Q3 2019 Earnings Call
Great.
Welcome to GW Pharmaceuticals, third quarter 2019 financial results Conference call.
At this time all participants are in a listen our newly married.
A question answer session will fully the formal presentation.
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Please note this conference is being recorded.
I'll now turn the conference over to your voice you specific Mr., Steve Schultz. Please go ahead.
Welcome all of you and thanks for joining us.
Today for our second quarter results call again, I'm, Steve Schultz, Vice President of Investor Relations at GW.
Today I'm joined by Justin Gover, GW is Chief Executive Officer, Darren Cline, U.S., Chief Commercial Officer, Chris Tovey, Our Chief operating Officer, Dr. Volcker can efforts Chief Medical Officer, and Scott Jukka, Belo, our Chief Financial Officer.
We hope you've had a chance to review our press release issued a short while ago, we expect to file our Form 10-Q tomorrow.
As a reminder, during today's call will be making certain forward looking statements. These statements reflect GW is current expectations regarding future events, including but not limited to statements regarding financial performance clinical and regulatory activities patent applications timing of product launches and statements relating to market access.
Vince and commercial potential.
Forward looking statements involve risks and uncertainties actual events could differ materially from those projected here in.
A list and description of risks and uncertainties associated with an investment in GW can be found in the company's filings with the U.S. Securities and Exchange Commission.
These forward looking statements speak only as of today's date August six 2019 finally, an archive of today's call will be posted to the GW web site in the Investor Relations section I now turn the call over at adjusting over GW is chief Executive Officer. Thank you Stephen welcome to all those who joined us today.
We are once again pleased to report strong sales of Epidiolex in the U.S.
While we are still in the early stages of this product launch a success continues to be fueled by strong market receptivity and demand by U.S. patient.
Increased prescribing by healthcare providers.
And ongoing progress in pad coverage determinations.
Darren Cline will provide more detail on our U.S. commercial achievement in a moment.
We continue to see significant potential for the growth of every Darling.
In May we reported positive results in our phase three trial in patients with seizures associated with hubris sclerosis complex.
We expect to file the S and the acreage for dialing in TST with the FDA in the fourth quarter, which should lead to a mid 2020 ft, a decision and if approved expansion as the market for epidiolex into this tiny patient population of approximately 50000 patients.
Focused methods will provide more color on this and other R&D progress on this cool.
Outside the United States. We were very pleased that have reached a positive opinion from the committee for medicinal products, we'll see HMP in Europe recommending the approval of Epidiolex.
This European approval is expected in early October and I'll commercial team is now readying for launch.
Chris Tovey will provide an update on our European launch preparations late in this cool.
Finally on the school Scott Jacobellis CFO will provide our financial results.
Let me begin by asking down to provide the U.S. commercial update Darren thank.
Thank you Justin I'm pleased to be presenting results to you for the first time has GW is U.S. chief commercial officer.
EBITDA Lex U.S. net net sales.
For 68.4 million in the second quarter, and 101.9 million and the first half of 2019.
We're very pleased with these results and income.
Ladies and gentlemen, I apologize for the interruption. Please hold the conference will redeem shortly.
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Ladies and gentlemen, thank you for your patience. The conference has now received please go ahead.
[noise] [noise], yes, a welcome all of you Oh. This is Steve Schultz Vice President of Investor Relations. Thank you for joining us for this third quarter.
Results Conference call I apologize for what you just heard which was actually a recording of our last quarter conference call, which for some reason they.
Started playing versus us providing this quarter's results so.
We'll reset.
And begin right now with the third quarter results conference call today, I'm joined with the by adjusting Gober GW is chief Executive Officer, Darren Cline.
Yes, Chief commercial officer, Chris Tovey, our Chief operating Officer, Dr. Volcker can efforts, our chief Medical Officer, and Scott Junket, Belo, Our Chief Financial Officer, We hope you've had a chance to review our press release issued a short while ago, we expect to file our Form 10-Q tomorrow.
As a reminder, during today's call will be making certain forward looking statements. These statements reflect GW is current expectations regarding future events, including but not limited to statements regarding financial performance clinical and regulatory activities patent applications timing of product launches and statements.
Relating to market acceptance in commercial potential.
Forward looking statements involve risks and uncertainties and actual events could differ materially from those projected here in.
A list and description of risks and uncertainties associated with an investment in GW can be found in the company's filings with the U.S. Securities and Exchange Commission.
These forward looking statements speak only as of today's date November 5th.
2019, finally, an archive of today's call will be posted to the GW website in the Investor Relations section [noise].
I now turn the call over to Justin Gover, GWP, Chief Executive Officer. Thank you save and welcome to all those has joined us today.
We're once again pleased to report continued EBITDA growth in the U.S. with sales in the first three quarters of the year totaling $188 million, including $86 million in this most recent quarter.
We are proud of the success of the launch to date and our experience adjusted EBITDA likes as it will the characteristics necessary to be a blockbuster black brands.
We see a met some of these in high demand by patient warmly welcomed by positions in the past recognizes providing meaningful value.
Beyond the U.S., we are now starting to commercialize epidiolex and selected major European countries and looking into 2020 , we look forward to adding a new indication of de risk. The rest is complex around mid next year.
In a moment down we'll provide more details on the U.S. commercial opportunity as it moves into it second year.
I have also off Chris Tovey to review the European launch status.
Understandably any epidiolex known here has been focused on commercial performance, but it's important to remind investors. The tw as a platform company with an exciting pipeline, which is going to be the subject of investment in 2020 Moca Klappa, who will review the pipeline with you later on this cool.
Finally on this cool, it's got Jacobellis CFO will review our financial results.
Let me begin by asking Darrin to provide a U.S. commercial update that.
Thank you Justin.
The dialects U.S. net sales were 86 million in the third quarter and 188 million year to date.
We continue to be very pleased with the progress of this launch and the impact Epidiolex is having an patient and caregiver lives and their prescribing physicians.
We feel very confident in the future direction of the brand as we complete our first year of commercialization and believed that the fundamentals to make epidiolex a highly successful brand continued to demonstrate themselves.
These fundamentals includes strong cooling conviction, among prescribers and the clinical benefits and both LG us NDS.
And increasing interest in the potential for epidiolex to treat other rare and refractory epilepsies.
Gain confidence in prescribing.
A very positive patient experience being shared.
Through very active and vocal patient and caregiver groups.
Physician feedback of positive clinical benefit and Tolerability and these patients and lastly positive payer coverage, which we expect to continue to widen.
Our market research as well as key.
AOL interactions reinforce our long term data safety profile and our novel approach to treating seizures are key differentiators for the brand.
Highlights for the quarter are as follows since launch over 15000 patients have received up a dialects up from 12000 through the end of last quarter.
Reflecting on our comments last quarter when factoring in the Q2 impact the pent up demand and he NP transition on the Q2 numbers, we believe that the underlying rate of new patient acquisition.
In Q3 remains very healthy.
Over 3000 physicians have prescribed epidiolex up from 2500 through the end of the second quarter.
Trend, which we also see is highly positive.
Patient retention remains high as physicians continue to see the clinical benefit while maintaining the tolerability as they seek to gain seizure control.
Patient dosing during the quarter continued to rise is more physicians gain experience with a therapy.
Our pediatric two adult mix remained roughly 60% 40% respectively.
The time to fill a prescription remains very stable as our specialty pharmacy and payer partners adjudicate claims and ship product.
On previous calls we've discussed the positive impact of significant prelaunch awareness and pent up demand on the initial wave of new patients and sales in the first half of the year as we evaluate the ups epilepsy, Mark and then other agencies that are preceded epidiolex such as on fee. I believe this provides useful contacts for the next phase of this law.
<unk> and how we think about the next wave of prescribers and patients.
Early in this launch most of the new patients came through a concentrated number of specialist and institutions and our initial targeting and deployment appropriately ensured that we spend our time and these top tier centers.
Virtually all the healthcare providers or HCP is and this top tier prescribed epidiolex in Q3, and we are encouraged by the market share penetration in this group of physicians, we expect to continue to see these top tier HCP introduce new patients to epidiolex.
Evidenced both by internal and external physician market research.
Looking forward, we see an additional next wave a significant opportunity and increase prescribing from a middle tier of our HCP targets, which represent just over 1000 prescribers.
And this 1000 prescriber universe, we've also experienced a high level of early adoption with over 80% having prescribed in Q3.
As is to be expected. However in year, one of the launch of a new AG. This group of physicians have generally prescribed to a small number of patients each well just beginning to gain experience with the product and I'm not yet moved to adoption and a wider group of patients.
A priority moving forward will now be to spend more time effort and resources with these physicians, which we are confident represents a large pool of potential new patient growth in 2020.
Beyond this the remained further waves are both prescribers and patients that we see our target prescribers universe number 6000, hence we will over time focused on the remaining 3000 prescribers and our call file which consist of mainly adult neurologist nurse practitioners and physician assistants, who see a wide spectrum of epilepsy.
Agents, including those with diagnose and undiagnosed LG Ssds.
In addition layer of opportunity as we prepare for 2020 as a long term care segment, we know from our market research feedback from customers and other analog so this to be an important growth driver for epidiolex.
We will be deploying resources next year to ensure recapture the opportunity to segment provides.
Of course 2020 is also expected to see the launch of a TSC indication.
The prospect of the launch of this new indication in 2020 provides needed hope to patients with difficult to control TSC associated seizures.
The most prevalent neurology co morbidity and CSC is epilepsy.
In which most our treatment resistance and the primary seizure types are focal onset seizures.
Which are also the most common seizure types and all epilepsy patients.
Effectiveness of Epidiolex and the TLC population greatly expands our understanding of the drugs potential to treat a broad spectrum about socal and generalize seizure types, which we believe will be important driver of Epidiolex peak sales potential.
Turning now to payer coverage as a reminder, our current payer mix remains approximately 45% commercial.
The percent, Medicaid and or managed Medicaid and 15% Medicare and other.
As to be expected our priority for the first year has been to ensure smooth patient and physician access for Derby and LG as patients to the labeled indication.
This has been highly successful and we see very little pushback in these patients.
As we approach the end of 2019 is important for investors understand the payer coverage for the remainder of this year will remain as is and that widening of coverage is being targeted for 2020.
Indeed, as we start to prepare for 2020, we're holding positive discussions with our commercial payers as they approach their first annual evaluations of Epidiolex utilization and expect that these discussions will enable further broadening of access next year.
We anticipate the utilization review will highlight several positive observations first physician utilization deschaine contained within our Apple apology in neurology targets, thereby reassuring payers that epidiolex as being prescribed by appropriate physicians.
Second Epidiolex is being used in the appropriate patients within LG us and the syndication.
Third upon appeal pairs are ultimately approving epidiolex for use in patients with other rare refractory epilepsies and that there is a clear unmet need for such patients.
Fourth.
Patient compliance as high, indicating a positive physician and patient experience and receptivity and lastly, the average price of Epidiolex is considered reasonable and provides a positive value proposition for the plan and their patients.
Overall these factors, we believe well positioned epidiolex well for broader payer coverage in 2020 and beyond.
The other important payer segments are the state fee for service Medicaid and managed Medicaid.
Medicaid prior authorization approval rates are in line with the commercial segment.
One important difference in the commercial and Medicaid coverage landscape is the variability of initial coverages within each Medicaid agency and the subsequent county counties and managed Medicaid plans. Hence we are aware that investors have noted changes in coverage conditions in certain states for example, in California in Colorado and I'd like to emphasize that these kinds.
Changes are positive for dialing.
They represent statewide coverage decisions, which replaced previous inconsistent county by county policies and procedures, we expect to see further progress with Medicaid plans in 2020.
Overall, the 188 million net sales in the first nine months of the year. This launch continues to track extremely well.
The prelaunch awareness dynamics have created an unusually steep uptake pattern, which has led to a large number of patients at an earlier stage that would normally be expected moving forward as we said in our last quarterly call, where you're seeing a healthy rate of new patient starts.
Starts which is more consistent with other successful analog product launches with potential market opportunity for this brand is very compelling.
As a reminder, between the three target indications of DS LD LG us Ntsc, we estimate there to be 70000 addressable patients in the U.S.
More broadly looking at analog peak usage of branded RMP indicated only for LG us approach 50000 patients and spinal year of exclusivity.
Overall, one third of patients with epilepsy have seizures that are not controlled.
We are laser focused on continuing to expand the market opportunities for this product as we move through 2020.
Thank you and I'll now turn the call over to Chris to discuss our progress in Europe press.
Thanks, Darren in Europe by European Commission approval for Epidiolex came in late September a wonderful news for those European patients and families that have been waiting for access to a fully regulatory approved CBD meds.
In the months, leading up to approval. Our early access program allowed us to provide epidiolex to over 1100 patients across the major five E U markets, including more than 400 key prescribers for more than 250 talk specially census.
We'll now begun the formal launch phase in the five major markets summing that will occur market by market over the next 12 months as we secured a national pricing and reimbursement. The first Mark to launch was Germany, where a full commercial launch took place in mid October .
In France. We're also now active in the market through a sales team of neurology account managers supported by team of medical Science liaisons.
In France winner relatively unusual position of having early reimbursed product available as part of the National 80, you early access game, which supports early patient access to important new medicines in serious diseases.
In parallel with fairly access the formal reimbursement presses has commenced the outcome of which is expected later in 2020.
The third the five countries, where we are making major progress towards commercial launch is the UK. We continue to what productively with nice and remain confident of a positive recommendation in the near future that would lead to the NHS paying for Epidiolex.
We plan on launching in the UK when the nice process is complete.
Continuing on across the EU, five, Spain, and Italy launches are expected during 2020 , whilst appropriate pricing and reimbursement negotiations are finalized.
We remain encouraged by the quality of our ongoing prelaunch pricing and reimbursement discussions with those authorities in the markets.
Underpinning our activities in Europe is a highly experienced team in both epilepsy and specialists disease product launches.
The field based team has been created to accommodate the specifics of the European medical environment, what typically physicians have high patient work lives and access to epilepsy physicians is limited proving a challenge not only for GW, but even patients and families themselves.
Consideration of what you physicians need from GW has prompted a customer facing team that is equally numbers between new cotton urology account managers and medical science liaisons.
The staffing model is different in that aspect from in the U.S. and it also and it is also relatively smaller reflecting the opportunity of a much more concentrated epilepsy specially subscribing base. The map 1600 key clinicians across the five.
What does it differ from the US, though is that market research and all our market feedback suggest the we're launching into a very receptive environment.
Research tells us that physicians are eager to have access to a new therapy to treat these difficult cases and that there was a high level of awareness amongst patients broadly equivalent to that of the us at a similar points.
This data is very reassuring and along with a physician experience in patient base created by the early access program offers us a strong head start as we begin the formal launches.
Moving away from European commercialization, our global commercial manufacturing supply chain, which also falls into my responsibility continues to run smoothly.
In addition, our longer term future capacity manufacturing expansion plans are on track to service, what we expect to be robust long term demand for epidiolex.
Thank you and let me now hand, the call to Voca for his update.
Thank you, Chris and good day everyone.
Looking first at any dynamics, we look forward to presenting at the upcoming annual meeting of the American efforts to society of positive phase three trial data in the treatment of seizures associated with Tubulars sclerosis complex or TST.
We are in the final stages of preparation for submission of a supplemental application to the FDA for this new indication. While this application timing has shifted into early January .
I still expect approval of this indication in mid 2020.
The European submission of the Telus TV does due to the to be filed in Q1 2020. The addition of TST and its associated seizure types, which are predominantly full colin on that will be important new features into prescribing information.
Beyond Epidiolex was thesis and building. So we are now actively recruiting patients into a placebo controlled phase three trial in erected syndrome.
In this 252 patient trial, we have focused our investigations on the non seizure aspects of the disease.
We see this trial, serving as an important source of information on the potential for at the dynamics to address many of the symptom complexes that are commonly seen in patients with autism spectrum disorders and the also comment in several several severe newer developmental disorders outside of epilepsy.
Success in children with Lyft syndrome corroborate the many anecdotal reports, we continue to hear from commissions and parents for leading to improvements in social interactivity and cognitive and be integral functioning.
Before moving on let me address Commons, we've heard from some investors regarding epidiolex and safety profile.
Since launch the safety information that we have seen this consistent with the LIBOR safety profile in the U.S prescribing information and is as expected.
The RFP dialects, we are advancing plans for sativex in the us.
And see this product is the major LTE speeds pipeline opportunity with potential for extended exclusivity.
We have spent the last several months evaluating the development strategy and commercial potential 'cause better decks across a range of neurological and psychiatric indications.
This work has reinforced our view of the significant market potential into use for sativex botanically derived products containing THC and CBD as well as other cannabinoid non connected components.
We look forward to sharing further insight into the end of this opportunity early next year.
The fastest route to market for status in the US is via the Asian already approved in Europe , and for which we have reported three positive phase three trials, namely the treatment of spasticity due to multiple sclerosis.
Over 35% of Emmis patients have moderate to severe specificity in represent candidates for this treatment.
In discussions with Emmis experts in the US it is clear that Sativex would bring a welcome novel mechanism of action to the specificity space, where there continues to be a substantial need for new therapies. As there has been known new oral anti specificity treatments introduced to this field for over 20 years.
Based on an ongoing dialogue with the FDIC. Our plan is to perform one additional phase three placebo controlled trial of approximately 450 patients to supplement positive data from three European phase three trials them is intended to address Sds preference for a primary endpoint that focuses directly under.
Physical manifestations of specificity.
To complement this trial. We are also initiating two mechanistic studies of about 35 patients each.
This clinical program is expected to come in in the first quarter of 2020 as a reminder, with this product already commercialized in Europe , we have a comprehensive mcd that package in place together with over 80000 patients years of safety data.
In parallel with the phase three M.S. trial, we anticipate during 2020 and 2021 initiating clinical programs and additional follow on indications for set of it and see a truly exciting opportunity for this product to address markedly.
Several indications over the coming years.
The onset of that we're particularly excited about the prospect.
For the treatment of autism.
As we have seen a potential beneficial effect for both at the dynamics and CBDV in several symptom complexes associated with autism spectrum disorder.
This is of particular interest as they are currently only a few options to treat these symptoms.
These are largely anti psychotic agents, which are especially challenging to use in children.
The effects of CBDV CBD in autism have been excluded who a range of genetic cumulative become environmental installed base animal models.
Demonstrated efficacy in social impairment visual recognition memory, which is a key component of social recognition as well as competitive behavior Ison high productivity.
A small expanded access programs study with CBDV in is the reported beneficial effects on social engagement and communication five patients.
We are following this initial experience it's the with the 30 patient open label study, which is about to commence and we expect the first set of data from this study to be available by the end of next year.
In addition, investigator led 100 patients placebo controlled trial in autism spectrum disorder has been actively recruiting since earlier. This year. Finally, an open label investigator led studies and Rett syndrome with seizures is ongoing.
Looking at our program in neonatal hypoxic ischemia against that philosophy or any charge.
We have opened trial sites and expect shortly to treat the first patient in this initial safety study of our intravenous it seemed to be formulation for any update.
They are currently no ft approved medicines indicated for energy you clearly have products to address this patient population of would represent a major break through and we look forward to advancing this program.
Finally, I am pleased to announce today that we're now moving forward a clinical development program for schizophrenia.
This is an area, which GW has been researching for approximately effective.
CBD has demonstrated efficacy in multiple preclinical models of schizophrenia.
There has been two randomized controlled clinical trials evaluating the efficacy of CBD in the treatment of schizophrenia, one off which was a placebo controlled GW sponsored study.
In this study in 88 subjects in schizophrenia, we experienced partial response to anti psychotic therapy GW is investigational CBD containing product with superior to placebo on positive symptoms as well as on the clinical global impression of improvement which were both statistically significant.
Having reviewed this data package with experts in schizophrenia.
We are now moving forward with a follow on phase Twob study. This study will enroll patients with despite receiving a stable dose of anti psychotic therapy continued to experience psychotic symptoms. The study aims to further estimate the magnitude of treatment effect of an investigational DVD containing product on par.
Positive negative and general symptoms of schizophrenia, as well as to evaluate effects on quality of life cannabis use and cognitive function into well characterized population.
We expect to to initiate enrollment into this study in mid 2020.
Thank you and that now has the call to Scott Checker Belo to provides the financial review.
Thanks, Volcker and good afternoon.
I'll now provide high level comments on financial results for the quarter at nine months ended September 30 to 2018.
More detailed discussion of results will be provided in our 10-Q to be filed with the FCC tomorrow.
I'll start with revenue.
Total revenue for the quarter was $91 million compared to 2.4 million in the prior year quarter.
This increase is due primarily to epidiolex us net sales of $86.1 million in the quarter.
Net sales of Epidiolex outside of the U.S. amounted to 1.9 million consisting largely of sales through early access programs in Europe .
Total deductions from gross sales for allowances were 18.6 million for the quarter related mainly to Epidiolex.
Gross to net is in line with our expectations at this point launch.
For the nine months ended September 30, total revenue was $202.3 million driven mainly by the dialects us net sales of 188 million.
Cost of sales for the quarter amounted to $8.2 million or 9% of net product sales compared to 1.4 million or 60% of net product sales in the prior year quarter.
This improvement is due to the launch of Epidiolex in the U.S.
In the prior year net product sales consisted of sativex sales outside of the us through license partners.
Cost of sales continues to be Favourably impacted by Epidiolex inventory produced prior to approval, which was expensed in accordance with us accounting guidelines.
Moving to R&D spend.
Total research and development expense for the quarter was $36.3 million compared to 28.9 million in the prior year quarter.
This increase reflects expenses related to the ongoing Epidiolex development program, including preparation of the supplemental NDA for TSC as well as advancing the Sativex clinical program and our other pipeline programs.
Turning to SGN today.
Selling general and administrative expenses for the quarter increased to $64.2 million from 52.7 million in the same period in 2018.
This increase is primarily result of costs related to the launch of Epidiolex in the U.S. and the build out of our commercial operations in Europe and preparation for upcoming launches.
A third quarter spend was in line with the previous quarter spend 62.3 million.
This is all resulted in a net loss for the quarter of $13.8 million compared to a net loss of 79.9 million in the prior year quarter.
Moving to cash flow.
Net cash used in operating activities for the nine months ended September 30 amounted to $107.5 million compared to 180.3 million for the prior year period.
Net cash provided by investing activities for the nine month period was $73 million compared to net cash used in investing activities, a 24.1 million for the prior year period.
The current year amount includes 104.1 million and net proceeds from the sale of our priority review voucher in the previous quarter.
Capital expenditure for the nine month period was $31.1 million compared to 24.7 million for the prior year period, reflecting continued investments and the expansion of our cannabinoid production facility.
Resulting net decrease in cash and cash equivalents for the nine month period amounted to $36.8 million for the quarter ended September 30, net decrease in cash and cash equivalents was 29 million.
At September 30, we held cash and cash equivalents of $554.7 million.
Turning to guidance regarding operating expenses for 2019, we're narrowing our guidance range to $415 million to $430 million from our previous guidance range of 395 to 425 million.
This spend reflects the continued ramp up the epidiolex launch in the US launch preparations in Europe and continued investments in R&D portfolio.
As previously guided we continue to anticipate capital expenditure in the range of $35 million to $45 million related mainly to manufacturing expansion.
Thank you and I'll now hand, the call back to adjusted Thank you Scott before closing the call I just wanted to comment on intellectual property, which remains an area of great focus at tw.
First in respect of epidemic there are nine granted patents in the Orange book that run through 2035.
Further we are developing novel formulations with IP potential that have yielded promising PK data this year and which are moving into additional studies in 2020.
In addition, we have been exploring whether it be deluxe is different from synthetic CBD and recently a patent application was published the indicates epidiolex is more efficacious than synthetic CBD in animal models of seizures based on the key difference that epidiolex comprises up to 2% of.
Now that can happen late.
The patent if granted would be a useful addition to our portfolio and we continue to produce more data to support new patent applications and our understanding of the mechanism of action of at the dialing.
With respect to our pipeline, we believe that Sativex CBDV in a number of other pipeline products will benefit from strong IP protection, given that complexity and novel application.
Overall I believe the tw is at the most exciting point in its history as we move into the second year of Epidiolex commercial availability, we have established an enviable enviable pay base of patients and see major growth opportunities in 2020 as more and more patients gain access to the medication.
Beyond Epidiolex, we believed that our pipeline will start to emerge as a major value driver as we'd have on multiple late stage opportunities and consolidate our leadership in cannabinoid science.
Before I hand, this call over the questions. Let me highlight an upcoming GW hosted KL didn't have the upcoming American epilepsy Society annual meeting in Baltimore on December nine.
If you're interested in attending please reach out to Steve show.
Thank you for your time today and appeal interest in GW and I would now like to open the call for questions.
Thank you at this time, we will be conducting a question and answer session.
I'd like to ask your question. Please press star one on your telephone keypad.
Information triangle indicate your line is in the question Keith.
You May proceed dotcom, if you would like care, maybe a question from the Q.
The participants season speaker equipment, it may be necessary to pick up your handset for pricing stocky.
First question is from Phil Nadeau with Cowen Inc. Please.
Please go ahead.
Good afternoon, and thanks for taking my questions first just a quick question on the epidemics revenue to press release mentions 86.1 million in US revenue can your prepared remarks, you mentioned.
1.9 million from ex us sewage.
Total epidemics revenue for the quarter $88 million or was that 1.9 million not actually booked because it's early access payments.
No no now that the total revenue would and at the total epidemics revenue globally would include the 1.9 million.
So the total global revenues 88 million.
Not at US revenue rapid dialects was 86.1 Hello.
And then there was 1.9 adept Alex revenue outside of the U.S. related mainly to the early access programs.
Got it okay. That's very helpful. Thanks.
Then second question on the EBITDAX launch in the US another spin on the market for approximately a year do you have any quantitative understanding of what persistence and compliance issues for patients on therapy.
Particular, do you have a sense of what the current dropout rate is.
Hey felt darrin I'll take the question not providing specific metrics on this but.
Thinking about modeling retention.
I think it's helpful to remind.
Everyone. The data that's already published.
You know across our four phase three trials of withdraw rate for patients on Epidiolex.
It was on average 10% over the 14 week trial period.
And for those patients the completed the trial them into the long term open label expansion and this was presented a EPS in 2019.
Over one year period, we saw retention rates of 80% for LG us and 70% for day. So again a court again. This is of course in the context of a clinical trial environment and worth noting that these these numbers or are those typically.
Seeing or above what we see in the in the class. So I think thats, how you probably should consider.
Modeling retention.
Great and then last question for me is just on toxicity in your prepared remarks, you mentioned that it was at its thus far it's been consistent with the label. Thank the concerns investors had.
Were around perhaps the death rate can you discuss.
Specifically anything surprising there are different than what do you expect from the natural history of these decisions.
Well. Thank you. This is full occurred chief Medical officer for the question we.
Just to refer back to my prepared remarks, we have carefully look.
At the post market surveillance, we do this on an ongoing basis, we're aware of all the data that's out there and there's really no change homeowners in the mid April and is consistent with what we've seen so far in the clinical trial program and what is known from the epidemiology of those diseases.
Perfect. Thanks for taking my question.
Thank you.
Your next question comes from Salveen Richter with Goldman Sachs. Please go ahead.
Thanks for taking my question.
Forward can you just put the or elaborate on the healthy weight of new patient starts you mentioned in the context at that third quarter trajectory and then secondly, with regard to the payer process. When we think about the refractory epilepsy patients.
How are these patients.
How are you know in terms of them going through appeals process are being able to get tried through the first pass you know how does that I guess.
Great.
Success play out here.
Yes, thanks solving some of them regarding the the new patient adds in as we've stated with the.
Large uptake early on in the launch and now kind of the the settling out into the third quarter, we still.
Patient adds for the quarter remain very healthy and our view is as we kind of move and transition into 2020.
On.
Regarding the payer frauds and the rare and other refractory epilepsies.
As I alluded to on the call we feel very good about the LG Estriol Bay. What we have found are those physicians I want to prescribed and these other areas that have an unmet need once they go through the appeal process and or a peer to peer conversation with the payer we're seeing a hot very high number of these get get through and get ultimately paid.
Okay.
Thank you.
Good question comes from Danny Atlanta, with Morgan Stanley . Please go ahead.
Hi. This is this summer along for David. Thank you for taking your question can you remind us of your expectations for the European ramp in 2020, and the dynamics that may differ from what you experienced in the U.S. launch. Thank you.
Chris.
Yes, Hi, Chris Tovey, I think Tom I think it's fair to say that the European launch hasn't really really started in earnest CNO or the.
Europe , the gym alone started for the Middle mid October and.
French launches really any oneq only just starting so I think 2020 is best thought of as the as the first real loan shift.
First real launch year for Europe , similar some ways to the way the us launch timing worked.
And as I've said, it's all about pricing and reimbursement so.
A you know we will be looking overseas for an outcome from nice.
And then we've got a complete pricing reimbursement in Spain, and Italy, So you're going to have the sequential introduction of of countries through 2020 , which which means it's not ready easy to compare with the U.S., which is obviously one country.
One population in one go so a little it look.
It looks very different but.
Typically we expect the European market overall, when it when it matures into the launch to be about a quarter to the third of the size of the U.S. market the patient.
Availability in DS and down GSK is pretty similar in the in across Europe to to the U.S. So now we remain really optimistic about about the opportunity for.
For the European launch and 2020 is going to be a case of achieving pricing reimbursement in the major you five markets and then and then bringing darling them on and bringing them through in a into real sort of commercial launch phase.
Okay, great. Thank you for taking your question.
Thank you.
Next question comes from Cory Kasimov with JP Morgan. Please go ahead.
Hi, This is neenah on for Corey.
Question.
Some of that go back to kind of the underlying brave new patient acquisition can you just couple of understand how we should really think about that rate moving forward should we kind of expect it to level off from here should we expect to see grow.
Yeah anything anything you can kind of gotten on that'll be helpful.
Yes, I think through the at the staring to through the end of 2019, I think we're in a really nice kind of steady state as we we exit the year, but we as I stated in my remarks. There there are several growth drivers for us in 2020 beyond.
We look at the advocates that were early part of this launch it continued to prescribe epidiolex I talked about the next thousand or so prescribers that we're going to spend time and effort onto increased our prescriber base and that goes hand in hand with the opening access of the payers that.
As I stated doing their annual review now so I think that through the remainder of the year, we feel very good about the patient adds that really looked at 2020.
To really capitalize on those dynamics that we're setting up for the future.
Okay great.
And then just one question.
Our around that tier the kind of timing is are there any we thought that filing got pushed back.
First quarter versus.
Quarter.
Thanks for the question, it's really just a few weeks is that extra administrative staff. So it's just the these are important things to get right. It's actually a pretty comprehensive Sn da because it includes the second aggravates study as well so a lot is going into this and.
It's it's straddling a quarter, but the timing shift is actually relatively inconsequential.
Midyear approval is still expected.
Okay, Great and one more for the quick question.
Talk a little bit about and just looking at getting some of these other rare Atlas rare refractory epilepsy patients.
We're on drug so at this point in a launch can you tell us.
Give us any any sort of guidance on what the breakdown is between now on label and lately.
But stare and now we've again with the majority of the scripts are LG STS at this particular time, not really any insight into the into the broader.
Just curious to hear anecdotally through our payer interactions.
Okay, great. Thank you.
Thank you. Your next question comes from Marc Goodman.
If you may be Leerink. Please go ahead.
Yes first question it sounds like you've made some decisions on additional indications for side effects to start. Some studies next year I was wondering if you can elaborate a little bit on that and second if you could talk about what else we're going to see today, yes. This year I know you mentioned obviously the.
The phase three data, but what other studies that you're planning to to show us. Thanks.
And markets as Justin just I'll take the satellite question I think.
We will obviously.
Obviously, focusing on the call today on on the the lead indication in terms of the fastest route to the market I think with signaling strongly that you can expect.
Series of indications, we do see it as a so the pipeline in the product opportunity.
We kind of.
Being a little judicious about how we lay that out but you can expect early next year for us to kind of lay that out for you in terms of.
The series of indications that we will be investing in and there are a mix of sort of natural follow ons from the and spasticity indication to some broader less related indications as well.
And the market research we're doing is.
Is really coming out in the very interesting with that but I I am we've decided today to limit the comments to to the kind of route to end da.
But but stay tuned.
I think on adss.
We I mean, obviously the main focus is the TSC indication that will be additional long term data.
From from.
From from on Epidiolex use.
And so sort of selected.
The posted for the primary this is focused on EPS is definitely TSC.
Thanks.
Thank you.
Our next question comes from has been Ahmad with Ian. Please go ahead.
I think Dan is bank of America, so that must be me.
Hi, guys I did want to ask a couple of follow up any other questions that were asked earlier in the Q.
And in case I missed that did you give what your current mix of adult pediatric uses this quarter and if it changed at all from what you've been seeing.
In the first just wondering if the launch.
As soon as does remain.
At that 60 40.
Okay.
And then can you give us an idea of of what the growth and that was during the quarter.
Yes, dizziness, Scott I believe we said that we had total deductions from gross sales of 18.6 million, we didn't give specific percent, but it's running at under 20%.
And we don't split that out by product or by region, just until but where we're running where we expected today.
It's running under 20% can you say directionally, if that's changed from your first couple of quarters.
It's changed very little.
But what is happening is obviously Medicaid is a large portion of our business.
So as Medicaid, adding Darren mentioned is up to 40% and as Medicaid.
Picks up I think we initially thought to be somewhere around 40 to 45, it's the biggest piece. So it does drive it so it's ticked up slightly.
Okay and maybe the last question from me I know, you're you're a little bit constrains and and being able to answer.
Yes, I have no question, but just for R&D, but our understanding and being able to model that's better going forward.
Can you give us a sense you talked about retention, but.
Without knowing like what your patient count was this quarter, how do we get a better sense of discontinuation beyond let's say.
You know the comment that that Dustin has made about the launch going as planned so far.
Yeah, I mean, I think you know what I stated previously busy and I think that do you think about the class two different things I think think about our clinical trials in the open label and the retention rates there and just the general.
The epileptic drug class in that.
Between the two from a clinical trial is down to the classes is the range.
The patient should model it yeah, I think it's important investors understand this this anti epileptic drugs phenomenon and I I think we should also emphasize that we see epidiolex as a as a top performer when it comes to within that costs.
But epilepsy has a cadence to it and we just trying to make sure investors understand that that dynamic but.
I think thats as far as we can go.
Okay. Thank you.
Thank you.
Our next question comes from.
Hi wireless.
Oppenheimer. Please go ahead.
Thank you for taking my question.
How about the EU market dynamics with that with dispensing, great CBD where docket.
Maybe prescribing data in some markets, how does that impact your pricing discussions and use the uptake.
Hi, Chris Tovey.
It doesn't actually to be Frank.
The reality is all the market research we've done only engaging we've had throughout kao AD boards in it all to Congress is we've been at have made it very very clear that specialists and remember these are trading really seriously ill kids, particularly especially is actually one regulatory approved CBD medicine. So so essentially it really doesn't have.
Yes.
Any impact on the way that especially physicians are thinking about prescribing.
And additionally, the.
Health Technology assessment, so to go on the support pricing reimbursement in Europe are evidenced banks.
And there is no evidence for for these other.
Products. So so essentially it's it's sort of business as usual for pharmaceutical products and and obviously the data that we have behind epidiolex in a highly unmet medical need area.
Makes us it puts us in a really strong position and I think we've we've seen that come through in our conversations with nice for instance.
Okay, and then I really quickly on the EAP patient pool.
What how quickly do you see that.
Okay and take revenue you said that this quarter.
Im sorry, Im assuming Europe , sorry, just just sorry, just to wrap up.
I think I think the reality again is and this is the I sound like a broken record every country in Europe is very different and.
We're in a fabulous position to be sitting on.
1100 patients with of experience in just over a year and the early access program, but each country scheme is slightly different some of them a painful some of them or not paid for and the transition process. We'll have to be managed individually and the transition can only occur when pricing and reimbursement is is a great. So for instance, the process.
In Germany will take.
We take upwards of three to four months because of prescription Lance.
Given in the early access programs, so and so what will have is the benefits of these early access patients transitioning into commercial.
Pack through 2020 as we as we bring on new countries with pricing and reimbursement so, but it's just a pretty in place to just to be starting from mix. It means that at least a quarter of the prescribing base of got experience of Epidiolex and the vast majority of the key centers have also seen epidiolex on the shelves of their farm.
Thanks.
Thank you.
Thank you.
Next question comes from full Matthew.
Please go ahead.
Great. Thank you for taking my question.
If you look at a patient numbers that you guys reported this quarter and and last quarter from one Q. It looked like patients who try it up a dialects from wants you to Twoq you and then Twoq to Threeq you was about 4000 or over 4000, and then 3000 I was wondering if those numbers. The 4000 3000 also match the underlying.
Net patient add rate roughly when you control for discontinuation.
Secondarily on IMAX right now it looks like and Rx are continuing to increase into this quarter and they were increasing from twoq to Threeq you.
But new patient starts look like they were down this quarter can you help kind of clarify what's going on with IMAX and and whether or not we should be paying attention that data every Friday into November and December thanks, a lot.
Yeah, Hey, Paul Scott Carmilani take the first one.
On the patient as you mentioned 4000 3000 actually when you exclude the impact of VIP transitions in Q2 that there's a new patient add rate has actually been pretty consistent across the quarters.
From from the net patient AD when I don't think.
Hi can really comment on I don't really don't we know exactly how that's.
How that's playing out underneath the discontinuations coming off and on.
And I'm sorry, your third question.
That was about well actually Scott just as a follow up I thought 75% of the ERP was converted Q1 and then 25% in Twoq is that wrong.
Is that it should only impact about 300 or cell patients into care.
I don't think we gave the actual split over that I think we just said it was largely it's true that there was more of it completed and one Q that in Q2, but there is I. It was still a decent amount in the second quarter, but there wasn't for me there wasn't a drastic difference when you excluded those items as new patient adds between.
You too acute great.
That's helpful just to jump when way when I look back at our Q2 comments, which we were I think pretty clear that that we felt with the.
I think as you would have agreed that the the significant growth. We saw in Q2 was the combination of that transition, but also the extension of that sort of pre launch phenomenon extending.
Into the Q2 time period, so I think we feel very comfortable that when you look at.
This is the cadence our underlying the 3000 net adds is if somebody were very comfortable if we don't see it has a downside at all and I think just.
Emphasize that for all the reasons Darren that on this call it but I think in particular I'd point to the kind of prescriber targeting and also the payer access change that we expect to see in 2020 that yes. We are not worried at all about the potential pool of patients and the opportunities for new patient adds grow.
In 2020, I just want to be clear on that we're in an interesting year because of the brings we brought forward, but many of patients in the launch year, but there's nothing we're seeing which kind of causes us concern around new patient growth.
Moving Okay. That's helpful. My other question was just on I am asking because I imagine into this quarter is conveying that new patient starts are at least flat or may be actually even up it sounded like Justin that youre, saying that this 3000 add rate on a go forward basis skill sustainable.
What about IMAX should we be paying attention to that and what's been happening with the capture rate I was just wondering if you can clarify it all.
Yes, so Paul Scott again, I mean, again I mean, as we have said consistently.
It should you would caution around the IMS numbers right. It is not the full picture over a longer period of time, it's that should be directionally correct, but it clearly is not the full picture.
And I would say as far as capture rate, we haven't seen any meaningful movement and capture rate over the last couple of quarters.
Okay. Thanks for the help appreciate it.
Thank you.
Your next question comes from Charles Duncan with Cantor Fitzgerald. Please go ahead.
Hi, Hi, guys.
First of all congrats on the progress to Justin and team. Thanks for taking my questions I just have to questions ones commercial ones pipeline.
On the commercial question you mentioned the long term care segment and I'm wondering if you could provide some additional color on the on the kind of patient population that you're looking at their or numbers of patients and then other dynamics and whether or not at may impact the sizing of of your sale.
As for us going into 2020.
Yes, Darrin I'll take the question.
We we always had this long term care segment on our radar.
As a potential opportunity to the factors that I talked about interactions with our physicians market research and the other analog how their companies have handled it and the patient type. If you think about patients that are in a long term care facility. These are the most probably six of the SEC within LG us.
And other kind of these rare rare epilepsies and there was a great need for for this product as it relates to to kind of a resource.
Remit were actually it won't impact our our sales organization if anything at this will help our sales organization focused in our target prescribers, we're going to have a separate small group of account executives that will be but with long term care backgrounds, who will be deployed in into the segment. So we actually think that we'll be able to capitalized.
On the opportunity.
And in 2020 and beyond.
That's helpful or added color with regard to the pipeline. This may be way ahead of our skis or whatever but I wondered if you could provide some additional color on the rat study as well as is the schizophrenia study specifically with regard to rat are you tracking the pace.
Patients that have been enrolled and how do you feel about the characteristics in terms of being able to show signal to noise for the nurse site.
Symptoms versus certainly the.
I seizures, and then for schizophrenia could you just let us know whether or not that's it for six weeks studying it fits for us patients or more broader.
Yes.
So with regarding to your question on the breadth and I. Appreciate your concern about signal to noise. We're using a validated scale cultivars speak you would see yes, the Redskins behavioral questionnaire and we don't have you know ongoing monitor.
During or if that scale in the moment. So I can give you data on this we will be looking at the behavior of those skills and we'll be looking at a little bit looking at this in real time into trials, but this has nothing to be actually report. So I am afraid to have to ask you to be patient until the trial competes for results.
With regard to your question on schizophrenia, the duration of the trial.
We haven't announced the precise trial design yet.
But I anticipate this to be longer than the four to six sleep study I anticipate this to be.
Three months study.
And you answered global.
The study will be recruiting in various geographies, including the use.
Okay. Thanks for the added color and taking my questions.
Thanks.
Thank you Sir your next question is from Yatin Suneja with Guggenheim. Please go ahead.
Hi, guys. This is derek on for yacht.
I just wanted to get a little more clarification on the question Paul asked earlier on the sort of a lack of a relationship with the IMS scripts numbers and what we're seeing in terms of.
Total revenue I know that you guys are made clear that that we should really looking at the scripts, beating a.
Direct one to one addition or any other.
Just.
Color that you can add on terms that the patient adds that came through the quarter with a smaller which would perhaps have a lower dosages. There could have yes that would be reflected in trx numbers.
Good where specialty pharmacies, a lower percentage of the dispensary, which may not have been reflected as well and in all of those numbers was there any any additional information you can provide just kind of clear that up a little bit.
Yeah, I am sorry I.
We would like to be helpful that I'm not sure. We can be I mean, it's an imperfect data set does is incomplete and that's why ever since this no. Once we've just been hedging an element of caution that we have realize it's it's the most you happen and that's.
Maybe partial dangerous it's frustrating but.
I I, we come because the data is not ours and I think we can get excited enough to stop the explained to you. The difference is the result, all the results.
And obviously I think what we're giving you is that the actual metrics and IMAX is obviously, there and we realize it's a guide but it remains only a guide.
Okay. That's helpful. Thank you.
And just remind us real quick on.
How you view the size of the adult population you can be targeting in.
With appetite election algae messenger just yeah.
Mr. across all the indications.
Once Jeff.
Great.
Mr.
Regarding our addressable patient populations about 70000, or if you look at the us.
LG us an eventual.
TSC.
And the break down.
You know is we're probably roughly 50 50, ultimately as well we think it'll shakeout.
Great all right Thats helpful. Thanks, again, guys and congrats on the quarter.
Thank you.
Question comes from Jennie O <unk> with Piper Jaffray. Please go ahead.
Hi, guys. Thanks for the question. So you mentioned that the current mix of adult and pediatric this stable Oh I'm curious are you expecting that skew more towards adults as you increase focus on the middle tier providers and then also you mentioned that the average increase and the third quarter can you comment on revenue per patient dynamics and.
How we should think about shifting moving forward. Thanks.
Yeah. Its standard I think you know the overtime, we do anticipate.
More adults being treated as I as I noted in my remarks.
Driven by more broad neurology treating the disease.
And the second question around dose.
No. We just said as an increased during the quarter, but I think it's about mid point of the dosing range currently.
Got it thank you.
Okay.
Thank you. Your next question comes from Scratch go line up with Needham and company. Please go ahead.
Hi, good afternoon couple of questions for dairy.
What should we expect in terms of changes to pair coverage in 2020.
You're already at the mid 90 range in terms of covered commercial lives.
And then related to that you also mentioned that.
Some plans will undergo a review of there at the dynamics coverage. After in 2020, so any expected changes from that review process.
Yes. Thanks for the question well regarding the covered lives. We will be said, we're about 93, 94% of all covered lives in the U.S., which you know we feel very good low will will chip away at the at the remainder.
No I think if you think about 2020 and payer coverage and I alluded to this in my prepared remarks as one year.
If we approach one year of approval now or just slightly past.
Commercial payers in particular are doing there kind of annual review all that the dollar utilization and I think the takeaway that I have that I highlighted that the utilization has been contained within the target set of positions within the smart targeted set of patients.
And then you know those with the rare refractory upon appeal or.
Your peer to peer or ultimately getting through and I think our discussions with payers as we dialogue around this utilization is what what's the PPA accomplishing that how do they think about broader coverage and it all in anchors around what I heard recently in advisory Board that.
The managed markets team had what about a dozen commercial payers and Medicaid was that there's a tremendous value proposition for epidiolex in this patient segments. These these patients the with the uncontrolled epilepsy. So I think that it's a winning proposition for all parties.
As we look to 2020.
Okay.
And then it.
During your prepared comments you talked about the TSC phase three data set kind of establishing a broad usage role for epidiolex.
You know by mid twenties should have the label extended to the will include D.S. LG Snps C.
How do you go.
Beyond those three indications to a broader role is there a regulatory strategy to to get there or is it going to be driven by payer coverage.
Well I think from a commercial perspective, having not Trc label expansion will be it is tremendous for the brand as of the addressable patient population.
Commercially we won't promote outside of that label, but you know if you look at on for you and I talked about this in my remarks and in the last year. There exclusivity. There are lot of patients on drug and I think if you look at Epidiolex and the profile of.
Of this within the epilepsy community.
Bodes very well for us and I won't comment on you know the additional regulatory we talked about the rat later, but I think just these three and the has these uncontrolled where epilepsies provide us again, a very compelling proposition for this brand long term.
Okay. Thank you.
Thank you. Your next question comes from David Tobacco Alpha Capital. Please go ahead.
Hi, good afternoon, Thanks for taking my questions and congratulations on a quarter.
Just wanted to circle back to the comment that was made familiar.
I would now you're moving on to the mid tier physician.
So with that but a thousand physicians.
Arctic rapid dialects I'm, just wondering from a revenue standpoint, how we should be thinking about moving into Q4.
Compared to your top tier physicians is this going they require.
An extensive amount of efforts to training educate these positions now given that the mid tier.
As compared to where I can talk to your position so.
Yes, staring up thanks for the question I think you should think about again the dynamic of the the launch right. We had this tremendous uptake early on by those those centers.
And even these 2000 prescribers that are in kind of this next year.
You know, 80% have written but what they really haven't done now is that is gone from just the one or two scripts per.
For the physician to a broader set of prescribing across their practice and that's really the focus so it's not it's just additional if not any additional it's just continued effort of our us a tremendous salesforce around continuing call frequency and really it's around education experience of access right. We continue to edge.
Okay positions around APA dialects, and these these LG Astra very patients, it's getting the experience within their practices.
Coupled with improved access over time, so the fundamentals and really delivering on this mid tier are set up for us. We just have to continue to execute.
Understood. Okay. Thanks very much.
Thank you. This concludes today's conference and you May now disconnect. Your lines at this time. Thank you for your participation.
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