Q4 2020 Horizon Therapeutics PLC Earnings Call
Ladies and gentlemen, this is the operator todays conference is scheduled to begin momentarily until that time your lines will remain on music hold thank you for your patience.
[music].
Yeah.
Good morning, and thank you for standing by welcome to the Horizon Therapeutics fourth quarter and full year 'twenty 'twenty earnings Conference call.
A reminder, today's conference call is being recorded.
I'd now like to introduce Ms. Tina Ventura senior.
Vice President of Investor Relations. Please go ahead.
Thank you Bruce good morning, everyone and thank you for joining us on the call with me today are Tim Walbert, Chairman, President and Chief Executive Officer, Gordon Brown Executive Vice President Research and development and Chief Scientific Officer, Paul Hoelscher, Executive Vice President and Chief Financial Officer, Liz Thompson, Vice President clinical data.
External search and Andy Pasternak, Executive Vice President Chief Strategy Officer.
Tim will provide a high level review of the business, our 2020 performance in 'twenty and 'twenty one guidance.
Maria will then provide a review of our R&D programs, followed by Paul who will discuss our financial performance and guidance in more detail.
After closing remarks from Tim we'll take your questions.
As a reminder, during today's call, we'll be making certain forward looking statements, including statements about financial projections development activities, our business strategy and the expected timing and impact of future events.
Actual results could differ materially due to a number of factors, including the extent and duration of the effects of the COVID-19 pandemic as long as the other factors outlined in our annual report on form 10-K for the year ended December 31, and our earnings press release, which we issued this morning.
You are cautioned not to place undue reliance on these forward looking statements and horizon disclaims any obligation to update such statements.
In addition on today's call non-GAAP financial measures will be used these non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings press release and other filings from today that are available on our investor website at Www Dot Horizon Therapeutics dotcom.
I will now turn the call over to Tim.
Tina and good morning, everyone.
Our fourth quarter capped off an exceptional year for horizon, we achieved record full year total company net sales of $2 2 billion representing year over year growth of 69%.
This was driven by our successful launch of perpetual preferred or disease, achieving $820 million in its first year on the market.
Growth continued double digit growth from KRYSTEXXA, our biologic for uncontrolled gout.
Per the intersection and finished the year strong both growing double digit from the fourth quarter versus the third quarter.
We also achieved record full year, adjusted EBITDA of approximately $1 billion, which increased more than 100% compared to 2019.
Our 2020 adjusted EBITDA margin was 45, 4% more than 800 basis point increase compared to 2019, which drove a full year ahead of our previous plans.
This morning, we issued first.
Full year 2021 guidance, but again represents strong double digit year over year growth.
Our full year net sales guidance of $2 eight to two point.
$8 billion represents 25% growth at the midpoint.
Our adjusted EBITDA guidance of $1, one four to $1 8 billion barrels represents 16% growth at the midpoint and includes significant investment in driving uptake and our pipeline. We are roughly doubling our R&D spend compared to 2020 and initiating six new trials.
Independent of the acquisition.
Additional milestones achieved in 2020 include the acquisition of cursing pharmaceuticals, giving us <unk> to five <unk> antagonist that is expect to enter two fees to be pivotal trials. This year. We now have 14 programs total in our pipeline.
We also advanced our KRYSTEXXA immuno modulation strategy, where we continue to see an increase from use of KRYSTEXXA plus an immune modulator now have more than 35% of new patient starts.
This led to a strong second half and fourth quarter restriction net sales growth.
<unk> finished the year up nearly 20% despite the impact of COVID-19.
And we significantly strengthened our balance sheet ending the year with more than $2 billion in cash which is more than double the principal amount of our outstanding debt.
This provided us with significant flexibility to pursue business development opportunities and position us well to acquire <unk> for a total transaction value of $2 6 billion.
Net cash.
The acquisition of <unk> accelerates, our strategy to build a robust development stage pipeline to drive long term value for ways for us.
Can I have the deep mid stage biologics pipeline with four candidates currently in nine development programs.
Each of these molecules targets central pathways that are implicated in a wide range of autoimmune diseases, providing many avenues for potential growth.
We currently have a strong earned market portfolio of medicines with high growth potential and the <unk>.
Yellow pipeline will position us well to drive growth in the second half of the decade.
Second it expands the capabilities of our current strong R&D team, particularly early stage research and translational capabilities as well as deep scientific knowledge in autoimmune and severe inflammatory diseases.
These capabilities will allow us to continuously innovate beyond what is included in our combined pipeline today.
Third deal allows us to continue to pursue our global expansion strategy that we have initiated with the peso and <unk> five.
And finally, there was a further diversifies our on market medicines portfolio with the addition of <unk> and produce biologic medicine indicated for the rare disease, neuro myelitis optical spectrum disorder or animal SD.
It is the human monoclonal antibody with a well understood mechanism of action high efficacy levels, and a favorable dosing schedule as well as the safety and Tolerability profile.
As a leader in commercializing rare disease medicines, we see many additional opportunities to add value from a commercial perspective.
This includes generating conveying additional evidenced that reinforces the value per clip now as well as building the necessary infrastructure to support a favorable physician and patient experience, while ensuring the right sites of care available to treat patients. Examples of successful approaches we have to use a both KRYSTEXXA and <unk>.
Bill has a strong strategic fit with our portfolio in our therapeutic areas of focus, including ophthalmology rheumatology and nephrology.
We also believe three currently approved for clinical stage really candidates, which include employees know VIP 49, 20, and VIP 70, 734, each represented more than $1 billion annual net sales opportunity.
We're on track to close the acquisition by the end of the first quarter.
Now moving on to our fourth quarter results.
Fourth quarter net sales of $344 million Rep.
Representing sequential quarter over quarter growth of 20% with full year net sales of $820 million.
We have not had the supply disruption at the end of the quarter and had a normalize level of inventory in the channel we estimate the sequential growth would've been well over 30%.
The two per the loans truly exceeded all expectations and has turned to us through one of the best rare disease medicine launches in history.
As we announced last quarter based on the potential we see from <unk> and its ability to help many more patients suffering from thyroid eye disease. We're further investing in capacity to support continued long term growth.
This includes our U S infrastructure and marketing initiatives supply capacity and global expansion.
In the fourth quarter, we doubled the commercial and field based organization, which includes new sales representatives patient access liaisons.
Regional reimbursement leaves us site of care managers and medical liaisons.
I'll have completed training or in the field educating physicians on the importance of <unk> EBIT treatment strengthening the co management of the disease across key positions Purcell specialties, and established and reinforcing the treatment path infrastructure and referral network.
Our sales force has continued to drive demand from new patients during supply disruption.
Total paid pending patient enrollment forms for perhaps a leading indicator of demand.
<unk> the total number of patients were on therapy in the fourth quarter.
We continue to see strong clinical conviction from two pairs of prescribers, which drove uptake it depends on among our roughly 1000 top tier high volume physician targets in TEP specialists.
We see significant opportunity for continued growth given an annual incident population of <unk> patients.
10% to 20000.
As well as the prevalent population of 70000 U S patients who've had chronic CEB from five years or less.
The expansion of our commercial infrastructure has also served us well during this supply disruption as they are.
The team has been able to provide valuable support to physicians patients sites of care and payers keeping them update us helping them navigate through this disruption and be prepared to relaunch.
I will now give an update on competitive supply.
We've been investing in our long term manufacturing supply capacity since the acquisition of comparison.
We have continued our efforts since it was approved.
The fact that they were able to meet the significantly higher demand for the launch 23 times. Our initial guidance is a testament to our comprehensive supply strategy and our talented team.
Our strategy included increasing both drug substance manufacturing through our partner AGC biologics and drug product manufacturing.
The 1 billion, finishing up the present miles with our drug product manufacturer catalysts.
<unk> approval, we began efforts to increase the scale of each drug product manufacturing low.
This effort proved particularly important December when the US government mandated COVID-19 vaccine production at Kettle and dramatically restricted capacity for the production of <unk>.
We've run out of supply since the end of December and have continued to make good progress towards bringing to pass it back to market.
We submitted a prior approval supplement to the FDA for this new manufacturing process with supply produced the day plus the manufacturing capacity currently planned account, we expect to be able to serve existing patients and new patients, allowing us to relaunch the peso following FDA approval.
We continue to have good dialogue with the FDA, including answering several series of questions from them. We are hopeful that the agency approves the supplement on an expedited basis.
We continue to estimate that the disruption could last through the first quarter.
We also remain on track to receive FDA approval to start producing to present supply from our second drug product manufacturer by the end of this year.
We're looking forward to being able to again provide compared to the patients who have no other options available to them to treat their TEP highly debilitating in sight threatening rare disease.
With our expanded commercial organization and improving COVID-19 environment and return us to put the supply and lack of any of the approved option for <unk> patients. We remain highly confident cause us long term potential peak annual net sales target of more than $3 5 billion globally.
With KRYSTEXXA, we reported record full year net sales of $406 million.
On a year over year growth of 19%.
We significantly exceeded the guidance, we provided us the onset of the pandemic a testament to the efforts of the KRYSTEXXA commercial organization and our immuno modulation strategy.
This strategy is key to the long term success of KRYSTEXXA.
The evidence has been building that demonstrates the response rate of KRYSTEXXA plus immuno modulation is significantly higher than the response rate seen with KRYSTEXXA alone.
This data is resonating with physicians with more than 35% of new patients now starting KRYSTEXXA plus immuno modulation.
It's quickly becoming the preferred treatment option for patients with uncontrolled gout driven by the data publicity the chosen an approximate doubling of the patient response rate using KRYSTEXXA plus immuno modulation vs KRYSTEXXA alone.
This was demonstrated in the first randomized controlled trial to study KRYSTEXXA <unk> modulator in this trial called recipe patients on KRYSTEXXA plus the immuno modulator, Michael Fennell late month of sales achieved an 86% response rate at the 12 week primary endpoint.
Our mirror randomized controlled trials 12 month trial evaluating the efficacy and safety of the use of KRYSTEXXA plus methotrexate.
The trial completed enrollment of August in August from 2020, and we remain blinded to the results of the trial to date.
The primary endpoint is at six months and secondary endpoints growth through 12 months.
As we've discussed in the past.
In the past we had plan to approach the FDA to potentially submit the six month results for inclusion in the KRYSTEXXA prescribing information.
And our ongoing dialogue with the FDA. The agency recently informed us that they want the trial to continue unblinded to the full 12 month period.
With alpha blending at six months.
Given that patients could be on KRYSTEXXA, plus methotrexate for a longer period of time in clinical practice.
We therefore expect the primary and secondary endpoint results along with key safety information to be available in the fourth quarter of 2021.
We expect to submit the data to the FDA for potential inclusion in the KRYSTEXXA prescribing information in the first quarter of 2022.
Our strategy for KRYSTEXXA is working exemplified by our expectation for strong growth again this year.
We are well on track to achieve our peak us sales annual net sales estimate from more than $1 billion.
Our rare disease medicines <unk> precision Penectomy had an impressive year and finished 2020 with total growth of approximately 11% compared to 2019.
We continued to see strong combined active shipping patients and high rates of compliance and adherence.
In addition to the acquisition of the yellow, which represents a significant transformation of our R&D organization. We also continued to advance our other clinical programs with.
With the present, we partnered with kind of low volume to develop a subcutaneous formulation of <unk>, which may offer additional flexibility and convenience for patients.
With <unk> five we have finalized the protocol for our diffuse cutaneous scleroderma trial and we're on track to start this total in the first half of this year.
We're also pursuing interstitial lung disease, starting with idiopathic pulmonary fibrosis or IPF as a potential indication for <unk>.
If we are successful the development of <unk> <unk> five for these indications, we estimate that <unk> could generate more than $1 billion in peak annual net sales globally.
With KRYSTEXXA, we've recently announced two new trials, the monthly dosing and the re treatment trials. We now have five trials to maximize the value of KRYSTEXXA.
Finally, I want to note that our success. This year is a testament to our talented employees. We continued received multiple recognitions as a best workplace 13 total in 2020, reflecting the high level of engagement engagement of our employees.
In addition, we're taking steps to foster inclusion and combat racism.
We've donated $500000 to community organizations that are addressing racial inequality and racism and $1 million from endo and scholarships for students of color.
We've also instituted diversity and inclusion efforts within horizon to further embed inclusion diversity equity and Alice ship at all levels of the organization.
Our progress in 2020 underscores our position as one of the fastest growing biotech companies with the top tier growth profile and we remain focused on continuing to drive significant value for our shareholders patients and all of our stakeholders moving forward.
I will now turn the call over to Craig for an update on our R&D programs.
Thank you Tim and good morning, everyone I will start with a summary of the day yellow pipeline and then move to our Horizon program.
Video acquisition will add a portfolio of novel medicine candidates ranging from phase one to phase three.
Neil US first commercially available medicine.
And anti CD 19, humanized monoclonal antibody obtain FDA approval for the treatment and then OSB last June.
<unk> is also pursuing additional indications for the medicine and ongoing phase III trial in myasthenia gravis or M. D, which is a chronic rare autoimmune and neuromuscular disease that affects voluntary muscles, especially those that control the ice MAU growth.
And ongoing phase III trial in <unk> related disease, a group of disorders marked by tumor like swelling and fibrosis Awesome day.
Got it.
<unk> pancreas, salivary glands kidneys, and finally, a phase II proof of concept trial in kidney transplant desensitization, which is currently paused due to COVID-19.
Vib 49, 20, HSA dollars 40 locked.
TD <unk> TD 40 ligand antagonist on us being studied by the airline fleet potential indication.
<unk> sales to be tried in chicken syndrome, a chronic systemic Albanian condition that index fixed plans, including the salivary MTO block share.
<unk> syndrome is the second most common probiotic disease after rheumatoid arthritis.
These two trials active rheumatoid arthritis patients on a small phase two proof of concept study in kidney transplant rejection.
774 is a human monoclonal antibody that has the potential to become a novel treatment for Albanian diseases in which plasmacytoid dendritic cells Pdc's overproduce interference from other types of cytokines.
Chemo price.
Systemic lupus erythematosus or SME niello reason, they decided to move into phase III trial after demonstrating encouraging results from their phase one day cutaneous lupus erythematosus trial.
774 is also in today's volume development for COVID-19 related acute lung injury.
And finally, the EIB 1116 is a monoclonal antibody that is expected to moving to phase one development in mid 2021 for autoimmune diseases, and we look forward to exploring the potential of these candidates.
Maybe ill acquisition with.
Talented team skilled in the development of medicines that treat pelton us in inflammatory diseases with important early research and translational capabilities that will position us for growth now and in the future.
In terms of explore the full potential of E. L F pipeline to leverage our combined capabilities to maximize the potential of these molecules.
Moving on now to discuss HCM eight to five.
Selective <unk> antagonist tamas from early signs of clinical impact in fibrotic diseases.
Par signaling has been implicated in fibrosis, and inflammation and preclinical and clinical evidence to post the anti fibrotic potential of alpine taconite across organ systems, including both lung and skin.
We are on track to initiate our first pivotal phase III trial in HCM 825 in diffuse cutaneous systemic sclerosis. During the first half of this year.
If you turn your systemic sclerosis is a rare chronic progressive auto immune disease that often causes internal organ damage and has a high mortality rate given there are no FDA approved treatments for patients per day diffused cutaneous systemic sclerosis presents a significant unmet medical need.
Current treatments provides symptomatic relief, but nothing extra slows disease progression a more comprehensive treatment is needed to address the inflation I'm sorry, Joseph the Jive is progressive disease and its high mortality rates.
We expect to enroll approximately 300 patients will be randomized in a one to one to one ratio to receive HCM H 253 hundred milligram once daily.
HCM 825, 300 milligrams twice daily or placebo for 52 weeks.
Finally endpoint of the trial will be changed in forced vital capacity or SBC. After 52 weeks. This is an objective endpoint measure of lung capacity and is used to assess the progression of lung disease on the effectiveness of the Kingdom Keith.
Key secondary endpoints include the health assessment questionnaire disability index or <unk>.
Modified Rodman skin score at ACR Criss.
We expect enrollment to take approximately two years and with a one year endpoint, we expect data to be available in 2024.
Mid this year, we expect to start the second pivotal phase III trials with HCM page two sides of idiopathic pulmonary pulmonary fibrosis, which is the most common interested your lung disease.
<unk> will be the primary endpoint here as well.
Moving to chip in a placebo controlled trial.
T D.
The aim of this trial is to generate clinical data to better inform pay your sensor sessions, we used to pay us off to treat their chronic patients.
This trial to begin in the second quarter moving to touch on supply normalizes.
I'm from data are available from a chronic TD trial case reports can help inform physician who may wish to use to pay us that in treating their chronic TD patients.
Case reports of approximately 30 <unk> patients with chronic disease represented after birth shortfall symposium will be American society of ophthalmic plastic and reconstructive surgery or a soft for us in November last year and in other forums that show comic TD patients benefited after treatment, which caused us.
Also this week a poster was included in the North American U S Technology Society or non US 2021 annual meeting of a patient with longstanding T D <unk>.
Decompression surgery to treat Turkey, sorry months later, the patient experienced a worsening diplopia on Proptosis averse to a second decompression surgery the patient the GAAP to cancer therapy. Upon completion of our true she had significant reduction in proptosis or between five six millimeters.
And her lead retraction subsided substantially.
We're also working on additional administration options, which would cause us any lovaza, we partnered with <unk> to begin work to develop a subcutaneous formulation, which may offer additional flexibility and convenience for patients. This year will be starting our early clinical work from two peso with Palestine technology initially to understand the pharmacokinetics.
Bioavailability, Tolerability and dosing regimen, we will work with the regulatory agencies typically on the full required data package, which we anticipate will include the confirmatory trial to demonstrate safety and efficacy occupies a co formulated with <unk> P. H 'twenty molecule.
You told us to legally.
For perspective, we currently have.
<unk> R&D programs aiming to maximize its value in three ways, increasing the response rate benefiting more patients with uncontrolled gout and improving the patient experience us.
<unk> mentioned, we expect the readout from the mirror placebo control trials from the fourth quarter of 2021.
Chuck Todd, which is starting to use of KRYSTEXXA for people, who are living with uncontrolled gout and have undergone kidney transplant is now fully enrolled we have followed by two percentage encouraging interim data from this trial and our own trucks will find themselves by the end of this year.
We're progressing with our trial evaluating impact of administering KRYSTEXXA shorter infusion duration.
Also check to initiate our newest KRYSTEXXA pipeline trials.
Monthly dosing from the retreat in the first half from 2021.
All of the monthly dosing Hollister store with us that dosing regimen can provide similar outcome from current dosing schedule, while the KRYSTEXXA treatment trial will evaluate whether patients can benefit from KRYSTEXXA plus methotrexate after developing an immune response to KRYSTEXXA.
Taken alone.
In conclusion. It is a transformational time for R&D at Horizon, we look forward to integrating the viola R&D organization once the transaction closes as well as developing extensive experience. So all that combined team to pursue the full potential of our development stage candidates on market medicines with that I will turn the call over to <unk>.
Paul.
Thanks, Karen.
Comments. This morning will primarily focus on our non-GAAP results unless otherwise noted.
I'll start with our fourth quarter results, followed by our 2021 financial guidance.
Fourth quarter net sales were $745 million a year over year inquiries from 105% and a record for the company.
Our orphan segment generated net sales of $628 million, an increase of 151% year over year, representing nearly 85 per site of our total company net sales.
The growth was driven by the exceptional to peso launch with fourth quarter depends on net sales of $344 million along with strong growth per KRYSTEXXA with record quarterly net sales of $129 million, representing quarterly sequential growth of 19%.
Our fourth quarter operating margin for the orphan segment was 48 per subs a year over year increase of 500 basis points.
Net sales from the inflammation segment were 117 million with segment operating income of $67 million.
So net sales from this segment declined by 8% for full year 2020.
<unk> segment operating income was roughly flat.
Evidence of the successful execution of our strategy to maximize profitability in this segment.
We continue to reinvest the resulting cash flow of this segment into our growth drivers and expanding pipeline.
Our fourth quarter non-GAAP gross profit ratio was 87 per cent of net sales.
Non-GAAP operating expenses for the fourth quarter were $279 million. This.
This included non-GAAP R&D expense of $38 million and non-GAAP SG&A expense of $241 million.
Fluffy and our increased investments and deposits.
Adjusted EBITDA was $371 million from the fourth quarter significantly exceeded expectations.
The non-GAAP income tax rate in the fourth quarter was 17, 1%.
He then the nine 9% non-GAAP tax rate from the full year.
Non-GAAP net income was $298 million and non-GAAP diluted earnings per share were $1 28 sites.
The weighted average shares outstanding used to calculate fourth quarter non-GAAP diluted EPS were 233 million shares.
Non-GAAP operating cash flow was $411 million benefiting from the collection of significant depends on receivables in the fourth quarter.
As of December 31, our cash and cash equivalents were $2.08 billion and the total principal amount of our debt outstanding was $1.018 billion.
We plan to fund the Vela acquisition with $1 $3 billion of new debt plus available cash on hand.
The Hart Scott Rodino waiting period expired yesterday in line with our expectations to complete the acquisition by the end of the first quarter.
As Tim noted the total value of the transaction is 2.67 billion net of the <unk> cash and cash equivalents.
Based on this our pro forma gross leverage ratio is expected to be about two six times.
We expect our gross leverage ratio to be near our target of two times by the end of 2021.
We significantly strengthened our capital structure over the last two years and we were very pleased that S&P recently recognized our efforts upgrading our company rating to double B a rating they affirmed following our announcement of the <unk> acquisition.
Moving to our outlook for 2021.
Our 2021 guidance excludes the impact from the operations of DLR, which we currently estimate will reduce our adjusted EBITDA by approximately $140 million.
Our guidance also assumes FDA approval of the increase scale drug product manufacturing process up to pass us and the successful completion of future committed manufacturing slots for deposits.
This morning, we provided full year 2021, net sales guidance of two seven to $2 $8 billion.
Representing year over year growth of 25 per site at the midpoint.
Core deposits, we expect full year 2021, net sales of greater than $1 $2 $75 billion, which continues to assume that the supply disruption could last through the first quarter.
For KRYSTEXXA, we project net sales of more than $500 million representing.
Representing continued strong growth.
We expect full year 2021, adjusted EBITDA of between $1, one four and $1 one $8 billion.
Presenting a growth of 16% at the midpoint.
This reflects our expectations for strong growth in our net sales, partially offset by the roughly doubling of our R&D dollars that and compare it to last year as well as the investments. We recently made to expand the public commercial organization and marketing initiatives.
We expect our non-GAAP gross profit ratio for the full year to be between 86 and 87%.
Non-GAAP net interest expense is expected to be approximately $45 million, which does not include the interest on the new debt to be issued to fund EBITDA DLR acquisition.
Yeah.
We expect our full year non-GAAP tax rate to be in the low double digits.
As with every year, we anticipate variability in our non-GAAP tax rate on a quarterly basis.
We estimate that our cash tax rate will be in the low to mid single digits in 2021.
And as always our tax rate could change significantly as a result of any acquisitions or divestitures made by the company or any changes in tax laws.
We expect our full year 2020 weighted average diluted share count to be in the range of 230 to 234 million shares.
Let me now touch on the first quarter as we discuss every year first quarter net sales are generally the lowest of the year impacted by seasonality as patients experience changes in their health insurance coverage.
Therefore, we expect a typical sequential step down for our medicines.
Additionally, operating expenses will increase as we approach mid year as additional marketing efforts from depends on continued to increase and our two phase II trials and HCN eight to five to get.
And finally, we expect the operating cash flow to increase significantly year over year, although as usual, we expect first quarter cash flow to be the lowest of the year.
With that I'll turn the call over to Tim for concluding remarks.
Thank you Paul.
2020 was a breakthrough year for horizon.
The long far exceeding expectations and resulting in one of the best rare disease medicine launches ever.
We generated record net sales from $2 2 billion.
And adjusted EBITDA of approximately $1 billion driven by the tremendous success of dependent as well as by strong growth from KRYSTEXXA and our rare disease medicines.
We continue to execute on our strategy to maximize the value.
<unk> and.
And expand our pipeline.
The real transaction is a great example, this acquisition represents a significant step forward in our transformation.
Innovative driven high growth biotech company and gives us tremendous potential to help more patients their caregivers and positioned quite premium to market medicines that are truly serve unmet needs.
We made remarkable progress as a company transforming horizon in just a few short years and just the last two years alone our market cap has increased sixfold to approximately $20 billion today.
Horizon is one of the fast growing biotech companies with a top tier growth profile and we expect the biller acquisition to build on the value, we provide patients and to drive long term value for our shareholders.
We will now open the call up for questions.
Go ahead please.
Ladies and gentlemen to ask a question. Please press Star then the number one on your telephone keypad.
First question comes from Annabel <unk> with Stifel.
Hi, guys. Thanks for taking my question.
Great year.
Yes.
I understand that Youre not.
Yeah, providing guidance for us long to be able acquisition.
And right now it doesn't include the $140 million, but as we approach the closing.
Aside from your patient had been reimbursement team do you have any better sense of how much of your sales infrastructure.
You can leverage to cleanse non does that also helping us get into neuro ophthalmologist offices start targeting them.
So in other words, how should we think about SG&A, we already realize that R&D assemblies for good reason.
Maybe you can give us a little bit us.
I guess directional color there and just one quick question on hopefully you've all seen that.
M D.
Yes Defense Act has increased.
And she.
Demand for vaccines in the production of vaccines has that day.
Anything with regard to your plans or timelines.
Yes.
So I'll start with the.
As are we.
We are in daily contact.
With catalyst as you would expect.
Based on.
Regular dialogue, we feel confident that we'll be able to continue to manufacture lots that are planned to the second quarter end and once we get the initial <unk>.
Commission approved by FDA that will be able to meet the demand for.
Existing or patients that have.
Stop treatment as well as new patients.
So.
Continue to feel confident that.
Based on discussions and where things are right now.
We can continue.
Continue to manufacture products.
And it gets us through I think importantly, that's been discussed publicly putting us at.
The high speed model will be coming on in April for catalyst that can significantly increase the ramp up of a.
Vaccine manufacturing, a tailwind and that will take us significant relief all come to us.
Line that we're working on so we do container field.
There is a good plan moving forward realm.
Relative to the commercial infrastructure, certainly things that have added tremendous value with KRYSTEXXA.
We have over 1300 sites of care.
For the past us.
Been certified and 650 of them actually infused compared to last year, so being able to leverage that resources is critical for our players.
And it's also going to be important.
Other groups like patient access managers and reimbursement support.
Folks are added into the fold here.
As I mentioned in our ophthalmic surgeons and physicians in general is an overlap and that's something that we've certainly seen opportunity.
To leverage when we commented on the $140 million that is net of our expected increase in investment in the.
The commercial commercialization of a placement as well as the R&D spend expected for the outlook for this year.
Thanks Annabel next question. Please your next question comes from Jason <unk> with Bank of America.
Oh, Hey, guys. Good morning, Thanks for taking my questions.
I guess two from me just.
Can you guys comment at all how patient enrollment forms have been evolving during the period of shortage. Some of our checks indicated that physicians were still planning to work through their enrollment forms so that they werent kind of inundated once the supply became available. So just kind of curious if you can comment at all on the patient enrollment form trends and then my second question just on.
On <unk> 825, just didn't move up.
Galapagos is drug which works through a similar mechanism being discontinued at some safety concerns.
Drug that's been stopped due to some safety concerns.
How does that alter your thinking regarding the viability of eight to five.
Realizing that the assets.
Diffuse cutaneous has a different end market, but they just continue that program as well. So just kind of curious your thoughts on that thanks sure Jason I'll answer the two.
A question and then hand over to lead us to answer the final question.
Enrollment continues to go well as I mentioned in my remarks weighted.
We have more patient enrollment forms.
In the to the total patients treated in the fourth quarter. So the team continues to execute a zone.
You had also mentioned we've completed the hiring of doubling of the commercial organization.
And field based organizations, so that patient access managers across the board are having regular dialogue with physicians and patients and our sales force continues to execute and drive patient enrollment forms. So that continues to go well.
Definitely moving in the right direction as it will be ready to relaunch successfully once we get FDA approval.
Do you want to take the.
I'd say on day, two five questions.
Yeah, I think so.
Your question was how the Galapagos results change our thinking about <unk> five enough. Although a couple of things about the glop, that's from golf course, which is that they discontinued both for us.
Underwhelming efficacy and those are their words as well.
It was dependent safety signals that seems to be driven by IPF exacerbation.
It plays a little bit into our thinking in a couple of players overall.
Do we think about the opportunity for 85, we don't know whether this is molecule specific or mechanism specific but even if it is mechanism specific blocking auto tuchman at blocking <unk> one are different.
How does Hudson is upstream of alpine high blocking the generation of LTA is actually affecting all different downstream pathways, rather than specifically all tier one blockade theoretically this can play out and safety effects and I'll tell you that there is some evidence already that <unk> blockade is cautious.
In IPF and that clearly wasn't the case with the Galapagos molecule or at least not from 11th I would've wanted. So overall, we continue to be very enthused about 18 five prospects.
And don't think that this meaningfully changes that we will of course watch this space very carefully.
Thanks, Liz virtually next question. Please your next question comes from David <unk> with Piper Sandler.
Thanks, So just on KRYSTEXXA and I apologize if I missed this can you talk about how we should think about the.
The extent to which we're going to see a patient backlog.
As the pandemic eases bearing in mind that you know this.
This is generally.
A high risk population. So that's number one and then secondly on the plays now and.
And you may have talked about this but I just wanted to get.
A sense of is there anything that you think in a general sense that you need to do differently from the L. A in terms of the commercial rollout and commercial support of the product.
Sure. Thanks, David with the players I think they've done a really good job since.
Since the launch in July.
Challenges with immunocompromised patients.
Typical too.
Launch in an animal SD there are some areas that we can just bring added resources such as <unk>.
Patient access managers reimbursement specialists, and importantly sites of care to ensure.
That these patients can be.
Find the right price will be infused and find that access so I think adding incremental resources will definitely make a difference here I think as we continue to move out of COVID-19, more vaccines occur that's going to make it even easier.
Easier to get patients.
These difficult patients under treatment and some of that applies as well to your comment on KRYSTEXXA, where.
Certainly immuno compromised patients are are ones that rheumatologists are concerned about.
I think there was a kind of a.
<unk> effect, where we had great commercial execution in the third and fourth quarters with KRYSTEXXA and the conviction among physicians that greater than 35% that are using every day modulation has led to faster conversion times. So.
Net debt from the time they are.
Ratified a patient at the time of their first infusion.
Accelerated versus what we had seen in the broader population and I think that offset some of the challenges that were driven by COVID-19 and email.
Immunocompromised patients from that second wave being less able or willing to go into a rheumatologist offices less overall visits and more closer in metrology offices.
January caused us about a 690 day delay with that.
That impact.
I think that will continue into the first quarter. We also have the reset that comes from patients having to get reverified that we typically see that seasonal impact.
In the first quarter.
As we look through the full year I think our intermodulation strategy really sets us up as you can see in our guidance of over $500 million, we expect strong.
Well over 20% growth.
I think as we get sequentially from quarters. This year, we're going to see strong.
Increased penetration of our immune modulation strategy and continued growth.
Growth and set up for a path to that $1 billion in peak sales.
Thanks, David next question. Please your next question comes from Ken Cacciatore with Cowen <unk> Company.
Good morning, guys and congratulations I'm, just trying to understand a little bit better the underlying to pizza demand.
<unk> just wondering as you get these enrollment forms are as you're actively treating these patients can you give us a sense of how many of the patients or percentage of the patients are active versus chronic.
Then within the chronic population can you just talk about to the degree in which they are typically incur out of care.
So are you advertising to bring these chronic patients in and how are you reaching them and then second question would be besides immuno ban unless you want to comment on them at events data can you just talk about the two piece of competitive landscape and also vis vis the improvements you're making into piece or seeking to make with the <unk> formulation or are you changing dose.
Is there things that you're trying to do to continue to move the ball forward. Thank you so much.
Sure. So when it comes to acute versus chronic chronic us.
Let's say high single digits as a percentage of overall patient.
Relative to overall as I mentioned, we're seeing strong continued enrollment of patient enrollment forms.
Being submitted to us.
It's up for a strong.
Bolus in population.
Roll on to present trigger both those existing patients, but also generating.
Those new patients so we feel that.
In a good place I think your question was how do we reach.
Gross profit patients a lot of it is generated.
30 patients through various different abstracts.
Presented in the fall and also moving forward in.
Key Congresses, this year and Thats generating a lot of interest in the prescribing community, who treat patients with thyroid eye disease.
That's what ultimately has been generating interest in the chronic population. So we would expect that to continue.
Relative to the competitive landscape certainly what we are seeing with us.
Some off target adverse events.
And it really hasn't been well understood, whether it's related to albumin levels or something specific with the more ubiquitous.
CRM mechanism.
Thyroid eye disease. So we just don't have a good sense of that and it seems like they don't either.
So with.
Other competitive landscape I think from a intellectual property standpoint, we feel confident that.
We've got a good pathway in place and overall, we think we are well positioned to achieve our credit from $3 $5 billion in peak sales. Thanks.
Thanks, Ken first of all next question. Please your next question comes from Chris Schott with Jpmorgan.
Hey, this is a cat arena on for Chris. Thank you for taking our questions and the question is can you talk about the gating of deposits sales in 2021 reflected in your guidance are you anticipating a fairly rapid recovery in revenues. Once you re launch we will take a few months to kind of get to more normalized sales levels and the second one is can you update us on.
Ex U S opportunities for the product in terms of any discussions you've had with regulators.
Typically, Japan, and Europe, but any other geographies as well, but you were looking at.
Yes.
Sure. Thanks for the question.
As we look at gating certainly.
Some potential for revenue in the first quarter, but the amount and timing of that revenue between Q1 and Q2 is still TBD.
Based on FDA approval, but that doesn't impact our full year guidance just the timing between those quarters as we look at the build for the year as I mentioned, we've got more patient enrollment forms in patients treated in the fourth quarter. So we feel confident that we'll be able to get.
Get back at significant growth in getting patients back on treatment.
<unk>.
And with the confidence that we'll be able to achieve our objective this year.
We don't have a full sense of whether that's going to be.
What would your tone or weeks.
Feel confident that as.
As we get through the year, we'll meet our expectations and then the final question I think us around to Pezza International Oh, Yes. So from a geographic perspective, we continue to map out regulatory pathways in prior years ex U S ex Europe markets.
Continued dialog with the regulators.
And upcoming meetings with regulators in areas such as Japan.
And as we map out those clinical programs from regulatory pathways will continue.
Thank you Curt arena or so next question. Please.
Your next question comes from David Steinberg with Jefferies.
Thanks, Steve.
Questions first I was just curious how.
Patients, who had commitments therapy, but then had to get us therapy.
Will be handled.
In some cases it could be two to three months in between.
It does.
And I know that accompany us tight connections with both the patients and.
And the doctors and so for example, if a patient has got two courses of therapy.
And then when us would.
Would they have to restart.
And start with of course number one.
Or just go back and start with course number three even though it's two or three months later than from.
That point of view do you have any sense. It may be too early to tell whether if they have to start all over again, whether the eight courses of therapy would be.
And then.
Regarding your acquisition as they owe us I'm just curious on the manufacturing side I know that Astrazeneca is manufacturing the products once that transaction closes will you stick with AZN or would you give us third party ore.
Moving House, and then and then finally I know Tim you mentioned several times that the paths are greater than the excellent number of patients who run.
Therapy in Q4 could you give us a little more granularity on that could you actually tell us how many pets.
You have in the queue or how many patients who acts in us in Q4. Thanks.
So I'm not going to get into specific numbers or peps or patients.
But.
As you can tell we had a strong fourth quarter, so I think that sets us up well.
For relaunch.
Just kind of work backwards, Dave so with the OLED manufacturing.
Has been manufactured by Astrazeneca and they've done a great job there.
Several years of supply or a pleasant.
So we will evaluate that situation after close and determined what the plans are the development stage medicines have already been transferred.
Two other contract manufacturers so.
We don't see any risk or issues there.
Getting to the question around.
What will happen with patients so I think to start with.
From a safety standpoint, you don't have significant this is a less immunogenic molecule than then.
But if you look at our KRYSTEXXA rituximab that there would be significant anti drug antibodies upon remediation and challenges here.
<unk> got a medicine that.
Is pretty.
Low immunogenicity involved.
That shouldn't create significant safety concerns, but this is all really that day.
Physician discretion level theyre going to make the best.
For their patients what we're hearing from physicians is very.
Get patients back on treatment and finish their expected course of medicine. There are particular instances, where a patient if he is.
As your example of true.
Treatments in.
And the position we want them to.
More that most likely require a product to have to go back to reimbursement and get recertified for that patient.
Steps that were expected to help with that process. So.
We think it's all manageable, but for the most part.
We've heard physicians will pick up where they left off.
Thanks, David.
The next question. Please your next question comes from David Risinger with Morgan Stanley.
Yes, thanks, very much hi, Tim and team congrats on congrats on the tremendous progress.
My question is on inactive.
Or I guess, what youre describing is chronic so some thought leaders.
<unk> expressed.
A lot of enthusiasm about the efficacy of <unk> in chronic patients could you discuss.
Publications on its efficacy in these patients and potential future adoption in this group. Thank you.
Sure David Thanks for the true for.
The comments certainly see the chronic population of chronic liver disease population is an important one.
As I mentioned.
The prevalent population of patients.
Who are five years past the active phase is about 70000 patients.
So we certainly see a real opportunity there.
There has been about 30 patients that have been studied and published in various.
Different abstracts at Congresses, and what we're seeing there and what we're hearing also from physicians as similar levels of dramatic efficacy that we saw in us.
The phase III phase III active population. So I think there is a lot of confidence that the pebble worked well there and certainly were labeled.
Two to be reimbursed in those patients given its indicated.
I don't know if you want to speak to the specific level of efficacy or anything.
To add there.
Yeah, I guess I'd just echo what Tim just said in that you know we've seen consistent reported across you know something like 30 patients in various key theories and case reports, suggesting that across the board, we're seeing clinically meaningful improvement in Proptosis, which is the.
Objective endpoint that was the endpoint in our phase three and phase two clinical trials.
We're pretty encouraged about how this is going to look into this body of evidence just continues to grow including with what I think you're hurting cowens reported remarks, which was the most recent publication at nano, which has something like a five to six millimeter improvement in profit cancer. So overall it appears that there was a consistent body of literature supporting.
Meaningful results from this patient population.
Thanks for that great. Thank you.
First of all it looks like we've got time for one more question. Please okay. Your final question comes from Gary Nachman with BMO capital markets.
Okay. Thanks, Good morning, a couple of months. It has the first where does the net price right now and how will that be trending in 2021, just the pushes and pulls on that.
And then once you start the phase four study in chronic how long to get the data on that to provide to the payers.
Any changes in how youre thinking about the protocol and will that be a quick process from the payers to reimburse us.
And then just one on BD.
The other deal is just about to close but any additional capacity for BD. After that deal closes how far would you stretch the balance sheet. Thank you.
So I'll start with the BVI, we continue to look at potential.
Potential new development stage licensing and acquisition.
More in the range of what we did with Turkey on pads.
Perhaps a more structured deal so that's the kind of low.
Licensing and acquisitions that we're pursuing right now so.
We continue to win with our strong cash flow generation as Paul said, our rapid Delevering, we think we're well positioned to use our cash flow generation to continue to expand our pipeline relative to the net price.
Pat.
Nothing has changed as far as we know obviously patients being treated right now so it's hard to read any trends, we want to see what that looks like once patients start getting back on.
Treatment.
And as far as the base for that product to your day.
Got it.
Our plans right now are to start that in the second quarter.
From what peanuts.
We expect that year end is that the pilot early next year early next year. It's a good data from that and we do think that that will certainly help.
With payers and getting additional but really speeding the time to reimbursement in the chronic population. Thanks.
Thanks, Gary.
Okay. Thank you.
So thanks <unk> that concludes our call. This morning, a replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
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