Q3 2021 Horizon Therapeutics PLC Earnings Call
[music].
Good morning, and thank you for standing by and welcome to the Horizon Therapeutics third quarter 2021 earnings Conference call.
Today's conference call is being recorded I would now like to introduce Ms. Tina Ventura Senior Vice.
Investor Relations. Please go ahead.
Thank you Anthony good morning, everyone and thank you for joining us on.
On the call with me today are Tim Walbert, Chairman, President and Chief Executive Officer, Paul Hoelscher, Executive Vice President Chief Financial Officer.
MS Thompson Executive Vice President Research and development, and Andy Pasternak, Executive Vice President and Chief strategy Officer.
Tim will provide a review of the business, including our third quarter performance. Liz 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 question.
As a reminder, during today's call, we will 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.
Our actual results could differ materially due to a number of factors, including the risk factors and other information outlined in our latest forms 10-K, 10-Q, and any eight Ks filed with the Securities and Exchange Commission.
In 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 and.
In addition on today's conference call non-GAAP financial measures will be used these non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and other filings from today that are available on our investor website at www.
Got horizon Therapeutics dotcom.
I'll now turn the call over to Tim.
Thank you Tina and good morning, everyone. We delivered strong results again this quarter across our business.
To generate record performance for our key growth drivers for Panther and KRYSTEXXA.
It's a peasant relaunch continues to outperform our expectations driven by rapid patient starts strong new patient demand and increasing prescriber base.
As a result, we're increasing our full year 2021 to present net sales guidance to more than $165 billion.
Okay.
KRYSTEXXA generated another strong quarter with new patient growth across rheumatology and nephrology as well as continued acceleration in the use of KRYSTEXXA plus immuno modulation, which is now more than 45% of new patient starts.
We are raising our full year 2021, KRYSTEXXA net sales guidance to more than $550 million.
We also generated strong growth for both victory and persist.
In total our net sales increased 63% year over year, and adjusted EBITDA increased 54% year over year.
Underscoring our position as one of the fastest growing biotech companies.
Given our outperformance we are increasing our full year net sales guidance to $3, one six to $3 to $1 billion and adjusted EBIT guidance to $1 315 to $1 $345 billion.
The mid points represent 45% and 33% year over year growth respectively.
Our strong performance was accompanied by several key achievements.
We initiated our to present randomized clinical trial in chronic fabry disease patients in September.
We announced results from our KRYSTEXXA mirror randomized clinical trial that demonstrated the KRYSTEXXA plus the immuno modulator missile Trixie resulted in a complete response rate of 71% at month six.
More than 30 percentage point improvement compared to KRYSTEXXA plus placebo.
In line with our strategy to expand our pipeline for future growth, we announced five new R&D programs Jordan, Our girl R&D day in September.
We presented new data at multiple medical meetings, adding to the compelling evidence supporting the use of a placement in neuromodulators optical spectrum disorder or animal SBA.
We acquired a new biologic drug product manufacturing facility in Waterford, Ireland to support the continued growth of KRYSTEXXA and replacement as well as our development stage biologics.
From a talent and workplace perspective, we've demonstrated gender and ethnicity pay equity for the second consecutive time based on the pay equity study conducted by <unk>, a leading compensation consultant consulting firm.
We continue to be recognized as the best workplace, receiving 11 workplace recognitions this year, including being the highest ranked company in the biotechnology and pharmaceutical category on Newsweek's inaugural most loved workplace list, which recognizes employee happiness and satisfaction at work.
Before I move on to our third quarter performance.
I wanted to highlight the announcement we made this morning regarding the retirement of our CFO Paul Hoelscher.
Paul's planning to retire in May of 2022 will stay on in an advisory role through May of 2023 to ensure a smooth transition.
Erin Cox, who has been named EVP finance and it's been my Chief of staff and head of corporate development for the last four years will be taking on the CFO role.
There's been a tremendous partner to me over the last seven years and I'm very grateful for his leadership and dedication to horizon.
I'm equally pleased to name Aaron to the role of CFO.
And has a deep knowledge of the business and he has been a leader in many of our major strategic efforts.
At our capital market activities and has a strong financial background.
I am confident that Erin along with our experienced financial leadership team will continue to drive our long term strategy of horizon.
Moving on to our third quarter results beginning with the peso.
Third quarter to present net sales were $616 million with year over year growth of 115%.
With a year to date net sales of $1 72.
As it became our first medicine to generate $1 billion in annual net sales.
We continued our strong execution on the relaunch that followed the government mandated first quarter supply disruption.
Since then we have helped patients whose treatment was disrupted resume their treatment. We successfully converted new patients added during the destruction and we continue to see strong new patient demand for <unk>.
We attribute this strong growth for the fact that we have continued to add new prescribers and further penetrate our existing prescriber base.
Turning to penetration among ophthalmology sub specialist prescribing to present, such as occupied surgeons or ophthalmic surgeons and strabismus specialists.
We also continue to continue to expand our reach ophthalmologists and endocrinologists referred to TD specials upon diagnosis.
We also continue to significantly invest in direct to consumer marketing initiatives, including our branded and unbranded TV campaigns, which had been effectively increasing awareness about the present and E D.
Our goal for these national campaigns is to increase awareness of <unk> and accelerate the speed to diagnosis and treatment of PDP.
We're also starting to proactively engage physicians on the use of the present and chronic patients.
As we noted last quarter, we now have six publications studying the successful experience with the peso treatment for totaling more than 50, chronic <unk> patients surpassing the number to peso acute patient studied in the phase III clinical trial.
The commercial team is leveraging these new publications to educate physicians about the efficacy of <unk> in chronic patients with the goal to expand the use beyond the acute patient population.
We remain very enthusiastic about the prospects for competitive help more patients address the serious debilitating in sight threatening aspects of T D.
Given the third quarter's better than expected results and continued strong new patient demand, we increased our full year to present net sales guidance to more than $1 65 billion, which is a near doubling of net sales in our second year of launch despite the supply disruption and other limitations from COVID-19.
<unk>.
Our guidance continues to assume that the third quarter is the highest net sales quarter for present in 2021.
This is a function of three factors first disruptive patients who've resumed treatment beginning in the second quarter.
Second patients with patient enrollment forms or perhaps that were generated in the fourth quarter of 2020 in the first quarter of 2021, who started treatment after supply resumed in April.
And third new patients who started treatment in the second and third quarters.
Our increased full year guidance positions us for.
Year over year growth of more than 60% in the fourth quarter.
We estimate that the vast majority of fourth quarter growth will be driven by perhaps generated after re initiation of supply in April.
We continue to see significant opportunity ahead for <unk>, both in the acute patient population as well as in the untapped chronic population.
We remain well on track for the peak global net sales estimate of more than $3 5 billion.
KRYSTEXXA delivered another quarter of strong performance generating net sales of $158 million.
As a result, we've increased our 2021 net sales guidance to more than $550 million.
On a year over year growth of more than 35%.
We're very pleased to announce topline data from our mirror randomized controlled trial last week demonstrated that 71% of patients randomized to receive KRYSTEXXA plus methotrexate achieved a complete response compared to 40% response rate for patients randomized to receive KRYSTEXXA plus placebo.
Our clinical team is working to complete the analysis of the results to submit a supplemental biologics license application or S. BLA in the first quarter of next year.
We anticipate a standard 10 month review.
Approval, but allow our commercial team to proactively promote KRYSTEXXA plus methotrexate to physicians.
In the meantime, our medical affairs and clinical teams are working to present, the mirror trial results and additional analysis from the trial medical Congresses next year will.
We will be engaging with key opinion leaders on the data as well.
The mirror results are culmination of significant investment we have made in immuno modulation for the last several years based on our long held belief in its potential to increase the complete response rate of KRYSTEXXA, which mirror has now substantiated.
Immuno modulation as a core element of our credit strategy to maximize the value of KRYSTEXXA.
It allows more patients with uncontrolled gout to benefit from the medicine. The only biologic approved for treatment of this debilitating disease.
We have been seeing increased adoption of the approach and estimate that KRYSTEXXA immuno modulation is now being used for more than 45% of new patients.
KRYSTEXXA team is continuing to drive strong growth and adoption, but both rheumatologists and nephrologists.
We're seeing results of the growth of our prescriber base by October.
More rheumatologists are prescribed KRYSTEXXA this year compared to the total number of prescribers and all of 2020.
And nephrology, we significantly grew our prescriber base compared to 2022.
To date exceeding the total full year 2020 prescribers by 30%.
With a pleasant our accumulative monoclonal antibody b cell Depleter, we generated strong third quarter net sales of $18 7 million.
Given the timing of a plasma approval last year almost the height of the pandemic.
We're executing a full relaunch of the medicine, leveraging the patient centric approach, we use for both to present and for KRYSTEXXA.
We made significant progress on that front, we completed the expansion of our commercial team in the third quarter.
Our new team with deep neuro immunology experience relationships and market knowledge is now fully on boarded and started meeting with key physician targets early in the fourth quarter.
In less than six months, we developed and launched new brand campaign based on key opinion leader feedback and market research. Our goal here is to drive awareness about the personal animosity reduce the time to diagnosis and <unk>.
Highlight the urgent need for treatment.
We've put a robust commercial structure in place designed to support the complex aspects of the applause and the patient journey.
We've also bolstered our site of care and reimbursement support.
From receiving positive feedback from both physicians and sites of care.
A critical part of our strategy is to drive physician and patient preference for replacement based on its differentiated mechanism mechanism of action strong clinical data and clear patient benefits, which we're doing through our investment in medical and scientific engagement to develop our scientific leadership position in <unk>.
Which liz will discuss in more detail shortly.
It takes time to effectively launch and infused rare disease medicine, and educate stakeholders about the new medicine.
We're off to a good start with a pleasant and expect to see the benefits of our new commercial organization and investments as we head into the new year I will now turn the call over to Liz.
Thank you, Tim and good morning, everyone.
Third quarter of 2021 marked another quarter of great progress in R&D and.
In addition to advancing our existing pipeline programs, we significantly expanded our pipeline announcing the addition of five new programs during our inaugural R&D day in September.
All told our pipeline today has the potential for 10, new medicine or new indication approvals in the second half of the decade.
The R&D day also gave us the opportunity to showcase our talented and experienced team. It was a pleasure to be able to talk more about our R&D strategy in particular, how we're expanding our pipeline with early to late stage program for sustainable growth in three ways.
By acquiring and developing medicines for indications that address unmet needs in rare autoimmune and severe inflammatory diseases, particularly those in our therapeutic areas of focus.
By leveraging our internal research as well as research based partnerships and collaborations to drive earlier stage innovation.
Third by maximizing the range of potential diseases, our pipeline molecules can impact.
Look forward to continuing opportunities to discuss our progress in each of these areas.
Sure.
Today, I'm going to recap some of our key programs similar to recent calls.
Start with docs still a mab or HCN 7734.
<unk> is the first and only plasmacytoid dendritic cell or PDC depleter in clinical development PDC.
PDC is are found in high concentrations in disease tissues of individuals with certain autoimmune and inflammatory diseases.
And this results in a significant inflammation and tissue damage, which are the hallmarks of autoimmune disease.
In addition to our ongoing phase II trial evaluating <unk> for the treatment of systemic lupus erythematosus, we announced in September for new indications, we are exploring to our lupus related discoid lupus erythematosus and lupus nephritis. The other two are alopecia areata and dramatic.
ESI this.
This good lupus is a scar fine disease that can be significantly just figuring. It can also result in hair loss.
One of the most important manifestations in lupus is the involvement of the kidney pdc's can promote kidney damage and are associated with more advanced disease, which is why we're pursuing lupus nephritis.
Next as alopecia Areata.
Patients with this disease for which there are no FDA approved therapies experienced baldness to varying degrees alopecia reata can involve the entire scalp or even the entire body.
And finally, we will be studying that still enough for donato myositis, a rare condition that manifest as severe skin rash and disabling muscle weakness.
We expect to begin phase III trials for these four new indications in 2022.
Moving to desert, Alabama, our ACN 49, 'twenty, our CD 40 ligand antagonist designed to block a central pathway involved in many autoimmune and inflammatory diseases.
<unk> is currently in phase III trials for three indications shogun syndrome, rheumatoid arthritis, and kidney transplant rejection.
During the R&D day, we announced a new indication for <unk> and focal segmental glomerular sclerosis or <unk>.
Progressive kidney disease with high unmet need and no FDA approved treatments.
We expect to begin a phase II trial for <unk> in 2022 as well.
HCN 85, our oral selective <unk> antagonist has shown early signs of clinical impact in fibrotic disease, we expect to initiate two pivotal phase <unk> trials for <unk> by the end of this year.
One in diffuse cutaneous systemic sclerosis, and the other in idiopathic pulmonary fibrosis.
For both of these disease States, we work closely with leading experts to incorporate learnings from prior trials to optimize trial outcomes.
Moving to a place now our anti CD 19, humanized monoclonal antibody were currently enrolling patients in two phase III randomized controlled trials, one in myasthenia gravis or Mg.
And the other in <unk> related disease.
MG is a chronic rare autoimmune neuromuscular disorder that affects the voluntary muscles of the body, especially those that control the eyes mouth throat and limbs.
<unk> related disease refers to a group of disorders marked by tumor like swelling and fibrosis have affected organs, such as the pancreas salivary gland and kidneys.
We expect data for both trials in 2023, however, because the <unk> related disease trial is event driven readout timing may extend beyond 2023.
Our prisoners indicated for Neuromodulators, <unk>, optica spectrum disorder, or <unk>, a rare and devastating neuro inflammatory autoimmune disease, the tax the optic nerve spinal cord and brainstem.
And I'm always see as severe and relapsing and because of tax can result in blindness paralysis and other disabilities, often permanent it is critical to prevent relapses.
We're rapidly building a base of compelling data to support the efficacy and safety profile of a place now.
This growing body of evidence is a key component of our clinical strategy to establish scientific leadership in an M. OSB.
We shared data this quarter at key neurology congresses, including a presentation of a new data analysis from our phase III animal OSD clinical trial.
The results demonstrated the correlation of B cell depletion and improve outcomes in patients receiving up listener showing that the greater the b cell depletion the better the patient outcome, providing additional evidence of the central role of the cells, playing an M O S T.
At another neurology conference, we presented data showing that <unk> may provide durable efficacy and a favorable safety profile for blacks with Nm, OSD, who often have earlier onset of the disease with more severe relapses.
Finally, a new analysis of data from the open label portion of the Phase III trial was published in the multiple sclerosis journal that highlighted a positive sustained effect on attack risk in people with NMFC treated with a pleasant it for four or more years.
For <unk>, we began enrolling patients during the third quarter and the phase four placebo controlled trial evaluating <unk> for use in patients with chronic thyroid eye disease.
T D a serious progressive and potentially vision threatening rare autoimmune disease begins within acute phase during which inflammatory signs and symptoms such as eye pain, swelling, proptosis or eye, bulging and diplopia or double vision progress overtime.
The acute stage, followed by chronic phase in which inflammation is no longer present, whereas markedly diminished.
However, significant signs and symptoms may remain and continue to negatively impact patients quality of life.
As a reminder to pass other broad indication for all <unk> patients and physicians can prescribe to pause it for chronic patients today.
Our objective for the chronic T. D trial is to generate clinical data to better inform payers and physicians about the efficacy and safety of <unk> in people with chronic T. D. We expect topline results in the second half of 2022.
We also continue to advance our chip has our subcutaneous administration program as well as our clinical program for <unk> in Japan.
We've submitted our trial design to the Japanese Pharmaceuticals, and medical devices agency and anticipate a trial start in the first half of 2022.
In addition, long term data from our <unk> optic X open label extension trial were recently published in Ophthalmology. It showed high rates of maintained response for Proptosis Caf and diplopia with no new safety signals.
And as a reminder, the optic X patients had longer disease duration than those in the optic phase III clinical trial.
We also shared the longer term follow up results from optic at the annual meeting of the American Thyroid Association in October that reinforced previously reported data showing a sustained response in the majority of people treated with the peso.
We plan to continue to share to present data at upcoming medical meetings over the coming months.
And finally for KRYSTEXXA, we were very pleased to have recently announced the positive results of our mirror randomized controlled trial evaluating immuno modulation with methotrexate.
The trial, which met its primary endpoint at month six demonstrated that 71% of patients who were randomized to receive KRYSTEXXA plus methotrexate achieved a complete response compared with 40% of patients randomized to receive KRYSTEXXA plus placebo.
The results of the KRYSTEXXA plus placebo arm was very similar to the 42% response rate previously demonstrated with KRYSTEXXA mono therapy in the phase III program, a consistency that helps support the robustness of the trial results the.
The addition of methotrexate resulted in a 31 percentage point improvement in the complete response rate over monotherapy.
It seems such a substantial improvement to our response rate is rare and it reinforces the positive results of KRYSTEXXA plus immuno modulation, we've seen from multiple published case series as well as our own open label trial evaluating KRYSTEXXA with methotrexate.
This important milestone is the culmination of significant investment over the last several years.
With the goal of enabling more people living with uncontrolled gout to benefit from KRYSTEXXA.
And we continue to explore ways to improve outcomes and identify new paths for treatment with KRYSTEXXA as exemplified by our shorter infusion duration monthly dosing and re treatment trials.
Beyond the substantial efforts. We also continue to invest in developing new approaches that target the underlying cause of gout, such as our arrowhead and hema share preclinical programs.
As Tim mentioned, we expect to submit an S. BLA application in the first quarter of 2022 to incorporate the mirror trial data and to the prescribing information and we expect a standard 10 month review.
Finally, we will be announcing the results of the KRYSTEXXA protect trial at this week's American society of Nephrology kidney week.
This trial evaluating KRYSTEXXA in the management of patients with uncontrolled gout, who have undergone kidney transplants.
We look forward to providing additional details on our key pipeline programs as well as updating you on our continued progress in the coming months I will now turn the call over to Paul.
Thanks Liz.
My comments. This morning will primarily focus on our non-GAAP results unless otherwise noted.
Third quarter net sales were 1.037 billion.
Representing year over year growth of 63% driven by the record performances of our key growth drivers the peso and KRYSTEXXA as well as the strong performance of our other rare disease medicines.
Our orphan segment generated net sales of $951 million a year over year increase of 78% and representing 92% of total company third quarter net sales.
Orphan segment operating income was $476 million.
Net sales for the inflammation segment were $86 million with segment operating income of $34 million.
We continue to focus on maximizing the cash flow generated from this segment to reinvest in our growth drivers and our expanding pipeline.
Our non-GAAP third quarter gross profit ratio was 85% of net sales.
Non-GAAP operating expenses were $375 million. This included non-GAAP R&D expense of $74 million or 7% of sales versus 4% of sales in the third quarter of 2020.
Non-GAAP SG&A expense was $301 million.
Third quarter, adjusted EBITDA was $509 million.
Representing year over year growth of 54%.
Non-GAAP net income non-GAAP income tax expense for the third quarter was $74 million.
As we've seen in prior years, there can be variability in our tax rate across quarters.
We continue to expect that the tax rate in the fourth quarter to be in the mid teens to bring our full year tax rate in line with our projected low double digit rate.
Non-GAAP net income for the quarter was $414 million and non-GAAP diluted earnings per share were $1 75.
The weighted average shares outstanding used to calculate third quarter 2021, non-GAAP diluted EPS were 236 million shares.
Third quarter non-GAAP operating cash flow was $432 million.
As of September 30 cash.
Cash and cash equivalents were $1 1 billion.
Given us significant flexibility to invest in our growing operations and to further expand our pipeline, including additional strategic transactions.
The total principal amount of our debt is $2 6 billion with the earliest maturity in 2026.
As of September 30, our gross debt to last 12 months adjusted EBITDA leverage ratio was 2.0 times.
Presented achievement of our gross leverage target of two times well ahead of our year end 2021 goal.
Turning now to our guidance. This morning, we announced that we are increasing our full year 2021, net sales guidance range to $3. One six to $3. Two 1 billion from 3.0 to five to $3 <unk> 5 billion.
This reflects our strong performance across all of our business units in the third quarter as well as our increased full year 2021, net sales guidance for <unk> and KRYSTEXXA.
Our updated 2021 net sales guidance is for more than one $6 billion to $5 billion.
Representing year over year growth of more than 98%.
As Tim noted, we continue to expect a third quarter to be the highest net sales quarter of 2021, four it's a puzzle.
For KRYSTEXXA, our updated 2021 full year net sales guidance is for more than $550 million representing year over year growth of more than 35%.
In our inflammation business unit, we expect less than $5 billion of do axis fourth quarter net sales in our 2021 guidance given the at risk generic launch that occurred in the third quarter.
We are also increasing our adjusted EBITDA guidance range from 121315 to $1 $3 5 billion from $1 two six to $1 3 billion.
Yes.
We expect our non-GAAP gross profit ratio for the full year to be approximately 87%.
Our adjusted our updated adjusted EBITDA guidance assumes an increase in non-GAAP operating expenses in the fourth quarter driven by additional SG&A expense to support the <unk> launch and continued investment into puzzle.
We expect full year 2021, R&D expense to approach double digits as a percentage of net sales.
We continue to expect non-GAAP net interest expense for the full year to be approximately $75 million.
Okay.
We continue to expect a full year non-GAAP tax rate in the low double digits, we estimate that our cash tax rate will be in the mid to high single digits in 2021.
As always our tax rate could change significantly as a result of any acquisitions or divestitures, we may make or any changes in tax laws.
We expect our full year 2021 weighted average diluted share count to be approximately 236 million shares.
With that I'll turn it over to temper his concluding remarks, thank you Paul.
Third quarter was another excellent quarter marked by.
Strong commercial execution and continued progress on our strategy and multiple achievements.
We generated record financial results driven.
Dreamboat to present KRYSTEXXA as well as robust performance for our other rare disease medicines, and we see continued strong underlying demand.
We increased guidance for full year to pass on KRYSTEXXA net sales total company net sales and adjusted EBITDA.
We continue to expand our pipeline with the addition of five new phase III programs.
We announced positive topline results for our KRYSTEXXA mirror immuno modulation trial, we will be submitting an SBA related to the FDA in the first quarter to up the KRYSTEXXA label.
We completed the commercial expansion of a pleasant and.
<unk> launched it early this quarter.
We continued to demonstrate the value we place on talent, demonstrating gender and ethnicity pay equity once again, we're assuming multiple additional workplace awards.
Horizon remains one of the fastest growth and transformation stories in biotech and we continued to generate significant value not only for our shareholders, but also for the thousands of patients living with rare autoimmune and severe inflammatory diseases.
We're excited about horizon's future and remain focused on realizing the tremendous opportunity we see for the company with that we'll now open up the call for questions Tim Anthony.
Please open up the call.
Okay.
And just a reminder to ask a question you will need to press star one on your telephone. Thank you withdraw your question press the pound key.
The first question comes from the line of Chris <unk> from Jpmorgan. Your line is now open.
Hey, guys I appreciate the questions I just have two on <unk>.
Maybe first talk about I think what's implied is about a $550 million fourth quarter number for the drug is that a decent run rate to build off of as we think out to 2022 or are there still some sales in the fourth quarter from warehoused patients that came in during the supply disruption.
Let me just ask my second one upfront here also went to president just chronic use what percentage of <unk> sales are now in the setting and are you seeing more uptake in chronic with some of the recent data publications or do you think the phase four study is really what's going to be needed here to get traction in that setting. Thanks. So much.
Sure Chris.
As we look at the disruptive patients and how things have sequence they continue to come down.
The vast majority of patients in the fourth quarter reached six we expect will have been generated post supply.
And as we look at 2022, I guess the way to look at it is we've had four quarters of revenue and three quarters in 2021.
A rare dynamic given the supply disruption.
And the best way that we think to look at growth in 'twenty. Two is on a full year basis, we look at it year over year and as we looked at consensus estimates of mid 30% growth, we think thats, a pretty reasonable view in context of that dynamic.
Looking at the chronic population, we see that now increasing to low double digits as a percent of overall patients. So as I mentioned in my remarks, we have 50 patients of data across a number of <unk>.
<unk> kind of investigator initiated studies in our sales force has begun.
With case studies and presenting that data throughout.
The last several weeks so we expect to continue to drive uptake in the chronic patient population.
Thanks, Chris.
The next question please.
And your next question comes from the line of Jason <unk> from Bofa. Your line is now open.
Oh, Hey, guys. Thanks for taking my questions.
Just two for me.
Tim in the past you guys just talked about.
Some doctors, who are low prescribers prescribe something like one or two pads as scripts curious your commentary earlier.
These low prescribers, where you've gotten into have you have you had success pushing the low prescribers to becoming more mid to high higher desktop type of prescriber and then just on the mirror trial outcome I realize that we'll get more detailed data at a future medical meeting, but just can you comment directionally, what we saw with the infusion reaction profile at that.
Look similar to what was seen in the investigator trials and was an improvement relative to monotherapy.
So first on the mirror.
We expect to publish those results those results in.
Everything that we said we've seen to date is fully in line with expectations.
And as we publish that data, we will we'll share more and more specific details.
So.
Looking then towards <unk>.
We continue to make progress across the prescriber base.
First phase of launches always getting to those prescribers, who are regularly seeing those patients interacting with those patients I gotcha plastic surgeons neuro ophthalmic surgeons and strabismus specialists in and as you move through the launch, it's expanding that to ophthalmologists and endocrinologists and overlaying that with.
Our direct to consumer campaigns. So all of that continues to progress and that's evidenced in the results. We saw in the quarter Alright. Thanks, Jason Anthony next question. Please.
And your next question comes from the line of David <unk> from Piper Sandler Your line is now open.
Thanks, So one on KRYSTEXXA, one unemployment on KRYSTEXXA.
So is it your expectation that you will be reaching a significant audience of physicians.
<unk>, who are new to the product.
Or who are on <unk>.
It's about using it now that you have the mirror data in hand, just talk about how you think about the expansion of the physician audience.
So please now can you talk about what's driving new starts are switching from rituximab with switching away from older Immunosuppressants or de novo patients or some combination thereof.
And in your conversations with Kols and practitioners in general where do you ultimately think the bulk of your business is going to be coming from at least in the near term on the placement.
Sure.
With KRYSTEXXA, that's a really good point when we look at the approach with immune modulation that is provided to real opportunities. One is to go back to those physicians, who didn't have a great experience with KRYSTEXXA as monotherapy in <unk>.
Went away from the medicine.
Many years ago. So that certainly has been an opportunity to go back and give those physicians have reason to believe that they may see different results with KRYSTEXXA plus methotrexate as evidenced in the mirror trial.
But also it's evidenced when you when you have results that are 30 plus.
Points better so 70 plus percent response rates like we've seen in mirror and replicated across the recipe trial with <unk> and the other studies that have been represented similar response rates.
Getting those de novo patients to physicians, who haven't had a lot of experience.
Much different approach, especially as as you see infusion reactions and number of the other issues that we faced early in the launch 11 years ago arent issues. Today. So I think we expect to see growth.
And those new physicians new patients, but also continue to go back to those physicians, who didn't have a great initial experience in combination thats, what drove that 46% year over year growth. We saw in the third quarter and and also raising our guidance for the rest of the year.
Relative to <unk>.
We see about half those patients currently on Rituximab.
The base of patients with animal SD as we look at our.
New sales force that's out there, we're continuing to see and we have generated data that we've talked about last quarter being presented on patients who switched from rituximab.
We see the majority of patients switching from Rituximab, but also to novo patients coming onto the medicine. So I still think commiserate with Rituximab is used in the market, it's a little over half the market and we're seeing that be the similar conversion rate.
Two our place in the.
And as we ramp up our commercial effort. This quarter, we expect to be able to really start making a difference. We've got four year data published was also talked about.
Impressive data in the black population. So we think all of that together with our expanded commercial effort positions us really well great. Thanks, David Anthony next question. Please.
The next question comes from the line of Annabel <unk> from Stifel. Your line is now open.
Hi, Thanks for taking my questions I, just wanted to get a little granular on both of those for Matt. So maybe you can talk about.
Or do you feel that the market dynamics shrimp Krishna are meaningfully different than your other franchises and I guess, what gets you comfortable that you can repeat.
The same successes that you have today and KRYSTEXXA and <unk> given that it's a market that does have other therapies and I guess, what does that mean for.
Other indications like <unk> that does have a number of programs and then.
Thanks again.
No.
25%.
Yes.
Patients on immune modulation.
Are those physicians that arent using immuno modulation.
Is there some other rate limiting factor for those specific patients because it seems like there is a.
A decent amount of data already not just with methotrexate, but with other immune modulators.
That could've gotten them over that time, so maybe you can just talk about.
What other rate limiting factors there might be in getting patients to.
Prescribed.
Turning to Bill and I think it really comes down to the whole premise of doing the mirrored placebo controlled trial and that is.
For submitting that getting that included within our label and giving us the ability to actively promote KRYSTEXXA plus immuno modulation right. Now we are getting the word out via Congresses, and medical education and publication of the various studies that have been out there in the mirror data hopefully will be published.
As we get into next year. So it's really about the ability to drive that uptake versus it naturally being learned in scientific communication.
And as we get that data out.
Hopefully approved towards the end of next year that will put us in a position to actively drive patients onto the intermodulation strategy that is supported now by the mirror results look.
Looking at her please note.
I kind of look at it in a very similar way is that with <unk> with KRYSTEXXA. We are competing with standard of care and standard of care in the case of his surgery that was seen as the best option at the time until a new advanced was brought forward and when we see a pleasant and a very similar way Rituximab was the best agent available.
At the time with.
Much else available in a population where flares in patients that can get sight threatening complications.
Just don't have the option. So we see a place as competing with standard of care in this case.
Rituximab.
And we will approach it just as we have with our other medicines, helping them understand the long term data the differentiated benefits of humanized monoclonal antibody CD 19 benefits versus <unk> 20, and how we see mechanistically that works better within a more steady. So we think we've got the data and an improvement from standard of care.
It just happens to be a medicine in this case versus surgery or really not treating patients in the case of KRYSTEXXA. Thank.
Thanks, Annabel Anthony next question please.
And your next question comes from the line of Ken Cacciatore from Cowen and company. Your line is now open.
Hi, good morning team congratulations on all the progress just wondering Tim now you've had to pizza, obviously in the market for a sufficient amount of time to understand any kind of changing patient dynamics. So just wondering as you continue to push DTC are you moving at all into more mild patients I know mild is still very bad for this patient population.
Kind of anything generally surprising to you obviously that performed incredibly well and they know we're driving into chronic a bit more but maybe any context around differences from launch to what youre seeing now and then Paul Congratulations and I'll ask you a question, maybe Tim will chime in as well, obviously, there's going to be potentially a lot of bottom line leverage as we go into next.
Each year as we start Annualizing off of these really nice teaser on KRYSTEXXA and upwards. The trends can you just speak to how we should be thinking about the potential leverage as we get below the top line into next year. Thanks, So much.
Thanks, a lot Tim.
We look at that.
Dynamics and how they've evolved let's say the biggest evolution has been the use in chronic patients. We're not seeing them go back to mild patients. We see that 15 to 20000 moderate to severe patients coming into the market and Thats 70000 population of chronic patients to be the appropriate use of the peso.
We don't have data nor do we think the peso is a good choice and mild patients.
Once they get to <unk>.
<unk> getting pain, and diplopia or double vision Thats, what we think to present becomes.
Treatment for those patients. So we're solely focused on the moderate to severe population of acute patients and driving that uptick in the chronic population.
So thats the evolution, we've seen in Paul do you want us to do you want to speak to leverage.
So.
We're not going to give specific guidance on 'twenty two until after the fourth quarter on our call in March but as we've said in the past over the coming years, we do expect margin expansion and we do think that the EBITDA margin will expand as we get leverage on the SG&A spend that should more than offset the significant increase that we have that were.
And our investment in R&D as well as our investment in our international expansion ahead of really generating significant revenue there.
Paul next question please Anthony.
And your next question comes from the line of your team So Neil from Guggenheim. Your line is now open.
Hey, guys. Thank you for taking my question and congrats on very good execution question on at protects that could you give a little bit color on the contribution you're seeing from nephrology, what she's doing metallurgy segment and then any thoughts you know obviously you are in the 40% range now but to come to us what the peak might be.
And over what time period. Thank you.
Okay.
Thanks for the team so when we look at the KRYSTEXXA as had mentioned looking at through three quarters.
We had 30% more than all of the prescribers in 2020 and nephrology versus exceed.
Exceeding the total number for rheumatology three quarters versus 2020.
Nephrology, albeit off a small base is growing even faster than rheumatology.
And overall contribution again we.
Can't get to that data because a lot of these patients from nephrology or actually infused in similar places as rheumatology patients, but we're seeing strong growth in both of those segments, but off a smaller base prescribers, increasing more rapidly on the prologis side.
Immuno modulation as we said it is greater than 45%.
We don't see a 100% is a reasonable but getting to that 70%, 80% range as we think pretty reasonable and the ability to get there will be accelerated with getting approval of inclusion of this data in the label for KRYSTEXXA, which we expect at yearend next year great. Thanks.
Next question please Anthony.
And your next question comes from the line of <unk> from Jefferies. Your line is now open.
Thanks, so much.
Given the amount of case study reports you've seen in your assumptions is the chronic study is your base case that the chronic EDI data will look very similar to the acute population on Proptosis response, and Additionally, what was the dollar amount of supply disrupt patient restarts that contributed to Q3 sales and what was the core.
<unk> over quarter.
Demand growth for deposit.
These patients in stock thank you.
So on specific we're not getting into specific dollar contribution.
In the third quarter that disrupted patients continued to sequence through and we expect the vast majority of patients in the fourth quarter to be those generated post the supply disruption with.
With the chronic readout.
And expectations around it.
We look at it as a similar design in population that is being Houston today and would expect results in a similar range.
The cash next question for example.
And your next question comes from the line of Gary Nachman from.
BMO capital markets. Your line is now open.
Hey, guys good morning.
First one.
Just talk a bit more about your DTC efforts and what sort of impact you could see from that finding these patients and improving diagnosis.
You might step that up going into next year, especially as you want to expand more into chronic.
And then in terms of your ex U S efforts.
I think Paul just touched on it before.
For <unk>.
Outside of Japan.
Where else we look outside the U S and maybe also just talk about the timeline.
Doing the study in Japan, when it could reach the market.
And then for <unk>, just talk about what you're doing in the EU to prepare for the launch there what the status is.
Sure Thanks, Gary with a pleasant and Europe, we've hired our leadership team.
Warrant across on a pan European basis, as well as key reimbursement.
Also several of the commercial leaders.
We expect to be in place to launch beginning in Germany post approval, which is still expected in the first quarter of next year. So we are continuing to ramp up our efforts. There also looking to <unk>.
Preparing ramp up efforts in certain countries in.
In Latin America with <unk>.
We continue to prepare our study and working with the Japanese authorities.
And look to finalize that and got a clinical program beginning enrollment over the next few quarters, which will then set and timeline.
A few years out to get those results and get through the regulatory process.
When when it looks to DTC, we have ramped up those efforts substantially over the second half of 2021.
And the real goal there has been too.
Get patients whether that is in one of our three up to one is targeted at craves patients to educate them that you may get thyroid eye disease, and thats more just to educate patients.
If you look at our third eye disease, an unbranded campaign and the <unk>.
Come to pass.
DTC campaign, both of those are geared towards helping patients get to our website and look to find them.
Specialists, who treat thyroid eye disease, so educating the symptoms and we've seen a significant increase in the number of patients going to the web site looking for a specialist finder and we hear stories from our field and other areas of significant increase in questions being asked as a result of these commercials. So.
The ROI and all the different metrics that we look at are performing exceedingly well and we continue to expect to use that as a resource moving into next year.
Great. Thanks, Gary Anthony next question. Please.
And your next question comes from the line of Mike <unk> from Morgan Stanley. Your line is now open.
Hey, guys. Thanks for taking the question just two for me.
Maybe a follow up on KRYSTEXXA and Tim maybe you could just talk about some of the trends that youre seeing more recently in patient enrollment forms.
Paired to what you saw earlier in the year.
And then just on KRYSTEXXA in terms of the mirror data and what impact that could have on utilization is the way to think about it that presentation of the data early next year to drive some of that increased utilization or is it really more the label expansion that allows you to promote correctly. Thanks.
Sure.
Relative to pet growth, we've been really impressed with the growth we saw in the third quarter, especially in context of.
The the Delta variant in the.
Impact that had on the markets and the fact that we're able to still grow through that and we continue to expect to see strong pet growth throughout the fourth quarter and into next year.
With the mirror data as I said, it's greater than 45%.
We plan on submitting that data to various congresses, which.
It would probably be presented mid year based on our early estimates.
And I think that will continue to raise awareness and we will have an impact but optimal ability for us to proactively promote will be once it's included in the label, which is expected by year end next year, great. Thanks, Mike and Anthony <unk> got time for one more question. Please.
Okay and our last question comes from the line of <unk> <unk> from Citibank. Your line is now open.
Hi, good morning.
Quick question.
The first one is assuming we have positive data.
Chronic care trial can you discuss your expectations around payer acceptance dosing and compliance to the drug.
And my second one if I may ask.
To comment on your retirement or was it driven by personal reason now to question. Another question. Thank you.
Paul do you want to comment first.
Sure.
<unk> personal reasons is as we noted I am going to stay on as CFO for the six months and then stay involved as an advisor for the company another year after that and that's really to support in my life for a barrier to step back from day to day full time employment.
Thanks, Paul.
Relative to the question around chronic data and when we expect to get that data in the second half of the year. We think the key benefit there will be certainly to help from a reimbursement standpoint.
Less about access and more about speeding the time to patients getting infused with their medicine.
We don't think it'll have an impact on dosing our compliance we're seeing similar dosing and compliance everyone's getting the six full eight treatments over six months compliance is well north of 90% in both acute and chronic patients.
We think the main impact will be to help to accelerate reimbursement.
Great. Thanks, Yvonne and Anthony. Thank you that concludes our call. This morning, a replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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