Q3 2020 Strongbridge Biopharma plc Earnings Call

Ladies and gentlemen, please stand by your strong bench Biopharm appeals he corporate to be thinking three tiny tiny earnings conference call well begin momentarily again. Please stand by your conference call will begin in minutes. Thank you.

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Good afternoon, ladies and gentlemen, and welcome to the swung Beach Bio pharma you see quite a bit in Q3 2020 <unk> earnings conference call at.

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Thank you and good afternoon, everyone. We are pleased that you could join us today for Strongbridge Biopharmas third quarter 2020 earnings and corporate update conference call joining.

Joining me from strong bridge. This afternoon are John Johnson, Chief Executive Officer, Scott will Hoyt, Chief Commercial Officer, Rob Black Chief Financial Officer, Dr., Fred Cohen, Chief Medical Officer, and Rich Colander, Chief operating officer.

Before we begin I would like to remind you that during this call. The company will be making forward looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements right.

Reference to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and current events filings with the U.S. Securities and Exchange Commission.

I'll now turn the call over to John Johnson.

Thanks, Lindsay and thank you for joining us today.

Strawbridge has made significant progress this year and I'm proud of the team's performance, especially given the challenges presented by the ongoing global Tobin 19 pandemic.

I will start by addressing to Vegas, which has continued to show strong growth in the third quarter and exceptional year over year growth.

Advanced achieved net product sales of 8.1 million for the third quarter and 2020, representing a 42% increase from the 5.7 million in that revenue for the third quarter of 2019.

As a result of this growth the company remains on track to meet full year 2020 today its revenue guidance of 28 to 29 million.

I would like to recognize it conveys team led by Scott Wilhoit, our Chief commercial officer for driving this growth and for the team's unwavering commitment to meeting the many unmet needs of the primary periodic paralysis community that we serve.

Moving to our clinical development program for record loved an endogenous Cushings syndrome in early September we announced positive in highly statistically significant topline results from the phase three logic study, which met its primary and key secondary endpoints, Additionally, recorded which Jeff.

Well tolerated with a safety and tolerability profile comparable to the profile observed in the phase three Sonic study.

These results coupled with the positive results from our phase III Sonic study will support a new drug application in the U.S., which we remain on track to submit to the food and drug administration in the first quarter up 2021.

If approved following a projected 10 month producer reduce cycle the launch of record those as anticipated in the first quarter of 2022.

This would represent a major step forward in our mission to help address the needs of the estimated 8000 Cushing syndrome patients in the U.S., who are not treated with prescription therapy, many of whom are not well controlled with current therapies.

We look forward to leveraging our rare disease commercialization expertise and infrastructure to bring record flows through.

The cushions community.

Before I turn the call over to Scott, who will discuss these efforts in more detail I would like to briefly comment on the successful completion of our recent $25 million equity raise.

Which included participation from existing shareholders as well as new healthcare focused institutional investors.

Capital from this equity financing combined with our other existing financial resources provides us with the ability to appropriately invest in pre launch activities and.

And if approved the launch of record low.

Following the completion of the recent equity offering we were pleased to have increased our cash position and extended our runway to fund operations into and potentially beyond the first quarter of 2023, Rob will provide additional details later on in the call.

I will turn the call over to Scott.

Thank you John Good afternoon, everyone and thanks for joining us as John mentioned, we continued to be pleased with the whiskey basis performance in the third quarter and thus far in 2020.

In the second quarter, we quickly developed a comprehensive cold with 19 mitigation plan. The core elements of the plan consist of maintaining and growing our active base of patients in generating new referrals by creating new and innovative ways to interact with health care providers. We believe that our rapid response and continued ex execution contributed to both a continued flow referral.

[laughter] and new patient starts for continuous improvement in both conversion and retention rates.

We continue vigorous process crude prosecution of intellectual property that we have developed for Vegas.

Which includes more than a dozen patent applications.

We believe the claims and the applications based on drug drug interactions that promote the safe prescribing, Okay. The Vegas, which were recognized by F.D.A. and included in the updated 'cause. They asked label last November our allowable and if issued will.

It will be eligible for Orange book listing.

We're working closely with multiple intellectual property law firms on many fronts, including an expedited execution, an appeals process here.

When possible.

And we'll provide updates on key developments regarding these and other related activities I want to take this opportunity to recognize the efforts of the vast commercial team too.

We will continue to focus on serving the needs of the primary Peter periodic paralysis patients and the physicians, who treat them, especially during these unprecedented times.

Moving on to record that we're very pleased with the positive on highly statistically significant phase three watch results announced in September.

Filter consistent looks onyx and we believe they collectively provide the data required for resi agreed it's.

If approved we believe we're looking to achieve 250 to 300 million 350 million in peak your revenue.

Sales estimates based on results, but the quantitative market research, we conducted with 153 endocrinologists treat Cushing syndrome, and the qualitative research with 10 payers during which we learned the following.

First significant unmet needs for additional pharmacologic Cushing syndrome treatments remain despite a variety of approved.

An unapproved off label alternatives.

Importantly, 40% of patients are not well controlled with current therapies.

Second positions generally indicated they would likely prescribed korlym and our peak revenue estimates reflect the feedback.

No. The research included profiles for current products and potential new entrants. So our estimates are based on future market shares with current and new entrants included in the competitive set of products.

Third our research showed that 75% of respondents were either not using beauticontrol over reluctant to use getting caught us all in fact, 40% indicated they did not use beauticontrol and 35% use it on a limited basis, primarily due to safety concerns.

This large cohort of endocrinologists are looking for after the approved Cushing syndrome treatments with an improved efficacy and safety profile.

After seeing its target product profile, they indicated a high likelihood to prescriber cordless.

Fourth our key take away from payer feedback was that for a complex rare disease like Cushing syndrome payers would generally cover record them as they do other branded drugs into Cushing space.

Missions will likely need to document medical necessity, which.

Which is common for rare disease drugs, including brand ran into Cushing syndrome products.

Importantly, our commercial team and single source specialty pharmacy have experienced navigating these common payer requirements.

Fifth although not tested on our research, we believe recoiled, maybe especially useful for women in Cushing syndrome, which represent approximately 75% of patients. Many current drugs for cushings have side effects that are particularly concerned for women and record was clinical data and mechanism of action suggests that it may be particularly well suited for women.

Given our enthusiasm for record that we're aggressively moving ahead with prelaunch activities. We believe were well positioned for a successful launch given our current commercial infrastructure and experience launching today is with that I will turn the call over to Rob lets our Chief Financial Officer, who will review financial highlights from the third quarter before we open the call up to questions.

Rob.

Thank you Scott.

Our press release contains details of our financial results for the third quarter of 2020.

Rather than read through all of those details my comments today will focus on some key financial results.

We ended the quarter with approximately $82 million in cash inclusive inclusive of $23.1 million in net cash received from the equity offering announced on September 16th.

And $4.8 million in net cash received from completing an at the market.

Or ATM sale too.

An established healthcare dedicated investor a $3.50 per share earlier in the quarter.

Although operating cash flow will vary from quarter to quarter due to timing and working capital changes. We're pleased to announce we only used $6 million in operating cash this quarter.

This positive trend resulted from continued growth in Tibet, its revenue as well as a 20% reduction in S. DNA in the third quarter of 2020 compared to 2019 and.

And a 10% reduction in R&D spend for the same periods.

With the positive results from the phase three logic study ever Korlym in hand.

We now have the ability to draw an additional $10 million from our lenders in the fourth quarter of 2020 under the terms of the existing debt facility.

Assuming we draw that 10 million dollar tranche as well as the final $10 million tranche following potential correlate after approval and lender consent we.

We believe we can fund operations into and potentially beyond the first quarter of 2023.

Importantly, we expect to have more than one year's worth of cash at the expected time of the potential recall that after approval.

Which allows us the flexibility to reach that milestone before needing to make decisions on if when and how access additional capital.

And operator with that we're ready for questions.

Ladies and gentlemen, if you have questions at this time. Please press Star then the number one on your Touchtone telephone if your questions have been answered and do they stay move yourself from the queue. Please press about.

Your first question comes from the line of I know, that's a need from Stifel. Your line is open.

Hi, guys. Thanks for taking my question congratulations on a good quarter for today is I just had.

A couple of quick questions I guess one of them on Rekorderlig are we.

We have all the data didn't release is there any extension did are open label data that we should be expecting from a core live at all from from the logics trial and any rollover patients from any of these other trials and additionally separately when you.

Think about market entry and what the competitive landscape is going to look like obviously you have.

Good familiarity familiarity with key to Consol is that products that helps with the you know the message to physicians, but we have seen some new entrants in the marketplace, specifically report record watches product as Teresa and we've spoken to close if it could be in it.

First thing first line option. So how do you think the landscape.

Well play out given some change in competitive dynamics, and where those for cordless fit into that.

Thanks, Annabel Fred why don't you address the day the piece and then I'll go ahead and answer the piece around entry a along with some help from spot.

Yeah sure.

Hi, Annabel, so weve seen thus far release, the topline results from the end of the randomized withdrawal phase of logics will.

Present, a fuller picture of those but those data Oh, we're planning to do it at the American Society. If our abstract is accepted then we won't know that till the end of the year, but if we can't do it there for any reason we would do it around that time frame at another scientific venue and then the full study which includes the restoration fees will follow.

Well follow that presumably sometime next.

Next year towards the end of next year.

So that's sort of the timeframe we have four.

Presenting data.

Okay. Thanks, Fred then as it relates to [laughter] excuse me market entry.

Annabel does.

<unk> its Scott mentioned previously.

Oh did include is Teresa in that research.

Excuse me along with other potential.

No new entrants so we looked at that in the peak sales estimates that Scott referenced have back then and we have a pretty good deal. How physicians are going to think about that basket of products, assuming relaunch in the time frame that that I outlined Scott is there anything.

You want to add to that.

Yeah, I guess I would just ask you know the payer landscape piece, which is an important part we get the same with payers right. We laid up or you know that the TPP for record live.

Well as you know some of the current products that are on the market, both labeled and off label and asked them about coverage and so forth because reimbursement in the pathway to reimburse. This is so important I think it's important to mention that you know we think that a they view the profile of the corlett favorably and then secondly, you know we believe.

Based on their responses there is a pathway for reimbursement so.

So I think those two things combined competitive profile that John just mentioned and you know the pathway for reimbursement, we feel we feel really good about.

During the market with record living out maybe received.

Okay and I think.

I had no.

No not.

Not at all.

Well.

We now have a follow up.

All right sure Oh I was just going to say you know as we as we continue to do research and talk to physicians.

I think you'll see them begin to think you know in the front line more about different patient types and directing certain patient types to one particular therapy, we're not going to go into you know depth on that now that we have a lot of work as you can imagine that that's ongoing weren't full launch prep mode, but weve.

We're very confident in the peak rate adjustments that we provided.

Okay. So just as a follow up on the on some of the stuff you're giving us.

Did you did I hear correctly, 75% had not yet is key to kind of all in 40% of those were reluctant to use kit to consol did I hear that correctly.

Scott you want to clarify that.

Yeah sure. So I think what we found in our research was that 75% have either don't use it or a reluctance of that 70, 540% essentially discontinued their use and 35% use it on a limited basis. So the 40 and 35 kind of make up to 75 I think in the.

The important point there is that it was primarily for safety reasons and they're looking for a new option. That's an FDA approved as a broader label. It has a more utility than that and Vicki.

Okay. So that yeah, but its also your primary target.

Yes, certainly I mean, they indicate yeah I have it Scott so certainly they indicated that that they would be very interested in and using record 11, and a group of those positions will be a key targets at launch or we continue to refine that.

But we know that there's a subset inside of that group that will be very very hard targets and very high likelihood of prescribing record sales.

And I did make one there was I was reading too much script earlier I got ahead of myself a little bit there are 8000 patients treated to date of which approximately 40% our research indicates or not well controlled so back group of patients will will certainly be a key target for us and not the puzzle.

Listen to it with within whose offices they said.

Okay, great. Thank you.

Thank you.

Your next question.

Question comes from the line of <unk> <unk>.

Chris Howerton from Jefferies. Your line is open.

Great. Thanks, Thanks, so much for taking the questions and congratulations on a strong quarter for it today is certainly.

Right. So maybe just a few questions for me I think one just perhaps a easy clarification.

For the cash runway expectations that you provided for us Rob does.

Does that include hiring any additional sales reps or does that kind of.

Predict that you would use just the existing sales force this detailing convey is.

The second question was you know I think in the script described.

Some of the lifecycle management work that you're doing there in terms of patents for it today is any more color you know that we can have on kind of the nature and timing of that potential IP would be a very much of interest to me and then.

And the last one.

Just kind of curious to hear Fred starts on you know what it is is there going to be a challenge to educate and accrue knowledge is with respect to the safety profile of a quarter live a relative to two key to kinda zone and you know if so or if not kind of how do you see.

Highlighting that differentiation, particularly on the safety side given the recent discussion you just had with Annabel.

So Rob why don't you just the first question rich the second and Fred then you can close with the fall in the question and thanks for the questions Chris.

Thanks, Chris This is Rob good question on the the nature of the assumption that we've made for our cash runway and we have indeed included additional reps in the forecast at this point, we're obviously doing more work to refine exactly what what size of team will need and how will.

Coordinate and combine between convey some are core lab, but for sake of assumptions for now would have assumed additional incremental reps in the forecast.

Great.

Hi, Chris its rich thanks for your question, yes. So in terms of timing, it's difficult to give exact timing, but we would expect to have some more information yeah mid year into the second half of next year specifically on on outcomes here. We are as you know working.

Well generally on many fronts.

I have a couple of IP law firm working with US right now and we're taking advantage of of all methods to continue moving the state board, including appeal process. He is where those make sense.

And continue to feel encouraged by and confident in the IP estate.

So that's where that stands at this point in time.

Okay.

Yeah, Hi, Christa spreads so in terms of education you know it is still early days as we prepare for launch and we're still thinking through the various educational programs and materials and so on and so forth, but at this point. We think you know we have the data and we handed that we're gonna have at launch that's going to make an impact in term.

So you know.

The key decisions right. The key kind of data that doctors have to wait benefit risk.

And and as you know, we don't have any head to head clinical comparisons. So what we're talking about a sort of indirect comparisons to other drugs that they have used but the important point I think you know in all of this Oh, we talked about before is that [noise].

The core lab is very much a new truck right, it's not not keep trying as all its not consider key declined as well from a regulatory perspective, and it's backed up by and evidence base that you know by by any measure is is a much greater quality and strive to me I've been in space.

Morning News, so could you kind of saw our hope of course is that in the United States that translates directly into an approved product, whose labeling will reflect the evidence base supporting its use from Cushing syndrome, which is of course diametrically opposed to the current product labeling for acute at Cod as all which is limited to very specific uses.

Some rare fungal diseases and warns against used in Cushing Cushing syndrome [noise] in that regard the labels will look very much different from one another and we anticipate that the labeling for use in Cushing syndrome outline them in a fair amount of detail you know how the drug should and should not be used with regards to Cushing.

Thanks, Andrew in terms of how it should be monitored what to watch out for in terms of adrenal insufficiency, and so on and so forth I think for the most part that the types of monitoring that we're doing both quantity and quality are very familiar tender chronologies, they're similar to basically most drugs in the class.

That theyre used to using not just skewed economists off it's very much routine and the types of adverse effects and so on that we've seen in the clinical trials are again for the most part comment to most if not all of the drugs that are currently used in Cushing syndrome today, not just key to calm as off so for the most part I think doctors will be very calm.

Trouble with the types of monitoring and the types of adverse effect you might expect this lost the benefits and I think you know, we'll just have to lay out for the doctors. The information we have how it compares to the quality of data that's available with QB Consol and basically you know help them you know understand the proper role.

Or port proper potential role for a levy Kitty Con is all in in the treatment armamentarium to Scott's point, you know, we're going to have to sort of make that argument and establish its proper position.

Got it okay. So so basically your perspective, Dan is that.

It's going to be viewed as a separate therapeutic and that there shouldn't necessarily be any kind of infringed drawn based upon the safety profile of key to kinda zone and the monitoring that you're doing based upon your clinical study design is very much routine.

Shouldn't raising these factors of safety for record lows.

It shouldn't really shouldn't read anything.

Yeah uniquely special to record, though it certainly shouldn't look anything like the kind of monitoring requirements. You know that our current limit you know labor, which talks about weekly monitoring and you know it was a very much geared towards Oh gosh, a shorter courses of therapy for a fungal infection.

Entirely different than than usage and a chronic condition like like Cushing syndrome.

And of course, you know there's there's all the the other <unk> other reasons to go along for [noise].

You know why the drug is now like Lucky economy. So I don't know if you want to go on so all that again today, but you know there's pharmacological rationale theres going to be clear pharmacological rationale for why the bikini, calling us all.

You know is a preferable therapy, and obviously that does contribute to the benefit risk. Thank you.

Okay.

Got it okay, well no that's very clear thank you Fred I appreciate it.

Sure.

Your next question comes from the line of Justin Kim from Oppenheimer. Your line is open.

Hi, good afternoon, thanks for taking the questions and congrats on the quarter.

As you think about the established clinical profile for core lab have you had any additional thoughts on how you see clinical features of the drug having differentiated uptake for a particular segments of the market. I know you mentioned females and I presume, referring to maybe side effects such as endometriosis.

The testing with other competitors, but just wondering any thoughts there in terms of sub populations that might have a differentiated benefit and therefore, a stronger rationale for using the drug.

Scott you want to talk a little bit about what we learn book, we research as well as some of our discussions post the research.

Yeah sure. Good question and I think you hit on a couple of the key ones I think first thing I'd say is and as John said you know there's more work for us to do in terms of some of the the targeting work with physicians and the segmentation and the and the messaging that would apply to various segments, but I think importantly, when you look at Quito into discussions that you know Fred was just or just.

Yeah, I think we have done some had started some segmentation were in Quito and clearly that is a go to spot because of what we said there is a number of physicians who have decided in large part based on the safety profile that that they have they're looking for alternative options and the profile that we tested as as I mentioned that did very very well.

Oh and feel that that unmet need in particular, so not only the ones that have decided to move away, but also those that really had limited its use in their practice and that's a that's a significant cohort.

So so that will be clearly a target. We also you know post research and then talking about of the importance of this this product for women and that's the largest segment right up.

5% of the population are women that that'll be a focus because as you know some of the some of the products that are available from the treatment perspective have adverse events that make it particularly troublesome to women in particular, the the energenic effects or whether that's acne and on what that hair growth.

And those types of things what kind of impact compliance in a number of things. So we think that that is a a very good opportunity.

More work on that as we think about segmentation, but those are two that come to mind and they're very importantly is the ones that will be more were working at it.

Targeting or segmentation work and then factor that into our targeting at launch.

Okay got it kinda, great and then maybe for Fred if you could just walk us through some of the stuff. We might anticipate ahead of an end date submission just wondering what sort of feedback might be relate back to the investor community beyond lets say a filing acceptance and you know some commentary around that potential.

Uh huh.

Sure. So I think as we indicated at the last call. We're we are still anticipating.

You know first quarter submission and we probably will not be releasing any updates before then in terms of you know data or anything anything of that nature or or anything from a regulatory perspective as we prepare for the submission.

Now [noise].

Once the submission goes in its reviewed for a filing and the.

The FDA takes roughly two months to do that and then I'm sure. We will now I know its you know once that's been except.

In terms of Advisory Committee, we know we don't anticipate having an advisory committee.

Just given the precedent for other drugs in the category. For example is Teresa was recently approved without like that being said, we are preparing us if there could be one.

And so in the event there. After you decides that they would like to have one Oh, we will certainly be fully prepared for that.

Okay got it and maybe just a final question no with respect to come back as we think about sort of the guidance and maybe next year. You know just wondering any thoughts in terms of whether there is room for growth in terms of penetrating the market further and any thoughts.

You know with respect to that.

Sure.

Certainly, we'll expect growth going into next year and you know as I had you had said you know I.

I guess, a little over a month ago at this point you know, we we do expect a.

Assuming continued runway for capella instead, it will be north of $50 million annually at peak, how far north will put a finer point on that downstream but.

But short answer is yes, we do experience and expect continued growth then and I personally was really pleased with this quarter a four.

42% on a year over year quarter over quarter is really strong.

In my book, given this market and given the pandemic and the challenges with accessing physician, so really hats off to Scott and his team.

Great great. Thank them I can hop back in the queue.

Again, ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.

Next question comes from the line of Jonathan.

Well when some JMP Securities Your line is open.

Hi, Thanks for taking the questions and congrats on the progress.

Just a couple on record for me I'm wondering can you remind us where the manufacturing facilities are for growth.

Rich you want to take that.

Yeah. So its a hi, it's Richard there's a process obviously as you would imagine but the two primary manufacturers are U.S. based.

So their contract manufacturers and the handoff between the drug.

Drug substance and drug product.

Got it and based on your market research have you guys got any sense on duration of therapy, how long patients are staying on a particular medication before maybe switching or adding on a secondary medication.

Scott you want to address that.

Yeah, It's a great question, Jonathan Jonathan I think in our specific research I think first of all we found that there's.

A lot of switching that goes on so they're clearly in the qualitative portion of this with physicians indicated that durability is an issue of and there's a lot of combination therapy as well we did not in any of our question ask about specific linked to therapy or or specific durability.

Any of the any of the compounds in this set of work that is something that we're going to do a very near term as we accelerate our launch preparatory activities and there's a number of ways to get after that and we've got a number of different work streams in place that will give us some insights on that.

In the relatively near term.

I'm, sorry, Q&A session today, I will now turn the call over back to Mister John Johnson.

And clothing Strawbridge has made significant strides towards its mission of serving the unmet needs a rare disease patient populations.

We are pleased with the growth that's good based on a quarter over quarter basis.

We're eager to advance record up to market. So that we can make a meaningful improvement in the lives of patients with Cushings syndrome.

We look forward to continuing the momentum from this quarter and executing upon our strategic priorities as we work too advanced strawbridge transformation into a mall type product commercials stage biopharmaceutical company with a portfolio of differentiated products that address unmet needs of patients with rare neuromuscular.

<unk> a rare endocrine diseases.

Finally, I'd like to thank our employees a strong breeze for continuing to drive forward on these critical efforts.

All 2020th has been a difficult ear for many of US I'm incredibly pleased with the state of our business and the progress that we're making and we will continue to make going forward. Thank you for joining today's call and for your continued support.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation have a wonderful day you may disconnect.

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