Q3 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
Thank you and good afternoon, everyone. Today, we released financial results for the third quarter of 2019, a press release and accompanying slides, which you can advance to the webcast are available on the Investor Relations section we're told website.
With me are Scott Garland, President and CEO , Mardi Dier, Chief financial and Chief Business Officer, and Sheldon <unk> Chief Commercial officer also with US. This afternoon for the Q and a portion of the call our Pam Connolly Senior Vice President of research Smyers Senior Vice President of Medical Affairs and G.
Nice president strategic marketing.
Before we begin I would like to remind you that remarks on this call will contain forward looking statements.
Let's take a look at the risk factors discussed in our Form 10-K , and 10-Q and other FTC filings for additional detail. These forward looking statements apply only as of today and we undertake no duty to update any understatement.
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 these financial guidance.
Included in the Pennsylvania.
These non-GAAP financial measures should be considered in addition to but not a substitute for our GAAP results I will turn the call.
Thank you Shannon Hello, everyone and thank you for joining us on our third quarter 2019 financial results call. This is a pivotal time for portola patients with at our Cheryl.
Q3, we delivered strong index to revenue growth in the United States and achieved an important milestone of our first European sales as a global organization, we remain confident in our ability to build long term growth and value. This competence is driven by three key factors I want to talk more about today.
First we continue to execute our launch and achieved key milestones second the rapid growth at a large dr. today inhibitor market in the United States in Europe , and third our success and further establishing index standard of care.
We expand on each of these items first our team has a strong execution on the launch of indexes in the United States now on Dec see in Europe is continuing to drive revenue growth.
And the third quarter net product revenues for index that was 35.7 billion. This includes 33 million net product sales front exit in the United States and 2.7 million net product sales up index, yet in our wave one countries in Europe .
That's a reminder, our way one countries include Germany, Austria, the UK, and Netherlands, Sweden, Denmark, Finland.
We also had some exciting revenue milestone in the third quarter, surpassing 100 million in cumulative net sales since our launch in May of 2018 index. It remains on track as one of the top five hospital drug launches in the last 30 years.
These results demonstrate the demand for index is strong and the Sheldon will highlight our revenue is being driven by new customer additions and positive utilization trends.
Turning to Europe , the market opportunity and demand for index, yet is significant and our way one countries alone a number of patients ticking up X the ban or river Oaks, a bad is equal to or even greater than the number in the United States early indications of demand for index as high, particularly in Germany the European.
And team is executing well and we're pleased with the initial results were seeing there.
Second driver of growth, just a large and growing factor today inhibitor market globally.
12 months ending September 2019, approximately 5.5 million patients in the United States, we're taking a picks the ban over rocks.
To use approximately 150000 patients were hospitalized serious life threatening bleach.
In Europe , we estimate that they're over 5 million patients, taking a big Savannah River rocks to ban in our wave one countries and this number is continuing to grow.
Just last week, Bristol Myers Squibb reported 30% demand growth for Eliquis over the third quarter last year.
But the underlying market growth combined with label expansion plan and the future future Genericization of factor 10 inhibitors, we estimate that by 2025 over 700000 patients. When you factor 10, a reversal in the United States in Europe .
The third key factor I'll touch on today is establishing index as the standard of care the value of index. It as the only approved agent for the reversal of factor 10 inhibitors expand it River Oaks, a batch continues to be recognized by chief medical societies and government agencies.
Next is now on a total of 17 medical Society guidelines in the United States in Europe .
Guidelines from organizations like the American Heart Association European Society, Cardiology, and the American College of chest positions are particularly important because they are written by experienced practitioners based on a body of clinical evidence positions refer to these guidelines as best practice and providing quality care to their patients. These three factors.
Launch execution, expanding global market and establishing index as standard of care continued to drive our business forward and reinforce our confidence in a long term growth and value of Portola.
Finally, I want to provide a few updates on our label expansion plans for index as well as an update on our Syk JAK inhibitor sort of [noise].
I'll start with index. So we remain on track to initiate an urgent surgery study later this year or in early 2020 and look forward to updating you on our progress we estimate that approximately 60000 patients on river Oaks, the ban or actually bad in the United States must undergo urgent surgery, each year and could benefit from the use of index.
We plan to discuss the inclusion of other factor today inhibitors into the existing label with the FDA.
We also to continue to generate new data that support indexes unique position as the only Sta and you may approved agent for the reversal expansive rocks to them. We recently presented a new exploratory analysis of a subset of the ANNEXA four data in patients with acute gastrointestinal bleeding.
Data demonstrated that 82% valuable patients achieved excellent or good hemostasis, adding further support for index across all patients various lead times.
In July we presented compelling in vitro data at highest th demonstrating that pccs did not restore thrombin generation plasma treated with factor 10, a inhibitors, except at very low levels of anti coagulation.
In contrast data from the same thrombin generation assay demonstrated the index a fully corrected the inhibition of thrombin generation by X the ban rocks demand.
Across a broad range of inhibitor concentrations.
He said a further support the unique mechanism of action of index, a distinct from Pccs, which are effective at worst warfarin, but are not approved reversal factor today.
We plan on submitting these data for full publication by year end.
We'll be presenting abstracts for index at the American Society, Hematology or Ash annual meeting in December moving to sort of Latin and we plan to start our Registrational trial Celtic one in peripheral T cell lymphoma or PTCL in early 2020. In addition, we'll be presenting updated sort of Latin of data and PTCL.
And so LQA lymphoma ash in December .
His abstracts for both sort of Latin and index up will be posted tomorrow at nine am eastern time on the ash website and with that I'll turn the call over to Sheldon for a detailed update on our launch progress.
Thank you Scott Hello, everyone. Our performance the third quarter is a testament to the strong growth since launch and long term potential of our business.
The ended the third quarter approximately 550 hospitals in the U.S. had ordered index.
This was our second consecutive quarter of incremental hospital add that exceeded our initial expectations.
Along with increasing new account as existing accounts continue to show strong pull through the 76% of south in the quarter coming from utilization or reorders compared to 74% in a previous quarter. This isn't important metric because it reflects the man and see if you pull through in hospitals, where index is being used to treat patients.
Also inventory in the channel remains steady at approximately two weeks of demand.
The reorder, we also remain steady at 56% for the quarter.
Well. This is encouraging we believe this metric is impacted by the variability in the timing mix and number of our new hospital admission each quarter.
Therefore in the future will no longer be providing this metric, but we'll continue to provide quarterly hospital ads and the percent of revenues from the orders as well as evaluating any other metrics that we believe with best show our traction in the market.
Additionally, we are making important progress expanding access to index that in September index. It was added to the da National formulary with no restrictions and is listed at the first line therapy for the reversal of a picks a band that rock band.
The the has 170 hospitals across the U.S. with more than 8 million patients utilizing their health care services and approximately 260000 of these patients are taking factor today inhibitors.
A number of da hospitals are already utilizing andexxa now the is on formulary.
As we mentioned on our last quarterly call centers for Medicare and Medicaid services increased encap reimbursement from 50% 65%.
This increase went took effect in October 1st an effort to help hospitals make the most of this reimbursement program. We continue to help educate hospital administrators on how to easily apply for the intact.
Moving to our progress in your we have established an agile and focus European team across our we won countries due to solid execution by this team. We are able to report our first album Index, Yeah in Europe , and the third quarter.
These initial revenues of $2.7 million reflect the man since the majority of sales to date, our direct to hospitals.
The U.S., where we distribute the wholesalers.
All this underscores the unmet need and demand in Europe for Ondecks Yeah.
As you know launching in Europe , as a country by country process and it happens in stages, let's talk first about Germany.
So many in our I'm not dossier ahead of schedule in September allowed us to launch in Germany, a key EU country.
Remember there are a number of ANNEXA four sites in Germany, getting physicians familiarity and experience with index, yet and there used to factor today inhibitor is among the highest in Europe .
In Germany alone there are approximately 300 hospitals with stroke specialization and about 2.7 million patients.
Dr Tonight inhibitors in its clear that there is significant potential for long term growth.
[noise], Germany allows for free pricing curian, while pricing negotiations are underway.
Overall process takes about one year. So expect this to be completed in the second half 2020.
Hospitals are also making progress in applied for the new which allows for hospitals in Germany, threec supplemental payments for Ondecks yet.
Moving to the UK, we estimate our clinical and economic dossier Tonight and we are on the agenda for review at a meeting late in the first quarter 2020 with publication of the Nice reported plan in mid June .
Outside of Germany, and the UK, we're also making progress in our wave one countries, which together represent a large market with at least an equal number of patients on factor 10, a inhibitors as in the U.S.
In closing the market for index is large and growing our teams continue to be focused on exceptional execution, given the significant opportunity in front of us.
To put this in perspective, we are about 25% penetrated into our 2100 U.S. hospital targets and we are just beginning scratched the surface in Europe with our first sales in Q3.
We remain confident that we have the right strategy in place to ensure this novel therapy, that's available to patients globally.
With that I will turn the call over to Marty for review the financials.
Thank you Sheldon and Hello, everyone. Please refer to our press release issued today for a summary of our financial results third quarter and I will touch on the highlights.
Our third quarter results reflect strong execution and growing demand for index that total revenues for 36.8 million <unk> third quarter, driven by 35.7 million in global net revenues of index.
Total GAAP operating expenses <unk> third quarter 80.4 million down from 83.3 million for the same period in the prior year.
This is the result of a decrease driven primarily by our Gen. Two manufacturing cost now being capitalized into inventory and offset by investments and the launch at the pump index that and Ondecks yeah.
For the nine months ended September Thirtyth 2019, total GAAP operating expenses for 268.5 million, which includes 41.2 million in stock based compensation.
We remain on track for I, 2019, R&D and as Janet as DNA expense guidance.
Please see slide 12 for more detailed breakdown.
Research and development expenses for the third quarter by 25.69 compared to 40.29 for the same period and 20 team.
A year over year decrease in R&D expense it mainly due to the gen. Two manufacturing costs I just mentioned.
Actually it makes sense, it's been in third quarter worth 52.1 million compared to 38.89 to the same period and 2080.
This increase is mainly due to the expansion of our sales force and other can meet promotion related activities and launch event that and the U.S. and Ondecks Yeah in Europe .
In August we completed a follow on equity transaction, adding and that 245 million to our cash balance here cash cash equivalents and investment at September Thirtyth 2019 totaled 476.8 million compared to 317 million at December 31st 2018.
Yes, I plan to exercise their option for the remaining half of our senior debt land in health care glad he partners and Esperion next week, bringing in an additional 62.5 million.
We now have cash on hand to continue to find her launches.
There are opportunities for index that and then thanks, yeah and to meet our current business objectives.
Our financial results Textron price index, and the U.S. and now in initial demand in Europe .
<unk> expenses continued to be inline with our 2019 extends and and we are in a strong cash position and we look forward to the ended the year, we're excited to build and then.
With that I will turn the call, but it's got a closing remarks.
Thank you Marty as we look back on the first three quarters 2019, I'm impressed with our team's progress and execution, we're executing on our launch operating in a strong and expanding global market and establishing index as standard of care.
Heading into the fourth quarter and 2020, we will look to build on these accomplishments and continue to expand access and awareness of index. It in the United States and Ondecks here in Europe , we've built a world class team that is passionate about our mission to help patients before we turn the call over Q into and want to share that we'll be hosting an analyst and investor day on no.
Remember 14, New York. This event is index, a focused and we'll highlight the long term market opportunity for index up and in particular provide a framework for the opportunity in Europe , We will feature presentations from key opinion leaders and practicing physicians in the United States in Europe . Please refer to slide 13 for additional details I want to thank you.
For your continued interest in Portola and with that I'll turn it over to questions operator.
Thank you, ladies and gentlemen to ask a question you want me to press Star one on your telephone we ask that you. Please limit yourself to one question and one follow up question. You May then would turn to the Kim with John Your question. Please press the pound King. Please standby, we compile the culinary roster.
My first question comes from Jay Olson with Oppenheimer.
[noise], Oh, hey, thanks for taking the question I'm curious.
If you're still conducting your quarterly.
<unk> review and if you could comment on what sort of bleeds, you're seeing nice actually used for in the U.S. and how that maybe evolving over time and then I had one follow up question if I could please.
Okay ill turn on one of the reseller Hi, Jay So we do still continue our chart review on a quarterly basis and similar to what we've reported in our previous quarter's a index is being used in our range. The fleet. So not only in your opinion hemorrhage, but also g. I believe trauma related compartmental bleed.
So we're seeing it being used across all week height.
Okay, great. Thank you for that and then I'm curious about in Europe . When you extend your launch to the wave two countries how the pricing in those countries will be influenced by your wave one countries will the wave two countries reference the pricing.
We've won countries and how do you expect your.
Net price overall in Europe to evolve overtime.
Right. So right. So we haven't really comedy officially on our development of the way to markets, but let me focus on what we are doing in weight why so as you mentioned in the wave one markets. We currently have an established price of 16000 euros, that's for the logos and it's approximately double that for the high does so.
As we mentioned in our script, we submitted our AMNOG reimbursement process on September 1st to Germany and in June of 20, Tony will actually be meeting with nice to have discussions as it relates to reimbursement in the UK. So until then we actually will continue to utilize this 60000.
In Euro price and as we move forward, we'll be updating you on future calls.
Okay, great. Thanks for taking the questions.
Thanks to my next question comes from Ego No no tell my bench with Citigroup.
Hi, guys. Thank you very much for taking the questions I'm just a question regarding the V.A. first of all can you just clarify whether the 170 hospitals and the dealer network are part of the 2100, a hospital target and then more generally can you just comment I think you mentioned that some of the hospitals were ready stuck in that as some of the hospitals are ready stocking, but could you do.
Comment more generally on the trends in terms of uptake at the BA.
ER and stocking of the about network thinking.
Sure Hi, Eagle so the the VA case. They are currently within our target last of the 2100 hospitals just a couple of things. It's important to just reiterate the fact that this is really an important address significant AD for andexxa because it also truly afraid shade and back sorry, I mean, you seven banks.
From four factor Pccs on there is as we mentioned there is 8 million veterans with actually take beneficiaries or take advantage of da benefits, but more importantly, and something that we haven't had before until now we know that approximately 260000.
Trend actually are taking factor 10 age now as it relates to the da's coming onboard et cetera. There are hundreds have any of them. Those additions will be phased over time, we're not giving a specific number but we have seen some of these VA is already come onboard and you said that.
Okay. Thank you and then with respect to the though that's what decided on the 76% of sales revenue driven by Reorders can you just comment on where do you see that number trending and it seems like its leveling off a bit is that what you expect at this point in the launch [noise].
You go we haven't and won't providing any sort of forward looking.
Guidance on the reorder rate. It obviously went up quarter over quarter I do expect though that that number is not going to be a 100% clearly as we are still in the base batting hospitals percentage of those sales every quarter at come from new customers. So I would expect it's going to be awhile before that number starts to approach autumn sent back to serve.
Only be below 100% until all hospitals to purchase we think the numbers great. It's real signed a great gold product.
Great. Thank you very much.
Thanks Scott.
Thank you. Our next question comes from Matt Pets with William Blair.
[noise] actually my question like two things you don't have a two quarters of adding 125 hospitals. This is starting to see an inflection point. There do you think that kind of goes back to original guidance.
Maybe the via helps kind of keep that an elevated level for a couple of quarters and then now with a year of experience on the U.S. market I'm. Just wondering if you could start to give us.
Kind of Ah I don't know comparison or if it's high level, even about the current utilization at some of those hospitals that have been online for.
At least a year or maybe even over a year versus maybe some that have come online in the past six month.
There isn't any trends that you can at least kinda expand upon.
[noise] CMS. So on the first question around the hospital pads. So you are correct. We've got a couple of quarters in a row that have exceeded the 100 quarterly adds that we've been providing guidance for books in the past I do think there's going to continue to be variability on a quarter by quarter basis. So we're still sticking with the 100, it's correct number.
Juice.
Our opinion going forward.
And your second question what was around here now that we've got a couple of years under a year under our belt. How does the utilization look we aren't giving any detailed information around utilization per hospital per month, what we have seen at that that utilization cross border per months, Dave has been staying.
Assistant and 29 gene that is with the in the context of US broadening the hospital based conclude more tier two and two or three account.
But in terms of giving specifics beyond that we won't be providing that detail.
Okay, and if I can ask one more wasn't what are some of the gating factors to get into surgery cohort up and running give any sense. None of them now what that trial will look like or how you're thinking about dosing in a surgical patients.
Yeah. It's a great question that we literally just had a meeting with the FDA last week. It was very productive meeting got some great feedback from them.
We're still on the process of incorporating a feedback we actually haven't even got the final notes from the meeting yet so in the absence of having that solidified I don't want to providing specific detail certainly we'll give you an update once we got things finalized.
Hi, Thanks, guys.
You're welcome.
Thank you. My next question comes from Vikram parent hit with Morgan Stanley .
Thanks for taking the question. So I wanted to focus on your up so I think that quarterly sales figure for Europe for index. You may have come out a little ahead of where many people expected. So understanding it's still early days I wanted to see if it's possible to get a sense of roughly how many centers of demand.
This roughly $3 million of sales, maybe reflecting and then a follow up on Europe wanted to learn a bit more about how you're thinking about prioritizing wave two countries and buy when roughly be could expect to hear about what those countries could potentially be.
[noise] Supercom alter that went over to Charlotte John Hi background. So thank you for your message. So let me just focus on.
On your questions regarding Europe and again, we're very excited about what we're seeing in Europe , and it's important because the majority of sales are on track to hospitals. This is happening in multiple countries.
It definitely also represents significant unmet need and the opportunities for index up.
Again, just to remind or index, yes, it's down in Europe . As this is the only drug indicated for the reversal of Doe Act, specifically, a fixed a band and Red rocks. The bad to your point. It's early but we are really encouraged we've already seen reorders and some of the institutions, we haven't given spiro.
They number is as it relates to the actual amounts of accounts.
This is something we'll be monitoring as well as you know I'm in the U.S. you'd be very data rich I'm in tracking et cetera, it's not the same essentially in Europe on but as we move forward. We of course, well continue to inform you, but I just wanted to reiterate this says something.
We're going to throw in a country by country basis.
And but again very very happy with what we're seeing I'm in the early days.
Eric I'm just.
Couple of other points mean, well the reason why we decided go it alone in Europe was because of very large market opportunity. That's fair as I said in my opening remarks errors. Many factor today patients just these wave one countries as there are in the United States alone. So very big market opportunity. We've also talked about the fact that the ANNEXA four trial enrolled patients and.
Your own including Germany, So there's an awareness amongst thought leaders.
So overall, we're impressed with what we're seeing a as shown on did mention as a country by country process Europe can take time, but the demand. We believe is there and just to follow up on your second question related to wave. Two we haven't commented you had on our plans for ways to of course, we are putting together our business cases et cetera for wave two markets and will be up.
Gain you on future calls as relates to way too.
Thank you again, ladies and gentlemen, if you have a question at this time. Please press. The Star then one key on your Touchtone telephone. My next question will come from Kenneth Atkins with Cowen.
Hi, Thanks for taking my question. So at this point in the launch for index. So do you think you have enough confidence in the predictability of sales that you'd be providing revenue guidance for 2020 or is it too early to be thinking about that.
[noise] you know, we're still evaluating that obviously, we now have a year out or do you does what we'll do is let you know at JP Morgan.
Whether or not we'll be providing that guidance going forward.
I'll, just add and Ken that and what we said previously as they wouldn't do it before in fourth quarter colleges that then temporary and so well we're still evaluating and this is really still just nine months into our gen too much we're still not committing whether or not like it and in part.
Already correct me, it's a fourth quarter call. Thank you [laughter] [noise].
Got it Okay, and then given that the into a friend Dakota was increased at the beginning of October or are you starting to see the impact of that on usage or is that still too early to tell dotted line.
Yeah I can so it's still Charlie takes awhile.
Any pipe you have a government reimbursed and I mean can take nine months that 12 months, but one thing that we are doing and that we spoke about in the script. This well is of course route their educating and situations as it relates to not going to increase that we see from 50% to 65% which were extremely happy about but also.
So how an institution should apply and what they need to in order to satisfy their requirements to build for the untapped. So we're involved with that as well, but unfortunately, we can't see those claims and once you those claims to later in the future.
Okay. Thanks.
I'm showing no further questions in the queue at this time I would now like to turn the call actually we do have a follow up from Massachusetts with William Blair.
All right, let me on that thank you.
[laughter] utilization did you see any of the CECO utilization I believe that came online.
You know fairly recently, maybe over the summer that how much I know that was supposed to be a small part but doctors.
Sure Hey, Matt So I'm actually came online April 1st of 2019, and similar to end tap where somebody at the mercy up when the government actually gives us for the lack of better whereas quote unquote charge back data that you know we hear vignettes from the field and we know that theres institutions out there utilizing the seat.
So they there's the.
The same trip and check, which I don't think any of us like because these are patients that are who are in great need a new this trial, but they're getting the drug addicts me based hospital long been shipped two for instance, a lot one trauma center on and we have heard from our folks in the feel that they are you.
Oh I see the C code, but we cannot quantify until we actually received that data set from CMS.
Got it thanks, Tim.
Sure.
Thank you speakers I'm showing no further questions in the queue. At this time I would now like to turn the call back over to Mr., Scott Garland for any closing remarks.
Great. Thank you so much for a time and attention just a reminder will be having our investor day on November 14th in New York, We got a great lineup speakers will be going into more detail in Europe . So I think it'll be an opportunity for folks to signal, but more about the opportunity there.
Well some other great physicians. So we look forward to seeing some of you there. Thanks again bye.
This concludes today's conference call. Thank you for your participation you may now disconnect and have a wonderful day.
Hi.
Hmm.