And that is sort of the update on the citizens petition.
Unidentified Participant: Very helpful. Thank you very much.
Jeffrey Dayno: Thank you.
Operator: Thank you. We’ll take our next question from Jason Gerberry with Bank of America. Please go ahead.
Jason Gerberry: Hey, guys. Good morning. Thanks for taking my questions. First one for me, just on your annual — or I guess your net sales capture per patient, your average patient number, it looks like the revenue capture is stepping up, offered you a nice tailwind on a year-over-year basis and has kind of continually been grinding upwards. I was wondering if you could talk about the extent to which that’s a trend or just seasonality because when we look at the gap between first half sort of net sales capture per patient versus second half, that gap continues to widen. And I’m wondering how we think about that going into 2024. And then just second one on the share buyback, just wondering how you’re thinking about priority of the buyback versus M&A. I would think that the buyback is mainly where you see opportunistic opportunities to defend the stock, one, if it’s weak, and then M&A maybe a priority over buyback. But I wonder if you can clarify that. Thanks.
Jeffrey Dayno: Yeah. Thanks, Jason for your question. Sandip, do you want to speak to revenue per patient first?
Sandip Kapadia: Yeah. Sure. I mean, look, I think you see the general — usually every year, first half, especially in the first quarter, that tends to go down as you have higher growth in net deductions and impact of that, and then it improves as we go throughout the year. In terms of gross and net deductions, typically levels off by the third and fourth quarter of each year. And generally, the key change versus prior year, we’re up about 8% on that metric, and we took a price increase of about 10% early this year. So take plus or minus the impact of the price increase, as well as some inventory fluctuations, essentially gets you to that 8% that we saw year over year.
Jeffrey Dayno: And the way to think about it going forward and generally, like I said, gross net is relatively flat for Q3, Q4, second half of the year. And then of course, as we go into Q1 of next year, you’ll see the same dynamic again, where we’ll have higher net deductions and so forth. So it’s following the natural seasonality and pattern that we observed over the last couple of years for this product, which, again, is not product specific. It’s really industry specific, I would say, overall. I don’t know, Jeff, was there anything else you wanted to comment on that?
Jeffrey Dierks: So I mean, Jason, I think the only other factor just to consider when you’re looking at average revenue per patient is the patient assistance program engagement that we’ve seen has been relatively consistent. And so as the number of patients on average patients continues to grow and the participation in the free goods program is relatively flat, you’d see a slight incremental benefit as we’re adding more revenue-generating patients. It’s nominal, but I think to Sandip’s point, when you couple that with the gross to net and the price increase, that’s really what’s kind of driving. So you should anticipate a slight increase in the average revenue per patient moving forward based upon traditional price increases that we would take, as well as just a relatively flat participation in our free goods program, as we continue to grow the average number of patients on Wakix.
Jeffrey Dayno: Yeah. And with regards to the share buyback, I’ll just start and hand it over to Sandip. Jason, I think, as Sandip mentioned in his comments, it’s not sort of an either/or. I think that obviously, we’re in a strong position with regards to deploying capital, either toward share repurchase or business development efforts. And, Sandip, further thoughts on that?
Sandip Kapadia: Yeah. No, I think that’s right. It’s really not a question of either/or. I think we’re in a well-positioned — given our profile of the company, as I mentioned in my prepared remarks, we generated $63 million of cash from just operations last quarter, strong cash generation, profitability. We have a very different profile of the company. And we think we can also –and well-positioned to execute on share buyback, as well as business development. And of course, look, it’s going to fluctuate quarterly, and we’ll provide an update to investors as we progress on both of these areas.
Jeffrey Dayno: Yeah. And I think we remain committed in terms of our business development efforts and understanding the importance of growing the pipeline and diversifying our portfolio to drive long-term growth.
Operator: Thank you. We’ll take our next question from Graig Suvannavejh with Mizuho Securities. Please go ahead.
Graig Suvannavejh: Hi. Good morning. Thanks for taking the question. Congrats on the progress. Two quick questions, if I could. First, just going back to the new share repurchase and comments around potential flexibility around BD, should we assume or any comments you want to provide on kind of the size of the deals going forward? Certainly, Zynerba was, I think, as you mentioned, about a $60 million transaction, given that you got a new $200 million share repurchase. Is that $60 million kind of the happy place for you guys in terms of the types of deals and the size of deals you want to do? So that’s my first question. And then second, just on patent litigation with the P4s that have been filed. I just wanted to ask if you could confirm whether you have initiated patent litigation or patent infringement lawsuit yet? And any thoughts around time lines with respect to that? Thanks so much.
Jeffrey Dayno: Hey, Graig. Thanks for your question. Sandip?
Sandip Kapadia: I wouldn’t necessarily read into the urban transaction is the same as what we would do potentially in the future. Look, we have $438 million as of the end of last quarter. We continue to generate positive cash flow. We have access to the public markets that need it. We are in a position to do sizable transactions than what we have at that point. I think it will really be the types of opportunities that we see that will determine not necessarily — we have good flexibility in terms of capital deployment.
Jeffrey Dayno: And, Graig, with regards to your question on patent litigation and Paragraph 4 filings, I think as we previously have communicated, based on the commercial success with Wakix, we fully expected to see Paragraph 4 filings, and we received additional filings beyond the first two that we initially received and have shared and disclosed. So I think that we’ll provide updates on the process as it moves forward. This is a long process, I think, as you’re aware. We prepared for the generic filers, and this is really the start of the process. We have 45 days from the date of each of the Paragraph 4 notification to file the lawsuits, which invokes the 30-month stay, which, obviously, prevents the FDA from approval that generic file during that time frame.
