Q3 2019 Earnings Call
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Thank you and good morning.
Thank you for joining us today.
For Alexia its performance in the third quarter 2019.
This call will be led by Ludvik Hanson our CEO .
<expletive> will be joined by Paul Clancy, Our Chief Financial Officer, John Orloff, Our global head of R&D, and Brian Golf, Our Chief commercial officer, Radnets or in our chief strategy and business officer, and incoming CFO will be available for key money.
You can access the webcast slides that we presented on this call I going to the events section of our Investor Relations page on our website.
Before we begin I would like to point out that we'll be making forward looking statements and these statements involve certain risks and uncertainties that could cause our actual results to differ materially.
Please take a look at the risk factors discussed in our SEC filings for additional detail.
These forward looking statements apply only as of today and we undertake no duty to update any of the statements after the call except as required by law.
I'd also like to remind you that we'll be using non-GAAP financial measures, which we believe provide useful information for the understanding of our ongoing business performance.
Reconciliations of our financial results and financial guidance are included in our press release. These non-GAAP financial measures should be considered in addition to but not a substitute for our GAAP results. Thank you let me.
Thank you Susan and good morning, everyone.
I'm very pleased to share the outstanding performance in the third quarter and to continue progress all ex <unk> 2.0.
I'm proud to have excellent execution across all aspects of our business.
For the second quarter in a row, who received multiple regulatory approvals, including most recently built amir's for H.U.S. and U.S. and Soliris for animal is the in the E U.
These are in addition to the ultimate frisbee and each approval. Indeed, you at the start of July .
Collectively we have received five global regulatory approvals in the last four months and all launches Oh do us a strong starts.
We have also made significant progress further growing and diversifying our clinical stage pipeline.
Three business development deals are those still.
And acutely ill.
And we expect it to add four new clinical stage assets, including two in phase three development.
We're continuing to me remarkable progress evolving the company.
Slide six highlights key third quarter achievements beyond those I've just mentioned.
First on teams continue to demonstrate launch excellence across the globe.
Driving rapids, B and each conversion to pull to many years.
Do you S. launch trajectory continues upwards into conversions in Germany, and Japan are outpacing the rapid stock we saw in the U.S.
Second.
We continue to accelerate on new energy portfolio.
Today is the second anniversary of the F.D. approval of Soleris with GM G mocking the companys entrance into rare neurology.
No just two years later neurology is on track to be our largest franchise driven by continued strong adoption in G.M. G as well as robust early demand in animal I see.
So.
We continue to grow and metabolic portfolio with new Strensiq and Kanuma patients well also progressing to phase three study of 18 40 and Wilson disease.
Fourth.
We have heard a buildup pipeline through both internal and external efforts.
In addition to the new business development additions I highlighted earlier.
We have also grown up pipeline by progressing our internal assets, including late stage with multiple registrational programs underway and even more on track to start in 2020 as well as early stage moving 17 20 into the clinic.
And fifth we have once again delivered on our financial ambitions would strong revenue and volume growth this quarter.
As we look to the future we're focused on the durability of a core franchises as well as the further diversification of the portfolio to drive continued near and long term growth.
In order to do this will focus on three key priorities highlighted on slide seven.
The first is conversion.
We believe that ultimately here is the future of C. Five inhibition.
And the patient demand we see supports this.
Second is expansion in particular, although C five franchise.
There is an opportunity to help even more patients with little to matters and we have expanded the development program to seven diseases.
CNH, each U.S.G. Mg and Im always D. HSC TTM me, Yeah. This P.M.S. and also weekly Subcu dosing.
In addition.
Empty 20 moved into the clinic.
With both 18 10, and 17 20, we have optionality and the potential to treat a variety of complement mediated diseases not addressed but current portfolio.
A third area of focus is diversification.
Which we have specifically focused on as we have grown our pipeline.
Much of this is driven by ongoing business development efforts, which have included 11 deals in less than two years seven of which have been clinical stage.
And we continue to look for additional opportunities.
Well, we're building a pipeline from the ground up just two years ago, we had only three programs elite stage to clinical development.
Ultimately incipient age and each of us and solutions for anymore is the.
As you can see on slide eight Oh significantly expanded pipeline is poised to deliver at least 10 potential launches over the coming use.
These launches spend a range of disease areas patient populations.
Lots of administration and geographies.
Oh extend the portfolio positions us well to deliver long term sustainability and value creation with many important catalyst in 2020 and 2021.
Transforming a company does not happen overnight.
And I'm incredibly proud of how much we've accomplished in a short time meeting in many cases exceeding expectations.
We have established a very strong foundation on which to continue building election, 2.0, and remain committed to food evolving and growing the company to ensure it is positioned to deliver well into the future.
With that I'll now turn the call over to Paul to discuss our third quarter financial results all.
Thanks for doing starting with slide 10, we reported third quarter total revenues of $1.263 billion, an increase of 23% year over year. This was driven by GM G continued growth in the core business in old tumors P. NH conversion.
Our non-GAAP operating margin was 57% and expansion of 357 basis points driven by topline growth.
non-GAAP earnings per share was $2.79, a 38% growth year over year.
Moving to slide 11 third quarter net product sales were driven by volume growth of 23% in partially by appraise tailwind of 1%.
Turning to slide 12, Soleris revenue in the third quarter was $991 million with year over year volume growth of 11% driven primarily by strength in the United States in Japan, which both include the growing contribution from our GM GE business.
So where its revenues were partially impacted by Ulta merits conversion.
To mirrors revenue in the third quarter was $90 million, which now includes contributions from Europe and Japan.
Recall, there's a benefit in the quarter that each patient starts ulta marriage treatment due to the loading dose impact subsequent quarters are then impacted by the maintenance dose discount in extended every eight week dosing interval. We expect this the dynamic will create some revenue fluctuation on a quarter over quarter.
Order basis going forward for open Ameris.
Recall with each U.S., we anticipate that dynamic may be more pronounced given the even greater maintenance dose discount to Solaris.
The total revenue for C. Five franchise, which includes Solaris Endo tumors grew 22% year over year Cross Paean age you typically each U.S.G.M. Gi and animal study.
Underlying volume growth in the P. in each in each U.S. business remained solid in the quarter and we continue to expect high single digit underlying volume growth for this year.
Moving to slide 13, Strensiq revenues for the third quarter were $154 million, representing 36% revenue growth in 36% volume growth year over year.
Consumer revenues in the third quarter were $28 million, representing 12% revenue growth.
In a 16% volume growth year over year.
Turning to the piano on slide 14 during the quarter non-GAAP R&D expense was $186 million or 15% of revenues non-GAAP SGN any expense was $260 million or 21% of revenues.
The non-GAAP effective tax rate in the quarter was approximately 11% the gap right rate was approximately 13% both Q3 non gap in GAAP taxes benefited by a change in estimate over current and prior year foreign derived intangible income deductions.
Based on additional guidance provided by the U.S Treasury Department related to U.S. tax reform.
We reported third quarter, non-GAAP EPS of $2.79 growing 38% year over year, GAAP EPS was $2 an eight cents.
We ended the third quarter with approximately $2.2 billion in cash and marketable securities.
In the third quarter, we repurchased $335 million in shares in accordance with are sure stabilization plan to offset equity awards.
We've completed share stabilization for all of 2019 in a portion of 2020.
This week the board has approved a new authorization for $1 billion as we've nearly completed the prior authorization.
This is primarily earmarked for sure stabilization for future years.
Strategic deployment to further build the pipeline remains our primary focus for capital deployment.
I'll now slide turn to slide 15 for our updated financial guidance, which are Radnor jointly developed.
We're guiding to total revenues between 4.860 billion to $4.890 billion in increase from prior guidance. This represents 18% growth year over year at the midpoint of the range.
For the combination of Solaris and all comers. Our revenue guidance is 4.180 billion to $4.200 billion. This assumes continued momentum in gmg incorporates our ongoing launch of animal westy in the U.S. in the launch of ultra mirrors for PNM each in the U.S.U.
In Japan.
Turning to metabolic saw revenue guidance is $680 million to $690 million.
We estimate price will be a 2% headwind in 2019 in foreign exchange impact net of hedging is expected to represent in approximately 40 million dollar headwind.
GAAP operating margin is expected to be between 41 in 42% inclusive of restructuring and related expenses as well as upfront payments.
non-GAAP operating margin is expected to be between 55% to 56% revenue unchanged from prior guidance.
non-GAAP R&D expense is expected to be 14% to 15% of revenues, we intend to further build in progress the pipeline in it and expect clinical program spend especially for late stage development to increase in 2020.
non-GAAP SGN expend is expected to be 21% to 22% of revenues for full year 2019 slightly increased from prior guidance as we support the numerous launches around the world.
We expect a non-GAAP effective tax rate to be approximately 13% GAAP earnings per share is expected to be between $8.58 in $8. In 78 cents non-GAAP earnings per share is expected to be between $10.25 intend to always in 40 cents the midpoint of.
The non-GAAP earnings per share is approximately 30% growth year over year.
This guidance excludes the financial impact of the recently announced agreement to acquire kill me on as it is not anticipated to close until the first half of 2020.
We delivered a strong quarter and we're well positioned to deliver on our 2019 goals I'll now turn the call over to John to provide in R&D update.
Thank you Paul here on Slide 17 is our development portfolio, which has grown substantially this year. We now have 22 planned development programs and as Ludwig mentioned earlier. This leads to the potential for at least 10 launches by 2023 with significant milestones in 2020 and 2021. This further diversification includes three business.
Development deals announced in the past two months with Idahos stealth and acutely on.
I will also note that we entered into an asset purchase agreement pending bankruptcy proceedings with immune pharma to acquire an anti eotaxin one antibody for potential development in inflammatory diseases. So we continue to bolster our early stage pipeline as well.
Turning to slide 18 in our key late stage programs, starting with ultra mirrors.
We expect to have at least five ongoing registrational trial trials in 2020, including HSC TTM, a gmg animal westie, Alice and the weekly subcutaneous formulation for pain age and atypical at U.S.. We also anticipate initiating trials in additional indications and expect to update you.
On our strategy to further expand Ulta mirrors next year.
Moving to Alex and 18 40 for Wilson disease, we remain on track to complete enrollment in our phase three trial in early 2000, 2018, 40 has the potential to be a highly differentiated form.
Current.
From current treatments due to 10000 fold higher affinity for copper potentially improving liver function and neuro psychiatric symptoms and significant improvement in dosing.
Following review with regulators will be moving forward with a registrational phase two three trial for CA 101, nail light chain amyloidosis, stratifying patients by Mayo clinic stages to three and three b.
Turning to our emerging anti F. CRN portfolio, we remain on track to manufacturers have sufficient supply for 18 30, our lead anti fcr and asset by year end and plan to initiate a phase two study and warm auto immune hemolytic anemia. Early next year. We will also begin a phase two study of subcutaneous 18 30 and.
DMG in the second half of 2020 falling generation of subcutaneous data in healthy volunteers in.
In addition, we anticipate data from the Sad Mad study of Abbey Y O three nine potential best in class subcutaneous anti F. CRN, we are developing with Apple body in the first half of 2020.
On the right you see the late stage programs from our three recently announced business development deals I will provide a little more detail on each of these in the coming slides.
Moving to slide 19, which illustrates that across these late stage programs and platforms, we have the opportunity to diversify and significantly expand the reach of our portfolio to many additional patients with significant unmet needs.
We were able to leverage our ultra rare and rare disease capabilities for these patients who have very limited treatment options.
And this is only the beginning for example, with oral factor D NFC, Iran. We see opportunity and numerous complement mediated diseases, many that impact much larger populations and those we currently treat.
Moving to slide 20, we announced last week that we entered into an agreement to acquire a kilian.
Sending the satisfaction of customary closing conditions and relevant regulatory approvals. The acquisition is expected to close in the first half of 2020.
This acquisition would add two clinical stage oral factor de inhibitors to our pipeline factor D. as a critical control point for the complements alternative pathway is implicated in numerous rare diseases with significant unmet needs for example in areas of nephrology and ophthalmology.
Importantly, selective inhibition in all of the alternative pathway allows the lectin and classical pathways to continue to fight infection.
Therefore factor de inhibitors have the potential to advance the standard of care with oral administration for multiple rare complement mediated diseases.
In both for 471 in five to two eight provide important opportunities to diversify our complement portfolio beyond C. Five.
We also recently announced an option to co develop and commercialize a late stage therapy for mitochondrial diseases with stealth biotherapeutics.
Hello, Mr. tied isn't novel potential first in class therapy that targets mitochondrial dysfunction, which is currently being evaluated in a phase three study in people with primary mitochondrial myopathy or PML, a genetic mitochondrial disease. There are no therapies approved to treat PML, which is characterized by debilitating skeletal muscle weakness chronic.
The key and exercise and tolerance.
Phase two results from stealth manpower to study showed strong improvement and six minute walk test results among patients with low walking ability. These results inform the inclusion criteria and primary endpoints for the ongoing phase three am Mpower three study.
From which topline results are expected in the first quarter of 2020.
In addition, if exercised the option provides the opportunity to treat patients with Barack syndrome, labors hereditary optic neuropathy and geographic atrophy associated with dry age related macular degeneration.
We believe element for tied has the potential to meaningfully improved the treatment of mitochondrial driven disease and we look forward to the opportunity to work with our partners that stealth to bring this treatment to patients.
Moving to slide 22, and our agreement with iOS Therapeutics to develop AG 10 for transpired in amyloidosis or a TTR in Japan.
T R as a progressive fatal disease in which transpired and can be de stabilized in misfolded, leading to amyloid fibroid deposition in organs.
The majority of patients present, with either neuropathy cardiomyopathy, or both and often go through a series of specialists and misdiagnoses before eventually receiving a diagnosis of TTR Amyloidosis Agee 10 is currently in phase three development for 80, TTR cardiomyopathy, and the U.S. and he you after phase two results successfully show greater than nine.
90% average TTR stabilization at day 28 of treatment.
Alexia on will be responsible for development in Japan, where we look forward to applying our expertise to bring AG tend to Japanese patients.
The R&D organization has grown significantly to support our expanded pipeline is exciting that the effects of this are already starting to be seen I'm incredibly proud of the progress this quarter and we'd like to thank the global R&D organization for their dedication to advancing and further building our pipeline in portfolio strategy.
With that I'll turn the call over to Brian to provide a commercial update Brian .
Thank you John I'll start on slide 24, with an update on Ulta mirrors conversion then move to our great progress in neurology and the continued growth of the metabolic franchise.
Starting with ultimate were as for PNM each in the U.S.. We continued to be very pleased with the launch in our efforts to facilitate patient conversion.
As of the beginning of this week, 51% of patients are on treatment with Ulta Myris. This is unprecedented progress for rare disease facilitated conversion in just 10 months of launch.
As with any launch curve, we do not expect to continue on a linear trajectory as we now have a majority of p. in each patients converted.
That said, we have some promising developments to help maintain or momentum first a permanent J code for reimbursement was implemented on October onest, removing that as a barrier for prescribing and second we're starting to target a greater breadth of treaters.
So we remain on a very solid path towards achieving our accelerated goal a best in class patient conversion of at least 70% by mid 2020 in the United States.
Moving to our European launch progress, starting with Germany, where we launched in July we are already at over 45% conversion, which is more than three months ahead of the U.S. launch at the same time point.
This is tremendous progress in a credit to the strength of the Ulta Myris product profile, the local team in Germany and benefited by the concentrated treater base.
We've also launched in Austria, Denmark in Finland, providing access to other two ulta myris in other European countries is a priority and we're working towards additional launches in the EU as we seek reimbursement agreements.
In Japan, we received approval in June and while we were waiting for the National Health insurance price listing in order to launch we were actively engaged in efforts to improve physician awareness civil to mirrors.
We officially launched in September and while it's still early days conversion is tracking ahead of the US launch at the same time point.
Turning to slide 25, we're pleased to now have FDA approval for Ulta myris to treat atypical each us in adult and pediatric patients.
Here will leverage the strength of our p. in each launch experience to drive rapid atypical each U.S. facilitated conversion and stable patients in our goal is to continue to deliver towards a best in class launch.
I'll highlight a few subtle differences in the patient dynamics specific to atypical each U.S. first duration of therapy varies depending on etiology and is in general shorter than that NP in each given the silent nature of the disease between TMB events.
We hope that with the profile of Ulta Myris and it's every eight week dosing there will be potential to improve persistence and compliance given the significantly increased risk of a TMB event, if a patient stops treatment.
That said for some shorter duration populations for example, a typical each us in pregnancy, there may be patients to choose to remain on Solaris.
Second newly diagnosed patients often present in acute settings. So we'll be working to help start patients on ulta mirrors or facilitate rapid conversion of Solaris initiated patients once they transition to the outpatient setting.
Finally, we launched Ulta myris with the objective of a global sustainable pricing strategy.
Given that the labeled Solaris dose for atypical each us is higher than that in P. an age this translates to maintenance dosing at a roughly 33% discount to Solaris annually.
This dynamic has already resonated very well with both patients and payers.
Our team is highly prepared and we look forward to updating you on our progress here.
Moving to slide 26, I'd like to step back and provide a bigger picture view of how we see Ulta Murias conversion, providing the foundation for the durability of our C. Five franchise focusing on the four core Soliris syndications.
Or ambition is to deliver best in class facilitated conversion for patients across the portfolio and we're off to a strong start with the launch is already underway.
We believe that the vast majority of patients will be treated with Ulta myris before even the earliest potential biosimilar launch.
Furthermore, we plan to have our weekly subcutaneous formulation available to provide even more optionality for patients.
So we believe the market will move to and remain on ultimate Juris given its strong clinical profile globally sustainable pricing strategy and compelling value proposition, including 20 fewer infusions needed per year.
Consistent with the US timeline shown here, we expect to see similar dynamics play out in Germany, and Japan, which can be seen in the appendix.
Turning to slide 27, with an update on our neurology franchise, which continues to deliver significant growth.
You can see on the left we ended the quarter with more than 1500, gmg and emo SD patients treated with Soliris in the U.S.
This was our strongest quarter to date for Gmg and the animal Westy launches also off to a great start.
We believe our footprint in learnings in Gmg has helped to accelerate the early trajectory and immodesty.
Furthermore, the efficacy of Solaris in animal SD is profound and resonates with physicians patients and payers given the unpredictability and the devastating and often irreversible impact of even a single additional relapse.
In particular data from the phase three extensions showing that all patients on severest monotherapy remained relapse free through 144 weeks is highly compelling.
Turning to slide 28 in our metabolic franchise, we reported third quarter Strensiq revenue of $154 million or 30, 336% year over year growth driven by volume.
With our caliper age adjusted Lab testing initiative, we're working to increase awareness and adoption of the appropriate diagnostic ranges for HPP, helping to support earlier diagnosis, particularly of pediatric patients.
We reported third quarter consumer revenue of $28 million were 12% year over year growth again, this was driven by volume.
With both Lal D and HBP, we continue to identify and treat additional patients and look to expand or geographic reach.
Once again, the hard work expertise and dedication of the commercial team is inspiring and is enabled us to deliver on multiple fronts and bring hope to patients with numerous rare diseases I'll now turn the call back to look for closing comments literally. Thank you, Brian we have made significant progress in the third quarter as highlight.
Good on slide 29.
Thanks to the tremendous efforts off all of our employees.
Next Gen 2.0 is off to a great start with coal business that is performing better than ever before as well as an expanded and diversified pipeline.
As you can see on slide 30.
Focused on durability and long term growth by driving facilitate the conversion expansion of our current medicines into new diseases and further diversification of our portfolio.
Our current portfolio spans across hematology, nephrology, neurology metabolic and cardiology and is poised to deliver at least 10 additional potential launches like 2023.
Which will significantly evolve the composition of our core business.
There are many exciting milestones in the next 12 to 24 months in particular, including multiple Bindeez new programs entering the clinic and new pivotal programs as well as several data read outs from ongoing programs that were not stopping here.
We continue to look to add additional rare diseases to our portfolio to further disciplined business development and internal research efforts.
We also maintain our unwavering focus on patients and our commitment to advancing a mission of delivering life changing therapies to people living with rare diseases.
Debt, we will now open up to call two questions operator.
As a reminder to ask a question you will need to press star one on your telephone.
Draw your question.
Press the pound Keith please standby why the compiled the Q and a roster.
Our first question comes from Josh Schimmer of Evercore ISI. Your line is open.
Great. Thanks for taking the question maybe a quick went on my senior launch in the U.S. given the care paradigm and might have expected that most severe diagnosed patients.
Would have come on to Solaris fairly quickly and we might have even started to see.
In fact, I know it doesnt seem to be the case, maybe you can.
Help us understand the market dynamics here and the implications for the sustainable growth with them I assume your premise franchise.
Yes, Hi, Josh this is Brian so I'll take that as a complement so thanks a lot yes. The launch is going well and we are as I noted we're at the two year anniversary Mark for our entry into Neurology week, We said at the time when we started at the end of 2017 that.
We did not expect a bolus.
We knew it would be a heavy lift in terms of education around the role of complement in the underlying pathophysiology of Gmg and we've made great progress and along the way. We also expanded our commercial team to make sure that we could balance both depth of prescribing as well as breadth and we did that.
As well to prepare of course for the animal is STI launch and I think what you're seeing is just continued progress towards that educational effort and again I'll just say that this is a population where while we talk about being over 1500 patients now in the us for gmg.
That we're still just at the I guess, the leading edge you could say of the population that could be our addressable market and that's six to 8000 on the severe end of gmg in the U.S. alone with a broader population of 60 to 80000. So that continued educational effort. We believe will continue us on.
Our expansion journey and just to clarify at the end of September we were over 1500 patients across GMT animal SD granular continued to add more patients. Since then that's right yes I.
I was going to say that Brian that team are doing an excellent job and we.
We believe that this this this business is sustainable as we are focusing on the refractory population. We know does a lot of competition on the clinical trial sites that were focusing on the tape on the patient type that might be different than some other auto technology. So focusing on so we're really really placed.
The progress.
Next question.
Next question comes from Matthew Harrison with Morgan Stanley . Your line is open.
Hey, great. Good morning, Thanks for thanks for taking the questions I was hoping to just take a little bit more into.
Mowing and see what sort of metrics you could provide us there on.
Launch uptake, how we should think about that relative to what you saw from EMG launch.
And.
Any other feedback as you, especially as you think about potential competitors coming on next year.
Yes, good morning, Matthew.
Within Immodesty I would characterize it as seeing strong start and we're we're still relatively early in the launch.
I've communicated before that again this will be significant educational lift for clinicians one starting point is to make sure that it's clear to clinicians that this is not Ns and the reason that that's important is because they think about.
Oftentimes relapses and this is being recoverable and we have a very strong focus on the fact that every relapse matters in ammo as Steve and often times as I noted. These relapses are unpredictable theyre devastating and very often you reversible. So that's that's really the beginning point in this sector.
And is the role of complement which is very different and there's a lot of.
Off label Rituxan use that's out.
The animosity community. So this is the first approved treatment for animal as STI and we're pretty emphatic that there's a sense of urgency that clinicians need in the early days, what we're seeing right. Now is there are clinicians who have had some patients that they have already thought about as a candidate for Solaris and so thats.
Good they're moving on to therapy, and now were intensifying our educational efforts to make sure that they identify others, who could make that transition from things like rituxan or immunosuppressive therapy and I'll. Just add this is John with regard to competitive data while the majority of our patients were on background I Estes about.
25%, we're on no background I asked is that is essentially monotherapy and they showed 100% relapse free all the way out to three years.
Next question.
Our next question comes from Geoffrey Porges STB Leerink. Your line is open.
Thank you very much and congratulations on our results appreciate the questions.
Quickly.
I'm not sure whether it's a question for Brian will fall, but up.
Lot of confusion about but all the moving parts in terms of the transition, but could you give us some sense of whether you believe soleris can remain flat over the next two to three years, even as the ultramarine transition Mcos because you obviously solaris is still being driven by any measure on it and Mg. So.
Could you give us a sense of how we should be thinking about that and then on a related note.
Your transition slots for US you to Japan.
Et cetera very helpful.
Could you talk a little bit about how orphan drug exclusivity will play out when a biosimilar us available to you have any examples where orphan drug exclusivity for a protected indication has been sufficient to avoid erosion buyer biosimilar that's already on the market for.
An alternative indication so thats, what were going to be facing and 20 324 contract.
Jeff Let me let me this is Paul I'll try to take a little bit of a crack at the first part of that question and then Brian will kind of give a perspective on the orphan drug.
I think you want to think about it with respect to analogy or geographic perspective.
Our neurology business is disproportionately and we expected probably to stay that way us in Japan.
And and then I think the way, we think about the P. an age in eight us businesses around the world is converting told to Merus. So that's probably the guide posts that a I'd give you were seeing Solaris hanging in there now.
Because of the strength of Gmg, which as we said before by the end of this year.
Neurology will be the largest patient franchise in the United States.
So we expect that to continue to grow.
And then over a longer period of time, obviously, we've got all to merits that we're studying in both gmg and animal SD, which.
We were little bit bias here, but we think those are high probability trials.
So over a longer period of time, we kind of see them, but the business completely moving customers.
Yes, and I'll take the second I'll take the second part on this is Brian on.
Odidi, we're not aware of.
An exact analog of the situation that we face where there is rare disease or this case ultra rare disease odidi.
A biosimilar and then a generation one to generation to switch that has the kind of delta between the product profile of Solaris, which at that time will be 15, plus year old technology.
The result of Myris. So we havent seen that we do believe that Odidi provides a level of protection.
But I think the more important side of this whole story is.
That we will have conversion that will be in such a way where patients will have had many multiple infusion experiences with ulta Mira. So it becomes a part of their life and the Ics the feedback that we get from everybody from clinicians from patients as well as from payers is.
Very encouraging and so I I feel very good about the strength of the Ulta Myris product profile.
Even if there were the availability of you know at some point a biosimilar I don't see a switch back dynamic and we're starting to hear that reflected by K wells as well and from that the regulatory perspective with Odidi protection, they wouldn't be able to get that indication in their labeling and therefore, it wouldn't be able to promote off it.
Great. Thanks, very much okay.
Thanks, Jeff next question.
Our next question comes from Chris Raymond Piper Jaffray. Your line is open.
Thanks, just maybe sort of a little strategic question with regard to all the deals you guys have done and sort of the pipeline backfill. So just noticing with stealth kilian deals.
You guys kind of have the beginnings of a nice little ophthalmology portfolio.
I know these aren't lead indications but.
You still kind of highlight them and talk about them.
Yes clearly.
It's been very successful moving into neurology as an indication expansion, but should we maybe start thinking about ophthalmology as maybe another area that.
That's of interest here or is that just a byproduct of these two deals. Thanks.
Yes, I think from a strategic perspective.
Clearly, we're focusing them on rare diseases ultra rare diseases will focusing on a medicines that can be transformative and optimal achieve for sure. It's within that within that range. If we believed that we can be can impact on the journey of patients. We will sell wouldn't look at is as I.
Got it but have we.
Agreed on which path, we're going to take strategically within this disease area I would say maybe more discussions to pump in the next in the next months and I was just add where they are killing on deal. We're most excited about the opportunity for alternative indications that expands into new territory for us and that includes ophthalmology.
As I think proof of science in terms of alternative pathway involvement in various optimal logical diseases and then of course stealth that has ongoing phase two studies in.
Geographic atrophy in the MD as well as the labors hereditary optic neuropathy I think gets us.
Squarely in potentially in the ophthalmology space very soon.
Okay next question.
Our next question comes from feel NATO of Cowen and company. Your line is open.
Good morning, Thanks for taking my question just a question on the subcutaneous version of Ultramarine.
Could you remind us of the volume of the injection, there and how long it takes to administer.
And then as we look forward to the launch what percent of Alteris use do you think would transition to the sub Q.
Do patients consider this is a big benefit and.
What will happen in future indications, we have to escape subcu and each future indication or do you expect conversion based just on the Pinochet has stated that you're generating now thanks.
So with regard to the Subcu program, we are using to west Gen, one devices, which deliver three and half mills.
It's delivered over nine minutes.
And again the devices user friendly applied to the body they don't see the needle.
And it has been actually tested and commercialize with other products. So we're very bullish on the device and we're in the middle of our Subcu program now, which is nearing completion of enrollment and we should have data sometime in the second quarter of next year that effect, it's already commercially available will facilitate the regulatory.
Also so which is an important step and I'm really excited about the subcu.
Optionality, so Brian Yes, I feel it's a good question in it. It is one that we're excited about we we've talked about subcutaneous is providing options for patients. It may be though as we continue to do more market research that it goes beyond that and there are clearly some patients that.
With the profile that we believe we can offer with Ulta myris that may be the choice that they go for.
With subcutaneous it could be a function of their lifestyle. How active they are it could be a function of the distance from an infusion center or just simply that its minimally invasive.
Once weekly or so formulation versus an ivy delivery and so that's one that we look forward to as well as we continue on that conversion journey I think the sub acute could be another critical component to address the durability.
But more to come next year, when we should be able to to share you do the phase three data for Pn age and eventually also hey choose.
Okay next question.
Next question comes from Geoff Meacham of Bank of America. Your line is open.
Good morning, everyone and thanks for the question just have a few.
Brian on Ultimate Crusher conversion rates are strong so far as you guys get closer to 70% what would you say or the remaining barriers across the geographies and then I understand the dosing differences between.
Version teenage son age, who asked but are there access or payer differences between the two.
Then a bigger picture for liquid or Paul with with all the recent transactions of pieces are definitely in place.
For diversification I just wanted to ask how you characterize R&D capacity at this point our their room for.
Continued product specific deals platforms sort of technologies or maybe or are we at the later part of the innings in terms of.
The step up and BD. Thank you.
Yes, Jeff it's Brian I'll start that on the Ultima series question, maybe I'll just take a moment to do a little mini victory lap because.
I'm really proud of the progress of the team has made we're really pleased that we're well on track towards our goal of greater than.
70% or greater by the middle part of 2020, and just as a reminder, that is moving the goalpost earlier than we originally thought that's based on the progress and as you know.
There will be and ambition to go beyond the 70%, but it's interesting that not long ago. The questions that I was asked all the time is is our ambition to bold is it achievable in here. We are 10 months into launch and we have the majority of patients already converted which is as I noted that is unprecedented.
And by the way the simple math is that 51% of 70% means we're already three quarters of the way there in terms of our goal. So what we focus on from here on to your question is a broader range of prescribers. These are often times clinicians who have one or two P.M. each patients so that.
That requires more time and effort for the broader reach the other thing that is a tailwind and it came earlier than is typical is the availability now have a permanent J code.
Usually that comes in a year, we achieved that at the beginning of this month, which is 10 months into launch and that's very important for clinician confidence of reimbursement and we believe that that will be particularly helpful. As we move forward towards the next phase of the launch so we feel really good about or progression that we'll be able to make it.
Again, not just in the U.S., but in Germany, and Japan, which is actually tracking even faster than the you us.
Jeff This is Paul and take a crack at your question as it relates to R&D capacity in the connection with business development.
A few perspective and from a financial resource allocation perspective, I think we welcome the upward pressure on R&D and that's how are planning is thinking about it particularly as we go into 2020, we've alluded to that over this coal as well as last call. So I think we want to kind of welcome that it is good.
Good pipeline builds from a people perspective.
No no doubt the R&D organization is feeling kind of the added work that is going on.
And we do we do plan to kind of address that with additional hires and additional kind of keep building capability. So while that's not trivial, but it is absolutely solvable and then I think what a run is built in terms of business development organization.
Connected with the opportunity set in rare diseases, I think there's a pretty strong opportunity set externally to kind of press on with respect to the strategy of.
Kind of continuing to build the pipeline and continuing to build a clinical pipeline as well John or rather than anything to add I'll, just say that we've certainly grown considerably this year to keep pace with BD deals that have come in and the pipeline growth both internally and externally.
And we're in a position relate to tell a really good story to get of high quality people in the organization and expand our expertise. So that's ongoing now and it's going well.
Yeah, I think the other part of your question was when we look at any different.
Type of transactions and I think.
You will stay true to again, adding to what is a good strategic fit for us whether that's.
Staying within the rare disease focus focusing on clinical stage assets, but again, expanding our capabilities. We have been sort of therapeutic area agnostic, we have been technology agnostic and local onto need to be that way again looking for sort of the best assets in our view that can solve unmet clinical need.
Jeff It's Brian again, I'd, Susan reminded me that I missed one part of your question too about atypical at U.S. and.
The payer feedback that's I expect that to be a very compelling discussion they already have a lot of.
Knowledge now a Volta Myris, we've made great progress with pn, each with over 80% of commercial covered lives.
Now with a defined policy the economic story for Ulta, Myris is even stronger with the 33% discount versus Solaris and the maintenance fees and as I noted, we have the permanent J code, which which covers pn each any typically to us.
Okay next question.
Our next question comes from Paul Matteis of Stifel. Your line is open.
Great. Thank you so much for taking my questions I think I had two for Brian .
So now that you're halfway through conversion in the U.S.. Brian I was wondering have you noticed anything demographically that is different or unique about the patients the ph patients who haven't switch from Solaris and I'd be curious what the implications of this our if any and then secondarily what's going on in June .
Germany, why do you think thats gone, so well, so far and what's the read through their onto dynamics and other European countries. Thanks, So much yes, hey, Paul So on the first one in as we move into the call. It the next phase of our launch.
Some of the dynamics that we're seeing you anybody would expect there is in some cases and lower awareness on the part of the patients.
Around Ulta, myris or they're not as connected perhaps with other patients through advocacy or the like there also is the process. We're still working through is the frequency of patient visits to clinicians varies pretty widely across pn agent. So some of his just waiting for either the.
A visit or they need to have a few visits to have that appropriate discussion with the clinician ended the third thing I would note is.
Again, we've moved largely through the call at the higher volume type clinicians and when I say high volume its with quotes because this is ultra rare.
And now we're moving into.
Sort of one off clinicians they have one or two patients as I had noted that's that's mainly the U.S. dynamic.
In Germany first of all we've been able to really amortize the learnings of launch from the U.S Thats a real advantage of the sequential progress of us than Germany, and as I noted, Japan is going well. Additionally, one key difference in Germany is that the prescribing treaters.
Our more concentrated than in the U.S.. So that's not a disk credit to what the team in Germany has done, but I think its aided them with some of their speed to conversion.
Great next question.
Our next question comes from Mohit Bansal of Citi. Your line is open.
Great. Thanks for taking my question.
I would like to start with congratulating identify her new role and paused for a big banks to paused for all the had.
We'll definitely be missed.
No on the question side.
You saw quite a big jumping the number of patient can utilize side.
Could you could you clarify what extent Nicolas EMG flexes animal and on that thank you suggest that noodle could already be contributing 40% or show to fully for us.
Making it the biggest already can you please confirm that too. Thank you.
Yes, So mohit this is Brian and by the way all congratulate a rodney as well, we're really we're thrilled to be.
To have a rodney in her new position.
On the on neurology, we have not given the breakdown of gmg versus animal study.
In fact, it's the same commercially this is the same line and so we think about it as a dedicated franchise. What I have noted is we're really pleased with the progress that we see on both fronts. This was our best quarter to date that we've had in on our two year anniversary actually with gmg, so that parts going really well and as I had noted.
We continue to make excellent progress with educating clinicians. So now we've we've got good balance of both breadth and depth of prescribing in gmg. It animal SD were just a few months in.
But are also very pleased about how that's progressing that's going to be a journey very similar to gmg with not a bolus, but linear progression and and we see that becoming a very meaningful part of the business going forward and we have made the stated ambition that neurology.
By patient volume in the U.S. becomes our biggest franchise and wall on track for that goal.
Next question.
Our next question comes from Salveen Richter of Goldman Sachs. Your line is open.
Thanks for taking my questions just maybe one on the pipeline when we look to this proposed that carry on transaction.
I'll mention your prior work with Solaris and see three G. and just contrast that with this approach and we through.
Yes, there's only been anecdotal reports of the use of Solaris and C. GE and certainly nephrology has been an area that we are evaluating our multiple renal diseases that were complement plays a role that includes terminal complement as well as upstream complement targets and so with that.
With a killing hands program clearly they've got to phase two studies that are ongoing that will read out.
The next year with promising proof of mechanism data in patients. Following 14 days of treatment, where they showed you know.
Consistent effects on various biomarkers of the complement pathway that leads us to be optimistic about the potential results as we look at the phase two studies, which we'll be evaluating renal biopsy scores as well as Jeff our and proteinuria.
We take two more questions.
Our next question comes from Laura Chico of Wedbush Securities. Your line is open.
Good morning, Thanks for taking my question.
Wondering if we could step back to the theme of kind of the diversification efforts and if you could talk a little bit about the strategy around the airlift program that you're anticipating starting soon here just in terms of patient selection and trial design.
That's related to that we also notice a patent filing.
C inhibitors, and AMC and I know there have been prior studies with flares and dry AMD, the but just curious on your thoughts about the potential for altamira.
Thank you.
So I'll take the first part of that anyway with regard to Alice we've had input from a number of a key opinion leaders and we're seeking regulatory guidance on a program that would be registrational nature that delivers on endpoints that we'd be satisfactory to the multiple major regions.
Including the U.S. Europe , and Japan, we do have a final study protocol, we will be engaging regulators shortly and hope to begin that trial in the first half of next year that includes both functional.
Evaluation, so the ALS FRS our rating scale.
As well as looking at survival given that.
They are mortality is high and rapidly progressive so we'll be looking at both of those in addition to that we'll be looking at other functional.
Valuations such as pulmonary capacity forced vital capacity and slow vital capacity. The right now until we have the final design approved by regulators, we can't really say much more than that that we were at the top of the hours. So we take from one last question.
Our last question comes from ROE for side.
William Blair Your line is open.
Thanks for taking the question Rick assuming the Kelly on deal closes can you just kind of discuss.
The next Japan, and how it relates how it will relate to the authors conversion would you plan on kind of initiating studies with.
I'll timorous as an add on therapy and then that's one question on PDGF.
Threshold of debt capacity that you'd be willing to take on with deals. Thanks.
So with regard to the first part of that as you know they will be sharing their phase two data.
Fourth quarter.
With regard to add on to Solaris and then the the plan is to proceed with the regulatory engagement since the deal hasn't closed we really can't comment specifically on the plans.
But we are excited about the opportunities beyond a piano inch and MPN H.. We think it's certainly as add on can play a role for the unmet need in the small subset of patients who continued to have extra vascular mall says. However, this is a disease of intravascular mosses.
Which has served by C. Five inhibition LDH reduction being the biomarker thats most closely associated with reduction in the risk of thrombosis.
And only a small subset have that extra vascular mall since thats clinically of clinical consequence, but we are really excited about the opportunities outside of CNH, including see threeg, but as well as many in nephrology ophthalmology dermatology in other areas that allow us to expand our therapy.
Footprint.
And in terms of in terms of business development, we do have obviously substantial financial capacity.
In the transactions that we've done both from a licensing and partnering standpoint as well as.
From an M&A standpoint, which Wilson, Kelly on and and said to me and transactions.
We are right now under one times leverage so we do have substantial capacity, we really focus less on.
Instead of what threshold capacity is but really our ability to create value from the acquisitions that we do and.
The greater the transaction size, obviously, we want to make sure that those transactions our value creating.
This is going to be at full today.
As was already mentioned on the coal.
Big Thank you to Paul Paul was instrumental in transforming this company and he will continue to work with us and the next for the next nine months Paul. Thank you a big welcome to have run.
Great to have you as new CFO as you saw it was a great quarter and I really want to thank our employees for their hard work.
The organization is on an exciting journey, we're transforming our business.
In.
Thank you for your time and enjoy the rest of your day.
Thank you.
Ladies and gentlemen, this concludes today's conference call.
Thank you for participating you may now disconnect.