment penetration in [indiscernible] in the U.S. to date, what proportion of patients typically initiate treatment at age 2 years or older? Jan Mikkelsen: I think some way to roll it a little bit back because you can ask the question why you have under treatment in the U.S? And I think actually this is the key question to find out how can we really help this patient better. And I think -- and we believe that the undertreatment is basically the cause of lack of the right efficacy to show real benefit beyond linear growth. Many of these parents, children don't see linear growth as a key element. They really want us to address all the [ comorbidity ], specific if you can avoid surgeries, or changing the pain [indiscernible] with leg bone. You can avoid [indiscernible]. And I believe by having this focus on these elements and here, I talk about the older children. If you go to the younger newborn, yes, if we can avoid any kind of spinal stenosis by having early intervention from newborn, yes, there will be a major benefit for treatment in the state. So I believe our product profile that we have generated [indiscernible] a product, clear benefit compared to placebo. It needs always to be placebo controlled because there is a development to. So you cannot say, we also improve a [indiscernible] child with actually have a big increase in arm length. So you always need to really show it compared to a placebo-controlled trial. It's the only way you can really just the benefit of the medical treatment in it. So the question and the answer to you is I believe will be appealing product to the vast majority of parents, children in the U.S. also because they provide a way to address the comorbidities. So important one, everything that you basically will see benefit for not only quality of life that's associated with it, but also the element of physical strength. Operator: Our next question comes from the line of Paul Choi of Goldman Sachs. Kyuwon Choi: Congrats on the good start with YUVIWEL. I was just wondering if you could clarify in terms of the 60 -- more than 60 prescriptions you've seen to date, whether it's more driven by treatment-naive patients or switches? Any quantification there would be great. And I'm also curious in terms of your early starts or through the quarter, if you're seeing potential utilization in the below 2 years of age population, even though that's not officially on label yet. Jan Mikkelsen: Yes. We need to come with a meaningful answer. We need longer time because we only have been there for 4 or 5 weeks now. And we want to be sure that what we see in the initial part of the launch is also being representative of what we'll see in the later stage of launch. So Paul, we can discuss it, as Jay said, in a perfect manner. We see patients coming in for all 3 different groups, which was in a new group, patients that have discontinued [indiscernible] and patients that come directly on switching for [indiscernible]. So out from that, we see it coming in for all 3 different groups in the initial launch, we will expect to see perhaps one mix and when we come a little bit longer into the launch, we will potentially see a switch in the different 3 classes. And this is why really to make it meaningful, we need to wait longer time before we can give you something you can do the right modeling on. But when I look at this number we're coming up more than 10 patients per week, it's an orphan drug indication. I'm extremely proud that our product profile is getting so well recognized in the society in this way. Under 2, I cannot comment on that currently. Unknown Analyst: For the 70% cumulative U.S. insurance approval rate that you previously cited, can you give us any more color on what that cumulative rate looks like today? And then second, the EUR 500 million operating cash flow target that you laid out previously, are you reaffirming that guidance given the Q1 trends that you're seeing? And how should we think about the contribution of [indiscernible] to that target? Jan Mikkelsen: [indiscernible] one, we would like to come back in Q2 because we have a lot of positive data coming in now. We have the selling of our PMV and launch of YUVIWEL going much, much stronger than even myself hope. So apart from that, we will come with that claims guidance, but we will prefer to do it after our Q2 call, and we will give you what will be reflected on '26. Scott is saying yes to me. And Jay, you can give the [indiscernible] number, how it's improving the overall numbers. Jay Wu: Sure. So the overall cumulative approval rate since launch has continued to creep up as well. I think we're now closer to mid-70%, which again is incredibly high for any rare disease asset, much less one that has been on the market for the amount of time that we have. A lot of that is just a function of time given the favorable access policies that we have. So even some enrollments that might be many months old are coming through on appeal online, which would affect the cumulative approval rate over time. But given that it is a lagging indicator, it will take quite a bit of time for that metric to mature. Operator: And our last question comes from the line of [ Cecilia Hernandez ] of [indiscernible]. Unknown Analyst: This [indiscernible] is on for [indiscernible]. So given the revenue now from commercial products, the redemption of the convertible notes and the sales of the [ PRP ], can you tell us anything on your capital allocation strategy? What is the order of priority for you guys? Jan Mikkelsen: I think Scott you want really to answer the last question for today. So Scott get this opportunity now. Scott Smith: Thanks a lot, Jan. Of course, as you've seen with our R&D success, a key component for us is to invest in R&D and allocate capital there to continue to sustain not only into the 2030s, but the 40s and beyond with the continuous flow of new products. I think Jan highlighted new NCEs in his prepared remarks, and you'll learn about more of those in the coming future. And of course, I think after we give an update after Q2, as Jan mentioned, to our outlook for the rest of the year, you may get more color at that point as well. Operator: Thank you. That's all the time we have for questions. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good afternoon, and welcome to Verastem Oncology's First Quarter 2026 Earnings Conference Call. My name is Daniel, and I will be your call operator today. Please note, this event is being recorded. [Operator Instructions]. I will now turn the call over to Julissa Viana, Vice President of Corporate Communications, Investor Relations and Patient Advocacy for Verastem Oncology. Please go ahead. Julissa Viana: Thank you, operator. Welcome, everyone, and thank you for joining us today to discuss Verastem's first quarter 2026 financial results and recent business updates. This afternoon, we issued a press release detailing these results, along with a slide presentation that will be referenced during our call today. Both are available on the Investor Relations section of our website. Before we begin, let me point out that we'll be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and actual results may differ materially. We encourage you to consult the risk factors discussed in our SEC filings for additional detail. Additionally, today, we will be discussing certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in the press release we issued today. Joining me on today's call to deliver prepared remarks and take your questions are Dan Paterson, President and CEO; Dr. Michael Kauffman, President of Development; and Dan Calkins, Chief Financial Officer. I will now turn the call over to Dan. Daniel Paterson: Thank you, Julissa. Good afternoon, and thank you for joining our call today. Tomorrow marks 1 year since the accelerated approval of AVMAPKI FAKZYNJA CO-PACK, a practice-changing medicine approved for patients with KRAS-mutated recurrent low-grade serous ovarian cancer. Since our launch in May 2025, we've seen steady growth quarter-over-quarter, achieving $18.7 million in net product revenue in Q1 with nearly $50 million in total net product revenue to date. While we're pleased with the growth we've seen, we believe there's meaningful opportunity to build on the foundation we've established. New patient starts remain consistent month-over-month. Our prescriber base continues to grow and the reimbursement environment is favorable. As part of our ongoing commitment to optimize our launch, we conducted a focused review of our launch performance and execution and implemented targeted changes to our commercial organization and leadership. I'll walk through these details in a few minutes. I want to underscore that our confidence in the underlying demand and overall opportunity for the CO-PACK remains unchanged. Moving to R&D. We've made significant progress with our clinical trials for VS-7375, our potential best-in-class oral and selective KRAS G12D ON/OFF inhibitor, now branded as the VS-7375 Target-D clinical trial program. The Target-D-101 Phase I/II dose escalation and expansion trial is already underway, and we continue to enroll patients and evaluate higher dose levels. In addition, we've also initiated our Phase II registration-directed clinical trials in second-line pancreatic cancer, second and third-line non-small cell lung cancer and second-line plus metastatic colorectal cancer. Michael will share more about our progress and strategies with these trials. We continue to closely manage our expenses and remain on track for the LGSOC franchise to be self-sustaining in the second half of the year, meaning CO-PACK revenues will support both commercial operations and any ongoing clinical trials for avutometinib plus defactinib. As we look to the balance sheet, our focus remains on identifying value-creating nondilutive opportunities as we advance our pipeline and deliver for patients and shareholders. With that, let me turn to our commercial update. With almost a year into the launch, we're continually monitoring our progress. As with any launch, there's a natural evolution as we learn more about the market dynamics. We took a comprehensive look at our commercial execution and have taken decisive actions to strengthen it and position the business for the next phase of growth. Most notably, we've appointed a new Chief Commercial Officer, Dan Lyons, who has deep and relevant experience in oncology and rare diseases. He has a strong track record of leading global commercialization strategies across solid tumor cancers, including 2 successful rare disease and oncology launches at SpringWorks. Dan's leadership will be instrumental as we evolve our launch and bring AVMAPKI FAKZYNJA CO-PACK to all patients who could benefit from this important treatment. While Dan will not be joining us on the call today, he's already actively engaged with the team driving new and existing initiatives forward. Turning to the first quarter results. We were impacted by the seasonal headwinds many companies experienced, namely insurance turnover and reverifications as well as more severe weather, which affected patient access. This impacted both new patient starts and refills. On closer examination, we also observed a specific dynamic where some patients prescribed the therapy by early adopters were much further along in their disease and treatment journey than we would have anticipated and therefore, discontinued the treatment earlier than expected. This is not surprising as in many cases, these patients likely had no other alternative therapeutic options with proven clinical benefit. Since January, we've seen a rebound with a strong number of new patients through the end of the first quarter. There also continues to be strong physician conviction with the majority of physicians surveyed at our most recent ATU indicating that the CO-PACK would be their first choice at their patient's next recurrence. Now on to the numbers. Active prescribers continue to expand and through April, there have been more than 400 unique prescribers to date. And consistent with previous quarters, we continue to see prescriptions split between GynOncs and MedOncs at a 60-40 percentage. Separately, our active patient pool has grown over recent months, indicating patients are staying on therapy longer, but it's too early to provide duration of therapy as it continues to evolve. It's also too early to give an average number of refills, but the trend we are seeing is consistent with what we would expect at this point in the launch. Approximately 65% of commercially eligible patients are using our Verastem Cares Co-Pay Program. The remaining patients did not require co-pay assistance and the average co-pay for commercially insured patients is less than $30. Time to fill initial prescriptions continues to be in the range of 12 to 14 days due to rapid prior authorization approval and our payer mix remains consistent with previous quarters at about half commercial and half Medicare. As we look ahead and consider our recent learnings, we focused on 3 key drivers in our business to help patients realize the full benefit of the CO-PACK. The first key driver is to maintain the consistent level of demand of new patient starts. This starts with identifying the right patient for treatment. Without an ICD-10 code specific to LGSOC, we've identified other proxy measures within EHRs, including mutational status, AI or MEK use that may indicate an appropriate patient for the CO-PACK. Our team is actively working with prescribers when these proxy measures are identified in a patient file. Additionally, we've now added incremental personnel to continue to drive demand and support patient adoption. The second key driver is to drive earlier use at first recurrence. Over the course of the launch, we've observed discontinuations that in part reflect use outside of the attended approved patient population and in LGSOC patients who are much sicker than the patient population in RAMP-201 that was the basis for FDA approval. In fact, in some cases, patients were heading into hospice. As multiple physicians have noted, disease progression and complications can make it harder for patients to tolerate and absorb oral therapies, underscoring the importance of using the CO-PACK early at first or next recurrence when patients have the best opportunity to realize its full benefits. Our recently launched Reimagine Recurrent LGSOC direct-to-physician and patient campaign is focused squarely on this shift. The third key driver is to help patients stay on therapy. Recent long-term data from the RAMP-201 trial presented at the Society of Gynecologic Oncology showed that after 2 years of follow-up, patients on the CO-PACK achieved durable benefit with discontinuation rates consistent with the package insert, findings that physicians view as clinically meaningful. Our recent exposure response analysis also demonstrated that early side effects can be effectively managed with dose interruptions after which patients resume at the approved dose and schedule. Setting expectations with both patients and physicians around the AE profile and how to manage through it is a key initiative for the remainder of 2026. We continue to see a substantial market opportunity for the CO-PACK with growth potential coming from multiple directions, expanding reach among prescribers who ever prescribed the CO-PACK, deepening experience among current prescribers by identifying additional patients in their practices and shifting entrenched prescriber behaviors to starting CO-PACK on their first occurrence when appropriate. LGSOC is a relatively slow growing but unrelenting cancer where patients stay on their first treatment for several years. Therefore, achieving peak share at first occurrence will take time. But we believe the earlier use of the CO-PACK drives deeper adoption, produces real-world outcomes that mirror our trial experience and establishes the CO-PACK as the new standard of care at first reoccurrence. We remain focused on our core product launch priorities and sustaining steady growth throughout the year. I'll now turn the call over to Michael. Michael Glen Kauffman: Thank you, Dan. We continue to make good progress across our pipeline programs, and I'll spend the next several minutes with an overview of our VS-7375 oral KRAS G12D inhibitor program. As Dan mentioned, we've named our VS-7375 trials Target-D. Target-D 101 is our ongoing Phase I/II dose escalation, dose expansion and combination evaluation trial. In the dose escalation portion, we are now evaluating the 1,200-milligram daily dose to fully characterize the dose range available. We will complete enrollment across the various expansion cohorts shortly as well as the current cohorts evaluating combinations with chemotherapies. And importantly, we are moving to enroll patients into each of our Phase II trials, which I'll describe in more detail. As we mentioned last quarter, the FDA requested that we develop separate Phase II protocols for any trials where we are seeking marketing authorization. Thus, we have developed 3 Phase II registration-directed trials in pancreatic cancer or PDAC, non-small cell lung cancer, or NSCLC, and colorectal cancer or CRC. I'll now provide some detail on each of these. Target-D 201 is our second-line PDAC study. This Phase II open-label study is designed to evaluate VS-7375 at the 900-milligram daily dose, both as monotherapy and in combination with cetuximab. Based on strong preclinical rationale showing EGFR pathway activation in pancreatic cancer and its role as a potential resistance mechanism to RAS inhibition, we are studying the combination of VS-7375 and anti-EGFR antibodies to potentially deepen and prolong responses. We're also taking the opportunity to evaluate VS-7375 and anti-EGFR antibodies in first-line pancreatic cancer where we believe we can generate compelling data. It is worth noting that because VS-7375 has not been associated with skin rash to date, combination with EGFR inhibitors is expected to be clinically feasible and growing tolerability data to date support this. In addition, we are currently studying the combination of VS-7375 and gemcitabine nab-paclitaxel or GNP in patients with PDAC looking towards a frontline treatment regimen. Target-D 202 is our advanced non-small cell lung cancer study. This Phase II open-label study is designed to evaluate VS-7375 at the 900-milligram daily dose in patients who have received 1 or 2 prior lines of therapy, including a platinum-based chemotherapy and a PD-1 or PD-L1 blocker. We are currently evaluating VS-7375 at 600 milligrams daily in non-small cell lung cancer in our 101 trial, and this will provide information at this lower dose. But as in PDAC, we anticipate that the 900-milligram daily dose will be our go-forward monotherapy dose in previously treated non-small cell lung cancer as we look towards potential marketing authorization. We are also evaluating VS-7375 monotherapy in patients with non-small cell lung cancer and asymptomatic brain metastases where there remains a significant unmet medical need and an opportunity to improve outcomes. And as previously noted, we are evaluating the combination of VS-7375 plus pembrolizumab without or with platinum pemetrexed chemotherapy in the 101 study looking towards a frontline treatment regimen. Lastly, we have our Target-D 203 metastatic colorectal cancer study. This Phase II open-label study is designed to evaluate VS-7375 at the 900-milligram daily dose as both monotherapy and in combination with EGFR inhibitors, including cetuximab or panitumumab in patients with previously treated colorectal cancer. While we do not expect to see meaningful responses for VS-7375 as a single agent, this will be critical to showing the contribution of PARs for potential combination therapy regulatory submission. We're also going to evaluate VS-7375 in combination with anti-EGFR antibodies and the modified FOLFOX6 regimen in the first-line setting, again, to expand the opportunity and help us improve outcomes in patients with colorectal cancer with the goal to develop a frontline combination regimen. Importantly, across all 3 Phase II trials, the primary endpoint is overall response rate by blinded independent central radiological review or BICR, with BICR determined duration of response or DOR as the key secondary endpoint, supporting potential accelerated approvals in each of these 3 indications. The protocols have been sent to clinical trial sites, and we anticipate the first patient in each of these studies to occur mid-year, if not sooner. We continue to enroll patients and evaluate the 1,200-milligram dose, which is the highest practical dose that we can administer to define the upper end of the dosing range. We now have updated PK data that show that the 900-milligram dose delivers serum levels of VS-7375 at or above our target level and provides clear separation from the 600-milligram dose. While we are seeing good responses at 600 milligrams, these data, along with good tolerability, support our enthusiasm for advancing the 900-milligram dose in our Phase II trials. As additional data emerge, we expect to finalize the go-forward dose across tumor types and combination settings. As we shared last quarter, our goal is to generate meaningful data sets in these tumor types, both as single agent as well as in combination with other treatments with the goal of potential accelerated approvals in previously treated cancer as well as developing combination strategies to position our regimens in the frontline setting across all 3 tumor types. Now let me briefly set expectations for our first half update from the Target-D 101 trial. In terms of patient numbers, the safety data set will include a broad set of patients across Target-D 101. However, the number of patients evaluable for efficacy will still be relatively small. Recall that response evaluations require a minimum of 2 baseline scans, which are typically 6 to 8 weeks apart and not all responses occur at the first scan. And of course, duration of response requires follow-up for months after the initial response determination. We note again that meaningful response duration is typically about 6 months. As we've discussed previously, we believe that administering the highest well-tolerated dose of VS-7375 will maximize the chances for each patient to have a meaningful antitumor effect. And because the 900-milligram dose has been well tolerated to date in over 20 patients in the U.S., our results of this dose will require several additional months over what was originally projected for the 600-milligram dose. At this time, we can also add that the 400 and 600-milligram doses of VS-7375 in combination with cetuximab are well tolerated and that we are currently evaluating the 900-milligram dose in this combination. To reiterate, we will only be able to provide a preliminary view on activity overall because we've been able to utilize higher doses in our patients in the United States. That said, we see this first half update as an early checkpoint and believe the data set will be meaningful in terms of demonstrating our progress in enrollment, along with a more mature safety update and more PK data. We do plan to include some patient cases across tumor types and combinations in the update. Later this year, we expect to provide a more comprehensive data set, including tumor-specific breakdowns and more mature efficacy data as we enroll in our Phase II trials for potential marketing applications. Finally, switching gears for a minute to our avutometinib plus defactinib program. We remain on track to report an update on our RAMP-205 study in first-line PDAC before the end of the second quarter of this year. Now I'll turn the call over to Dan Calkins. Daniel Calkins: Thank you, Michael. Our full financial results were included in our press release, so I'll focus on the highlights here. For the first quarter of 2026, we recorded $18.7 million in net product revenue and $2.8 million in product cost of sales. Cost of sales increased in the first quarter in line with the percent increase in net product revenue for the quarter. Research and development expenses were $38.2 million for the first quarter of 2026. R&D expenses continue to be driven by both the ongoing global confirmatory Phase III RAMP-301 clinical trial with the CO-PACK and the ongoing VS-7375 Target-D 101 Phase I/II clinical trial in the U.S. as well as higher costs associated with clinical supply and drug production activities related to our expanded VS-7375 program. SG&A expenses were $22.3 million for the first quarter of 2026. The expenses were driven by commercial activities and operations, including personnel-related costs to support the ongoing CO-PACK launch. I can reiterate that we expect SG&A expenses to remain roughly the same on a quarterly basis throughout 2026 as we remain disciplined in our expense management, making the right investments at the right time to support the ongoing commercial launch efforts. For the first quarter of 2026, non-GAAP adjusted net loss was $42.7 million or $0.43 per share diluted compared to non-GAAP adjusted net loss of $42.9 million or $0.79 per share diluted for the first quarter of 2025. Please see our press release for a full reconciliation of GAAP to non-GAAP measures. Moving to the balance sheet. We ended the first quarter with 2026 with cash, cash equivalents and investments of $181.7 million. We believe our current cash, combined with the future revenues from the AVMAPKI FAKZYNJA CO-PACK sales will provide cash runway into the first half of 2027. We remain encouraged by the initial launch and look forward to building on the CO-PACK's growth in 2026. Given our current trajectory, I'm pleased to reiterate that we believe the LGSOC franchise will be self-sustaining in the second half of the year with CO-PACK revenues funding both the commercial operations and our avutometinib plus defactinib clinical trials. With that, let me turn the call back over to Dan. Daniel Paterson: Thanks, Dan. Before we open the call to Q&A, our focus for the remainder of 2026 is very clear, and that's to drive strong execution across our commercial launch, move our 3 Phase II trials expeditiously towards potential registrations, determine appropriate VS-7375 combinations for frontline strategies and maintain disciplined capital management while identifying nondilutive financial opportunities to deliver for patients and our shareholders. Overall, we believe we're well positioned to deliver on our key milestones this year and continue building a leading oncology franchise in RAS/MAPK-driven cancers. With that, we'll open up the call for questions. Operator? Operator: [Operator Instructions] Our first question comes from Eric Schmidt with Cantor. Eric Schmidt: Maybe one on each of the 2 programs. On 7375, what do you think potential partners need to see from either your Phase I or early Phase II data sets in order to be very interested in the asset? And then 2 for Dan in terms of the self-sustainability of the CO-PACK franchise. Can you be a little bit more granular in terms of the revenue that gets you to that sustainability? Daniel Paterson: Sure. Eric, thanks for the question. Just to comment on potential partners, we have had a fair amount of interest. And what typically happens in situations like this, it tends to come down to the competitiveness. I think if there's one party interested, it can go on forever. I do think the fact that we've got significant data out of China that aligns well with the preclinical profile, it's really seeing enough data from the U.S. where we show that we can give it in a tolerable way in a way that can be combined and that we start to recapitulate efficacy that puts us in the ballpark of still being potentially best-in-class. And Michael, I don't know if there's anything more you want to add there, but why don't you comment and then we can have Dan C talk about the expenses second half of the year and kind of what we're talking about being covered. Eric Schmidt: I think you covered it real well, Dan. We need U.S. data, and we need a lot of detail on the patients and their prior therapy, and we're quite optimistic that we'll be able to deliver on that. Daniel Calkins: Yes. Eric, this is Dan C. So yes, just in terms of the self-sustaining question, obviously, we haven't given guidance in terms of the revenue for the remainder of the year. But just in terms of the expenses, if you look at SG&A expenses from -- on a quarterly basis from when we were pre-commercial to where we are now, that increase has typically been around $10 million to $15 million per quarter. And then from an R&D perspective, if you look specifically at the A+ related programs, that spend has typically been about $10 million to $15 million per quarter as well. And the majority of that spend is really coming from the RAMP-301 trial, which we announced reached full accrual back in December of 2025. So that's now at full accrual. So I don't expect that, that will increase more likely be coming down. So that would give you a good sense of what it would take to be self-sustaining within that program. Operator: Our next question comes from the line of Michael Schmidt with Guggenheim. Michael Schmidt: I had a couple on 7375. Maybe one for Michael first. You talked about the Phase I update in the first half of this year. And maybe if you could just comment a little bit more about how the patients perhaps in the U.S. study compared to the GenFleet Phase I study that we saw last year. And also, you mentioned different follow-up with -- depending on which dose was used. And so how comparable will the U.S. update be perhaps to the GenFleet data from last year? Daniel Paterson: Michael, do you want to take that? Michael Kauffman: Sure. Yes. Sure, Dan. So PDAC is generally treated the same way across the world. And frankly, these days, lung cancer, I mean, KEYTRUDA may or may not be the immunotherapy, but it's generally treated with a platinum agent, typically carbo and since these are adenocarcinomas of pemetrexed. And again, colorectal cancer, it's pretty standard, whether they're getting FOLFOX or FOLFIRI and some people are getting FOLFIRINOX, it's all pretty similar. The patients are fairly similar. I think the most important difference and the reason we want to continue to study our drug is because the tolerability in the U.S. has been substantially better than what was reported in China. We are not seeing any significant level at all of liver dysfunction. We haven't seen any significant hematologic issues at all. And we continue to see that even with patients now who are on for many months. Some who are on for more than 6 months. We're just not seeing that. We're also not seeing cumulative toxicities, which is really great for a drug that can be given chronically. We have really not seen anything major with this drug to date, and it's -- the numbers are starting to climb. So the 600-milligram dose has been studied for a little bit of a while now, but across a whole bunch of different cancers. It was an open study. We'll have a little bit more specifics on it. But I think the points I made in the call were that it takes a while to get responses here. I mean you can't even assess the first response until 6 to 8 weeks after initiation of dosing. And remember, when we open a trial, we don't accrue everybody at the beginning. So this is a staggered accrual, of course, with staggered dosing. We all wish this could happen immediately. But the first scan is 6 to 8 weeks and then a confirmatory scan is another 6 to 8 weeks. And then if like in PDAC when many of your responses are going to occur in the second scan after the first scan because these are tough tumors and they have a lot of scar tissue. It's going to take a while, and that's okay, and that's very good. We absolutely have responses in the first scans after dosing starts, and we've seen responses at second, and we've seen patients who've done really well, have shrinkage of tumors and cross the important 30% threshold for a PR in scan 3 or 4. I don't want to go into any detail, but we're quite pleased with what we're seeing, and we believe that 900 milligrams will be the go-forward dose. So that won't be -- the 900-milligram details will not come until the second half of the year, as we said. And we'll be able to give a little bit of data on the 600 milligram. But we would far prefer to give you guys substantial data sets in the 20 to 30 patient range with reasonable durability so that we can make some -- you and we can make some intelligent decisions on how this drug is stacking up against others. All of that said, we remain very, very excited about the potential for this to be a best-in-class agent. And I would lastly point out that this drug does not carry rash with it at all nor does it carry stomatitis. And these are really important considerations for patients who could spend a year or more on these drugs. Michael Schmidt: Okay. Understood. And maybe a question on your Phase II program. Specifically the 201 study on Slide 12 is schematic and just wanted to ask, so you have Part A and Part B. And I'm just curious what the decision process is for either selecting 1 of the 2 cohorts, monotherapy or combination and then whether the Part A and B patients will be pooled at the respectively selected cohort. Will this be a 100-patient type -- actually 80 patient type registration cohort? Or how should we think about the decision path as you have sort of multiple steps in these Phase II studies? Daniel Paterson: Right. Well, beautiful way to put it, and you correctly figured out what we're really doing here, which is to expect that based on what's going on right now at the 900-milligram dose currently in our Phase I, we do think 900 milligrams will be good as both a monotherapy and in combination. We think both of these cohorts are going to be important. And we do intend to pull Parts A and B. This is sort of a 2-step. It's almost sort of a baby and 2-step trial, but we're just putting it in here this way so that we can review this in case there's some unexpected findings here, which frankly, would be different from what we're finding already in the 101 study. We don't believe that's going to happen, but this was -- we discussed it with our statisticians, and we thought this was the most appropriate way to do this. It doesn't really affect our time lines at all because we think both cohorts are going to go through, and we'll have both a monotherapy and a combination. I'll just add one more thing, and that is that these are important cohorts, assuming cetuximab can add efficacy, but it also remember, cetuximab brings about an 80% burden of it. It's a different kind of a rash than you see with some of the pan-RAS inhibitors. The cetuximab rash is so-called acneiform, and it's actually really well controlled with, frankly, standard acne medicines plus steroids. So a lot of the patients will go on prophylactic minocycline or doxycycline, and that can really mitigate these rashes. But it still comes with a rash. And there are patients even with pancreatic cancer who don't want that. So we think both of these options will be important, and we think we can deliver very significant response rates, which will be correlated with durability with this kind of a drug because it doesn't have cumulative toxicities for both of these cohorts, and we'll have 2 different options for patients. Michael Schmidt: Okay. And then cetuximab is clearly an interesting choice, I think, in PDAC, but any plans to potentially evaluate combination of 7375 with an investigational pan-RAS inhibitor? Daniel Paterson: We're absolutely considering that, and we're in discussions with folks. We have generated and continue to generate some interesting data in that regard. So we're absolutely looking into that. That said, frankly, there's a lot of different pathways that deserve study in now that we seem to have made a dent in pancreatic cancer, and we're considering multiple other options as well. Operator: Our next question comes from Faisal Khurshid with Jefferies. Faisal Khurshid: I wanted to ask about the GenFleet partnership. So when you guys did the partnership, I think you had 3 RAS programs that you were eligible to in-license. And if you look at the GenFleet pipeline, they have the G12D, the G12C and the multi-RAS. Can you confirm if you guys are able to license the multi-RAS and what the considerations around that could be? Daniel Paterson: Yes. This is Dan. So those 3 molecules were not -- well, except for the G12D, which we developed together with them and chose the lead. The other 2 programs were not officially part of the original collaboration. We continue to have discussions for us to jump into the pan-RAS space right now. We'd have to be convinced that it was a differentiated molecule and that, frankly, that combining G12D and pan-RAS is actually the preferred path we might want to go down. And we think we have so many other options. We're still considering it, but there are a lot of other options to look at for combination. Faisal Khurshid: Got it. But you do have 2 more molecules that you can get from GenFleet under the current deal? Daniel Paterson: We do, and we've not disclosed those targets yet. Operator: Our next question comes from Leonid Timashev with RBC. Leonid Timashev: I wanted to pivot maybe to the commercial side of A+F. Really appreciate the color on sort of how you see the commercial strategy evolving. But I guess I'm curious if you could provide more details on how you'll actually affect those changes. I mean is there a different way the sales force is going to message? Are the promotional materials going to be different? Are the regions going to shift? I guess how do you actually drive towards those goals that you laid out? Daniel Paterson: No, that's a great question. And the short answer is I'll accept the last one. So we did add 2 additional sales positions, and that was really driven by the fact that 2 of the regions were just too big. And so we said all along we were going to rightsize the launch. We were in the process of doing a deep dive. We're about 6 months in when we got to the end of the year. We had that seasonal issue, which frankly, impacted refills more than initial scripts, and it was reauthorizations and things like that, that would push things from January into February We actually had some patients we had to put on free drug for a month until things got sorted out. And so when I -- when we talk about the focus for 2026, some of it was just additional training. Some of it is making sure that we're putting the right amount of effort into the visits after the first prescription and not putting all our effort into getting a prescription. And then implemented a number of different steps with information flow between the specialty pharmacy and really our integrated force, which is both the sales team and the med affairs team to make sure that when there's a delay, and we increased the number of calls to patients so that we are in touch with what's going on with the patient. But also a very deliberate link where if there's a dose delay, somebody is calling on the practice, whether it's med affairs or the sales rep to both find out what's going on and then reinforce the messaging that came out of the SGO meeting recently. We had 2 big events at the SGO meeting, which that and IGCS tend to be our 2 big meetings of the year. We had the long-term update to RAMP-201, which showed durability and no increase in side effects with cumulative use over a long period of time. But also, we had a poster on the importance of dose intensity. And one of the things that you're able to do in a clinical trial when you're interacting in a very regular basis is make sure you're reinforcing the protocol rules, which is if there's a side effect, you delay the dose and you restart at full dose. That works really well with this drug. I think we were finding with MedOncs in particular, who are used to the dynamics for chemotherapy are a little different where you may get a response earlier and side effects are cumulative, where with this treatment, you tend to get early side effects, and they tend to be predictable things and things that the patient knows they're coming can be dealt with and then the response becomes later. And so really reinforcing the messaging and really the sharing of data on how important it is to get the patient through that first 3 months or so, so they get the benefit of the treatment. And then we talked about the new campaign that we rolled out. That's something that had been in the works for a little over 6 months. When you launch with accelerated approval, you're limited in what you can talk about in the early days. And so this was really our next wave of the promotional campaign that had been planned from the beginning and really reinforces the importance of getting on this treatment early. I think there's another dynamic going on is also at SGO, there was an early report of a frontline LGSOC study that compared platinum-containing chemotherapy followed by as part of the same regimen, an AI versus an AI only. And the combination won out. And I think you're going to start seeing patients as standard of care based on the data that just came out that will get the platinum-based chemotherapy followed by AI as frontline therapy. And I think that really sets us up very nicely to be the next therapy that patients get after that. Operator: Our next question comes from Graig Suvannavejh with Mizuho. Samuel Lee: This is Sam on for Graig. Congrats on the quarter. Maybe one on 7375. So how should we be thinking about the cadence in terms of the timing of readouts? Is there a specific program or indication that you see as, I guess, the most likely path for successful registration-enabled readout and data? Daniel Paterson: Sam, thanks for the question. I'll start, and then I'll turn it over to Julissa to give more specifics on what we'll have when. We believe all 3 of those indications are important for patients and places where our drug, we believe, will work quite well based on preclinical data. So they're all moving forward in parallel. Our goal is to have those Phase II studies largely accrued by the end of this year and then move forward as quickly as possible. Obviously, there's a lot of movement in PDAC. We're going to have to monitor. We are in an enviable position as a company of our size that we have multiple programs in PDAC, and we're going to have to see how both of those develop to make some decisions on how best to prioritize things while staying right on top of what's going on in the competitive space because obviously, there's a lot going on in PDAC. And then for CRC and lung cancer, again, the preclinical data is really exciting. If you look at the GenFleet data in second-line lung cancer, 50 -- or 69% response rate we're seeing unprecedented response rates as a single agent. We're starting to see that we can combine nicely with other agents. And so we've got a lot of choices to make around the frontline path in a very short period of time. But while we do that, and we will be doing frontline Phase III studies, we will continue to push forward very aggressively on those potential accelerated approval paths. Julissa Viana: I'll just add just with that. Yes. I think just to reiterate what we said on the call about the timing, again, the update in the first half will show progress on enrollment. We'll share some more mature safety profile data since the one that we provided back in March. And we'll provide some patient cases so that you can get a sense of the efficacy that we're seeing. And then in the latter half of the year, again, the goal is more comprehensive data set, double-digit patient numbers across the tumor types, ideally at the go-forward dose, looking both at mono and combo data sets. So we can make some decisions at that point, looking at all of the variables that were just mentioned. Daniel Paterson: Yes. In the first half data release, we'll have much -- we'll have more data on PK. And as Michael mentioned during his prepared remarks, this is the first time we've disclosed that in the U.S., we are seeing better PK at 900 than 600. And that's both AUC, which is kind of, I guess, the standard measure folks would normally use. But because of the residence time or time on target, being about 24 hours, we actually think Cmax matters a lot. So it can come out of the blood and still be actively blocking the target, and Jon Pachter presented some really elegant work at AACR last meeting recently. And so we think by seeing that PK going up with the dose, we think it just further strengthens the case for pushing that 900-milligram dose, especially since we are seeing that it's tolerable. Operator: Our next question comes from Andres Maldonado with H.C. Wainwright. Andres Maldonado: Congrats on the progress. Two for me for 7375. First, so in the non-small cell lung cancer, you're including an asymptomatic untreated brain metastases cohort. So curious there, is the goal mainly to show systemic activity in a difficult subgroup? Or is there potential to -- do you guys think you have enough CNS exposure to support a differentiated intracranial profile that extends beyond that tissue type? And then second question, kind of a macro question. So earlier this quarter, we saw a pan-RAS program report a Grade 5 pneumonitis given the historical trends also seen with approved G12C, how should we be thinking about these events through the lens of an on-off G12D or other strategies targeting G12D? Daniel Paterson: Michael, do you want to take those? Michael Kauffman: Sure. So first on the question of the brain mets. The systemic activity of the drug will be in lung cancer generally is being evaluated now at 600 in the ongoing Phase I, and we will be doing the 900 in the Phase II, as you see, as you saw from the deck that we had along with the prepared remarks. There is a separate cohort because, obviously, when you're trying to ascertain the value of the drug, systemically, you tend not to pick patients with metastatic brain disease. That said, lung cancer frequently goes to the brain, unlike colorectal and unlike pancreatic cancer. And so in lung, it's especially important to try to see if there's substantial brain activity. The drug does penetrate the brain. I believe GenFleet reported that 2 out of the 5 patients that they had who had asymptomatic brain mets had systemic responses to the drug. We haven't been able to ascertain exactly how much the brain mets may have shrunk, but the brain mets clearly did not progress because they wouldn't have been responsive if they had. So this cohort of about 25 patients will be treated at 900, which is a higher dose than GenFleet is able to obtain to see if we can control the brain mets. And you all know about avutometinib and some of the other amazing therapies that also cross the blood-brain barrier and really can help these patients do very well over time by preventing or treating brain mets. So that's a starting point for potential for this drug that may differentiate it from others. And to reemphasize what Dan said, the fact that we're able to deliver such good systemic levels that are very tolerable so far with the 900 gives us a good shot at being able to drive enough of the drug into the brain and do something about this. As far as pneumonitis is concerned, we have not seen any cases of pneumonitis that were believed to be caused by the drug. I believe that they -- that we may have a treatment unrelated pneumonitis case in a patient who already received radiation and it was thought to be a radiation associated, but it was grade 1, and it had 0 impact at all on anything we've seen. We've certainly not seen any kind of pulmonary symptoms with our drug that give us any pause. That said, we'll be treating a large number of patients with previously treated lung cancer, many of whom have received chest field radiation, many of whom have had one or more infections, all of which predispose you to downstream lung events. We're obviously hopeful we're not going to see that. And lastly, we do not believe, based on our tox studies, there's any drug-related risk of pneumonitis, but that remains to be seen, but nothing important so far. Daniel Paterson: And just to amplify Michael's comments about pneumonitis, we do have access to the entire PV database at GenFleet. And when we heard these events with some of the other drugs, we did a deep dive. And so his comments are informed by that work that's been done. Operator: Our next question comes from Yuan Zhi with B. Riley. Yuan Zhi: Maybe one question on the combination of 7375 plus EGFR inhibitors in the PDAC indication. So with this incremental addition of EGFR inhibitor, which normally patients cannot get because of baseline KRAS mutation, what kind of incremental efficacy you guys are looking to justify the addition of this agent considering the safety liability with this EGFR inhibitor? Daniel Paterson: Michael, do you want to take that one? Michael Kauffman: Sure. There's 2 components to this. One is the overall response rate, of course. And the second very important one is durability. It is -- we do believe, and we have some early data that could support that hypothesis that we could deliver a higher response rate. We -- it's too early yet to say whether we would have an increased durability of response. That said, the mechanism of action of cetuximab is to block -- specifically block not only a growth pathway. It's an accessory growth pathway for sure, for RAS-driven cancers. It's not the primary one. But when you block RAS in these cancers, including pancreatic and colorectal and probably some of the other gastrointestinal tumors, the EGFR pathway becomes much more important and blockade of that can be helpful, again, upfront, but also to prevent the development of resistance and running growth pathways through the EGFR pathway. So this could have impact on both sides of this. We will know fairly soon what kind of incremental we'll have. I can't give you a real number. I think what we'd like to do is say that if there are probably patients who would benefit from cetuximab from the get-go. We don't know who they are. And there'll be other patients who might benefit from down the road after, say, 8 or 9 or 12 months on our drug, if they started to develop resistance, one could imagine adding cetuximab. We think that this development plan that we expect could support accelerated approvals could lead to availability of this combination regimen, maybe not upfront in everybody, but certainly as an option for patients if they start to see progression of their tumor as well as for some patients upfront. So I think this provides a lot of flexibility. This is not an option for most of the pan-RAS inhibitors because the strong concerns about added rash here. And I think for the 40% of patients who have PDAC that's G12D and the 20% of patients that have colorectal cancer that's G12D that this could be a really important addition either upfront or down the road. Operator: Our next question comes from Jeet Mukherjee from BTIG. Jeet Mukherjee: Two for me. You certainly mentioned that 900 mg is looking like a very suitable go-forward dose. But I was just wondering if you could elaborate a bit further on why this hits the sweet spot. It looks like 1,200 mg is certainly still under evaluation. Was there some limiting factor with that dose perhaps? And then the second question was just related to the target studies. I think you've definitely mentioned that these are designed to be supportive of approval. Have you reached some degree of alignment with the agency on what the bar for approval is? It looks like ORR is a primary endpoint across several of the studies. Is there some threshold you need to exceed? Any details there would be helpful. Daniel Paterson: Michael, do you want to take those? Michael Kauffman: Sure. So just to be really -- it's a simple answer for 1,200. The capsules that we have right now -- I'm sorry, the pills that we have right now are 100-milligram pills. Asking patients to take 9 of these to give you 900 mg is the upper limit of what they can really handle in one swallow, if you will, or one session, if you will. For the 1,200, we're going to a split session of 6 and 6 split by about 30 minutes because we ask people to take it with food and plenty of water and so on to make sure it gets down there and everything. So it's just impractical to go much above 1,200 with the current pill size. That said, we are certainly in the midst of constructing larger pills, which we'll update you guys on when we have that to a point where we think it's real. And hopefully, we won't be -- we don't expect to be marketing this as 100-milligram pills. We expect to be marketing it with higher pill sizes so that we don't have to give people that much. So it's pretty simple and straightforward. Once we have the larger pills, depending on what we see with 1,200, we may consider going higher. But right now, 1,200 is it. As far as FDA's threshold, I mean, we have not had any discussions with them specifically about what this is. But thankfully, and I think the oncology division of the FDA has been superb about this, particularly for molecularly defined subsets of cancers. They have routinely approved drugs as low as 25%. Typically, the 25% to 30% ORR range is what's approvable as a single-arm study, provided there is sufficient durability. If you go to ASCO, most experts will tell you they want to see at least 6 months duration of response. You all keep in mind that, that's 6 months plus the 1.5 months minimum, it takes to get to a response. So you're talking 7.5 to 8 months at least on the drug, which for these kinds of tumors is pretty impressive, particularly in heavily pretreated patients. I think those are kind of the thresholds you should be thinking about 30% on the ORR number and 6 months durability, but those are general numbers, and it's always a review issue with the FDA. Operator: And our final question comes from James Molloy with Alliance Global Partners. Matthew Venezia: This is Matt on for Jim today. Just 2 from us. In terms of the launch for A&F, the reimbursement for KRAS undefined and KRAS wild type, is that continuing at similar rates from previous quarters? Daniel Paterson: Yes, we've seen no change. Matthew Venezia: Okay. Excellent. And then do you guys have any anecdotes from treating doctors whose patients have been on treatment for over 8 or 9 months at this point? And if you could share, that would be very helpful. Daniel Paterson: Sure. I mean it's anecdotal at this point, given the fact we've only been out for just a year now. But there are patients that have done quite well that are both wild-type and mutant. And we also continue to interact with the sites on RAMP-201. And I recently spent some time with a patient that's been -- never achieved a PR with stable disease, but had a really transformational change in her ability to do things. She went from not being able to vacuum or living room to running a 5k and has been on our drug for, I believe, 3 to almost 4 years now. And so we do have a lot of anecdotal information, even going back to the FRAME study, we had a number of patients staying on for a long time. So we do think when it's the right patient that we'll recapitulate what we saw in the clinical trial. As you may recall, in RAMP-201, we had patients from anywhere from 1 prior therapy to 10 prior therapies. And it tends to be less, I think -- of course, the more prior therapies you have, the more challenged the patient has. But I think the big difference in the real world versus the clinical trial will be performance status. In most clinical trials, you're limited to performance status 01. And obviously, in the commercial setting, you take anybody who wants to come on the drug. And even though we did hear instances of patients going on cycle and coming off and then you can say, well, they probably shouldn't have gone on the therapy. We've also heard anecdotal stories of patients that were pulled out of hospice put on the drug and did well for a number of months and got a number of months with good quality of life they wouldn't otherwise wouldn't have had. And so those are great stories to hear, and we continue to monitor those. And we're very excited about the franchise. I think we've uncovered some things from seasonality, plus you learn as you go through the launch, and I think we've made some course corrections that it may take a couple of months to see the full benefit of. But I will say with confidence, we already are sure that we will see an increase from Q1 to Q2 that was bigger than the Q4 to Q1. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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