Q4 2021 Global Blood Therapeutics Inc Earnings Call
Greetings and welcome to the global Blood Therapeutics fourth quarter and full year 2021 conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the prepared remarks, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being record.
I would now like to turn the call over to Steven Embargoed. Please go ahead.
Thank you and welcome to Gbt's conference call to discuss the company's financial results for the fourth quarter and full year 2021 and should provide a business update I'm, Steve <unk> head of communications and Investor Relations with me today on the call are Dr. Ted Love, our President and CEO , Jeff Farrow Chief.
Financial Officer.
David Johnson or D J, Chief commercial officer and.
And Dr. Kim Smith, Willie Executive Vice President and head of R&D.
During todays call Todd will give an update on our progress in Q4 and the full year, Jeff will review our financial results P. J, we'll give an update on the osprey to launch camel.
Ken will discuss our pipeline and then Ted will give a few closing remarks before we open the line for questions early.
Earlier. This afternoon, we issued a press release announcing Gbt's financial results and business progress for the fourth quarter and full year ended December 31 2021.
Before we begin I would like to remind you that certain statements. We make on this call that are not historical facts may be forward looking statements that are subject to risks and uncertainties infill.
Information concerning factors that could cause actual results to differ materially from those expressed or implied by such forward. Looking statements are contained in our SEC filings, including but not limited to our most recent annual report.
Report on Form 10-K .
As well as in today's press release.
Copies of our SEC filings and press releases can be obtained from the investors page of our company website at GBT Dot com.
The forward looking statements made on this call are only as of the time. They are made and you should not place undue reliance on such statements.
Future events or simply the passage of time may cause our beliefs to change and we disclaim any obligation to update any forward looking statements other than as required by law.
Now I'll turn the call over to Ted.
Thank you Steven and good afternoon, everyone.
2021 was a year of significant advancement in growth for GPT as we made progress on our goal to transform the lives of patients with sickle cell disease.
More health care providers and patients.
We're aware of a Friday and using it to address the root cause of this terrible disease.
And in December our broad label got even broader.
It now covers patients as you.
Young as four years out.
Outside the U S. We advanced our regulatory afterwards and launch preparations in Europe .
Gaining valuable experience through our early access program.
And we are very pleased with the progress on a robust late stage pipeline.
Going forward, our focus is on driving our Friday adoption <unk>.
Advancing our pipeline.
In supporting the patient community.
The fundamentals of our Friday are strong.
Every quarter since launch we have grown the net number of patients on therapy.
Physician and patient feedback continues to be very positive.
And we continue to have broad payer coverage.
Our key initiatives to increase adoption include executing on our pediatric launch.
Continuing to invest in our DTC campaign.
And developing more real world evidence of clinical benefit.
And in the European Union, We just received full marketing authorization for our brand.
Making it the first and only therapy approved to treat the hemolytic anemia of sickle cell disease.
This is an exciting and long awaited milestone for patients physicians, the sickle cell community and G. P T.
We will now work towards launching in Germany, beginning reimbursement discussions in France.
And educating health care providers across Europe .
Okay.
In the U K, we have submitted for marketing authorization and anticipate a potential approval by mid year.
Importantly for the U K.
Friday with granted <unk> designation.
Which provides two key advantages.
First patients that meet the eligibility criteria can gain early pre license excess stocks Friday.
Second medicines honoring that received marketing authorization by the M HRA as well as a positive assessment by nice benefit from accelerated NHS, England commissioning.
While we work through the process in the EU and U K, we are working to build momentum with early access programs with patients enrolled in France.
The U K and Germany.
Markets, where the majority of sickle cell patients live.
Our strategy continues to address sickle cell through various therapeutic approaches and we believe our R&D program is the most comprehensive in the industry.
We are focused on aggressively advancing the development of a lack of map and G. B T 601, both.
Both of which remain on track.
And our research team is exploring additional therapeutic topic targets in S E T.
And other red blood cell disorders.
Gbt's mission and commitment to underserved communities.
Stronger than ever.
We've talked a lot about COVID-19, and its outside impact on the sickle cell disease patient community.
In 2021, we established the GPT Foundation.
Which extends our corporate giving in areas of critical need and strategic importance.
We have and will continue to expand our investment in the S. C D community.
And overall health equity.
We will continue to meet patients where they are to support their overall health and wellbeing.
We expect that our initiatives will gradually contribute to new prescription growth over 2022.
We're also hopeful that the COVID-19 environment will improve.
We've recently seen encouraging trends and new prescriptions S cases began to drop.
We are hopeful that these trends will continue and our team is working extremely hard on all of the factors that are within our control.
Longer term, we remain optimistic for the future given the tremendous unmet need in this disease and the compelling clinical data on a Friday and our pipeline.
With that I will turn the call over to Jeff to review, our fourth quarter and 2021 results.
Thank you Ted.
Net revenue from sales of box Friday was $56 1 million for the fourth quarter of 2021.
Fourth quarter revenue increased by approximately $15 million or 36% year over year.
2021 revenue.
It was $194 7 million, an increase of approximately $71 million or 57% year over year.
On a sequential basis fourth quarter revenue increased by 8% from the third quarter.
This sequential growth was primarily driven by the continued increase in the net number of patients on a Friday.
Demand from existing and new patients and slightly higher inventory purchases by distributors.
On an absolute basis.
Inventory increased reflecting the growing patient base.
Days of inventory on hand in the fourth quarter was approximately four days higher than the third quarter, representing about 2 million in revenue.
Gross to net was approximately 16% around of one 5% increase from the third quarter, primarily related to higher Medicaid accruals in the current quarter.
Now turning to expenses.
Cost of sales for the fourth quarter was 1 million and for the full year was $3 million.
Compared with $1 million and $2 million for the fourth quarter and full year of 2020, respectively.
Cost of sales for the fourth quarter was consistent on a gross margin basis year over year.
Cost of sales was low in both years as the majority of the manufacturing costs related to <unk> sales were incurred prior to FDA approval and thus were recorded as an R&D expense.
R&D expense for the fourth quarter, 2021 was 59 million and for the full year was $212 million compared with $41 million and 155 million for the same periods in 2020, respectively.
The increase in R&D expense in the fourth quarter was primarily due to higher costs related to our two o'clock am at phase III studies, which included the $5 3 million clinical milestone payment triggered by enrollment in our phase III studies as.
As well as the advancement of our preclinical ox brighter and GBP 601 programs.
SG&A for the fourth quarter was 79 million and for the full year was $267 million compared with $59 million and 211 million for the same periods in 2020, respectively.
The increase in SG&A expense in the fourth quarter was primarily due to increased employee related costs, including noncash stock compensation expenses supporting the commercialization of box Friday, including the rollout of new materials, our direct to consumer advertising and readiness activities related to our launch for younger children.
Other factors driving this increase or a measured expansion into Europe and initiation of multiple investigator sponsored studies.
Net loss for the fourth quarter was $88 million and for the full year was 303 million.
Paired to $62 million and 248 million for the same periods in 2020, respectively.
Basic and diluted net loss per share for the fourth quarter was $1 36 per share and for the full year was $4 81 per share compared with a dollar per share and $4.04 per share for the same periods in 2020, respectively.
We ended 2021 with cash cash equivalents and marketable securities of $735 million compared with $561 million at the end of 2020.
This includes the addition of approximately 384 million during the fourth quarter net proceeds from financing activities.
Next I'll walk you through some of the dynamics to think about when modeling revenue for 2022.
If the pandemic begins to subside, we anticipate higher growth and ox bright and new prescriptions for the 12 and older population in the second half of the year.
While we're excited about the launch for younger children, we expect the new prescriptions and revenue growth will be gradual until the majority of patients have coverage, which we anticipate by midyear.
The label expansion represents approximately 16000 incremental patients for total dress for total addressable population of greater than 100000 in the U S.
Following EU approval, we are now focused on access and reimbursement, particularly in the U K, France, and Germany, where the majority of patients are located.
It will take time.
We expect revenue from Europe will be de Minimis in 2022 with growth ramping up in 2023.
Now for 2022 expenses.
Cost of sales, we anticipate that we will utilize the remainder of our fully expensed inventory in the second half of the year.
And we will see an incremental step up in expense in the fourth quarter.
For SG&A and R&D expenses, we expect higher than incremental growth in 2022 as compared 2021.
For SG&A the increase year over year will be driven by continued investment in the commercialization of ox Friday, including our launch for younger children are.
Our measured expansion into Europe .
And support for further investigator studies.
For R&D the increase year over year will be driven primarily by our clinical studies for <unk> clock map.
As well as continued investment in Nox brightest studies and GBP 601.
We anticipate that both SG&A and R&D expenses will be more heavily weighted to the second half of the year.
Specific to the first quarter of 2022, we.
We anticipate revenues in the range of $54 million to $56 million, driven primarily by the impact of AUM Kron and inventory dynamics.
Inventory levels are anticipated to decrease as distributors worked down the inventory built up from Q4 similar to our experience in the fourth quarter of 2021.
And gross to net is expected to increase incrementally from Q4, driven primarily by higher co pay assistance and greater 340 B utilization.
Importantly in Q1, we've seen improvement in demand trends that we anticipate will drive revenue growth in Q2, and the remainder of the year.
In summary, we delivered strong revenue growth in 2021 and have several catalysts to drive revenue growth in 2022.
In addition, we continued to be well positioned with a strong balance sheet, allowing us to make key investments in future growth.
And with that I will now turn the call over to D. J.
Thank you, Jeff and good afternoon, everyone I will provide an update on three key metrics that will give you further insight into our progress. These metrics are new prescriptions for <unk>, brighter, which informs underlying patient demand.
The number of health care providers, prescribing ox Friday, which captures the progress, we're making on adoption and payer coverage, which speaks to the access environment Aurochs Friday.
First new prescriptions that were approximately 800, new prescriptions during the quarter, reflecting the impact of the Delta variant early in the quarter and the holidays.
In Q4, there continued to be fewer interactions between providers and patients compared to pre pandemic levels.
And less engagement between providers and our field teams as compared to Q3.
Specific to omicron, we saw an impact in January so I am pleased with how our team continues to adapt to the changing environment.
And demand and access time dynamics have improved as infections have recently declined.
As a result, we believe new prescriptions in the first quarter will incrementally increase compared to the fourth quarter.
We believe the key leading indicators that are predictive of a return to sustained growth our improvements in industry wide new to brand prescriptions and our patients health care visits returning to pre pandemic levels.
But we have not yet seen a meaningful improvement in these indicators, we remain optimistic about ox brightest broke potential and have initiated new programs to drive growth and adherence.
One of the most significant new opportunities is the pediatric label extension and new formulation approved by the FDA in mid December .
This represents approximately 15% of the total patients in the United States.
Importantly, the new once daily oral dosage form allows ox Friday to be dispersed in a liquid which is suitable for young children.
It gives me great pride to have the opportunity to help health care providers treat children down to four years of age.
To start to address their disease early and potentially prevent further damage.
Following the FDA approval, we work quickly to train our teams update our materials and get the new formulation into the distribution channel.
One of the key positives for the pediatric launch is that we can leverage most of the people processes and learnings that we've had in place for the last several years.
This is illustrated by the following data, which speaks to the strong position that we are starting from.
95% of the kids age four to 11 with sickle cell disease live in the geographies already covered by our current sales force.
Drilling down around two thirds are being treated by prescribers.
We're already on our target list and with the addition of around 200, new prescribers with the expanded label this increases to around 75%.
Viewed from another perspective.
This younger age group is two times more likely to be treated in a sickle cell disease specialty treatment center as compared to adults, which is a more efficient model for our team to engage.
In early January our team was engaging with health care providers to educate them on the label expansion and train them on administering the new formulation and working with payers to secure coverage. The early feedback from the launch has been positive and our surveys from mid January indicate that around two thirds of providers, who are aware of Oxford.
I don't know that it is now approved for younger children.
This increases to more than 80% among pediatric Hematologist, who are the primary focus of our teams.
We are pleased that we achieved this broad awareness in the first few weeks of launch.
We are seeing early traction with some providers already writing prescriptions and starting their younger patient box bright across many states to support the pediatric launch we've seamlessly added a pediatric patient and family to our DTC campaign and updated our ox bright a website.
While it is still too early to measure how the campaign translate into pull through two new prescriptions, we are exceeding our target audience reach and made incremental investments in November to expand its impact in reaching patients and health care providers.
We are leveraging G O segmentation by ZIP code and other tactics to help focus our impression on our target audiences.
As a result in the first five months of the campaign, we achieved approximately 20 million impressions and $2 7 million unique viewers.
To complement our DTC campaign, we continue to focus on education in.
In December we launched a new series of virtual education sessions for providers focused on sickle cell disease, pathophysiology and the fundamental understanding of the root cause of sickle cell disease.
Understanding these fundamentals as critical to convey the value of box Friday and initiating patients on therapy.
We are also educating providers on the importance of improving oxygen delivery and reducing hemolysis and we're educating patients on the potential impact of low hemoglobin.
In the fourth quarter, we continued to make progress improving new prescription convergence.
We are seeing good utilization of our cover my Meds program and Q4 data shows impressive turnaround time, and adjudication rates ultimately leading to getting patients on medicine faster.
During the quarter Ox Friday adherence, which includes compliance and persistence continued to be within the range of our prior quarter and analogs and we are continuing to see some patients that previously discontinued therapy restart.
Around the end of the year, we launched two new patient support features for GBT source solutions, our patient hub.
First it will now spend email newsletters time to a patient's journey to provide information on how to access and use the hub.
And the ongoing support provided by the nurse adherence program.
Second patients can now opt in to receive mobile messaging to support engagement with the hub.
We hope to see these new tactics increase engagement and reduce discontinuation.
Our market research also continues to support the strong fundamentals of box brighter for example, post ash half of the health care provider surveyed who attended the conference we call box bright as real world evidence.
These transfusions and hospitalization.
Over half of current prescribers surveyed indicated that this new data will significantly increase their usage and for non prescribers more than 90% said that this data will motivate them to prescribe.
In terms of patients our market research building in January shows that sickle cell disease patients treatment habits were significantly interrupted by COVID-19 , including the omicron variant.
Many patients and caregivers reported building less comfortable seeking care with many delaying or shifting their appointments to telemedicine.
Looking at Ox Friday use we continue to see a broad range of patient characteristics, such as baseline hemoglobin at boc burden, suggesting the prescribers are increasingly recognizing the importance of addressing polymerization and long term health.
Which leads me to my second metric health care provider penetration.
During the quarter, our total interactions with health care providers decreased compared to Q3 due to the holidays and lingering impact of the Delta variant on the health care ecosystem in.
In many cases, our team had inconsistent access to in person meetings and had the leverage virtual tools instead.
This backdrop, we still added about 100, new prescribers in the quarter, bringing our total number to nearly 2000 and since launch.
When we look at the breakdown of writers, we continue to see prescriptions being written by both specialists and non specialists, which we believe is a positive trend for the long term trajectory of the launch.
Turning to payer coverage, we continue to have broad payer coverage for the 12 and older patient population with more than 90% of covered lives having access in the United States and our focus is on making it easier for physicians to prescribe and patients to receive ox Friday.
In addition, our team is supporting the pediatric launch by engaging with payers to educate them on the expansion of box brightest approved label.
We are already seeing prescriptions for these patients covered through the prior authorization process with many payers. The majority of decisions have been positive and the few denials had been administrative in nature.
We believe we can achieve broad coverage for the photo 11 age group by mid 2022 faster than we did with the adolescent and adult population.
And with that Kim will now talk about the developments in our pipeline.
Thank you T J and good afternoon, everyone on today's call I will provide an update on our key real world evidence study tracked by Uh Huh.
Ben its geographic reach and our pipeline.
Following G D G strong ash in December and medical Science liaisons have been proactively sharing updated analysis of Symphony claims data covering more than 3100 simplified disease patients ages 12, and older which was just published.
Interim data from the retro registry and the durability of response and safety data for the long term and use the box right out from the open label extension of the Phase III study.
From my perspective, as a clinician this data is extremely impressive.
It is not surprising to hear the impact that this data is having based on the market research that D. J 's MRI and we are excited to continue delivering on this right with our ongoing and planned studies.
What are the retro registry dataset now includes 230 patients submitted from nine U S site.
The data collection period closed at the end of 2021, and we are now working to analyze the data and plan to submit the results for presentation at medical meetings. This year.
The prospective registry is currently enrolling patients with the goal of including a thousand patients from 40 site and we anticipate the first results from this five year study will be available in late 2022.
Of note the prospect registry has been updated to collect data from patients in the four to 11 age group.
And again from a clinician perspective, I want to reiterate my excitement that Brian It is now available to younger patients.
I also heard directly from many of my pediatric Hematologist colleagues across the country letting me know how thrilled they were to have a new treatment option.
I believe early intervention is critical for our pizza.
And this is an important step towards the goal of making sickle cell disease, a well managed condition.
This month, we initiated two randomized double blind placebo controlled multicenter trial studying our brightest treatment effects on neuro cognitive function in pediatric and adolescent patients.
And cerebral blood flow in adult and adolescent piece yet.
We believe these studies will further add to the evidence supporting the safety and clinical benefit.
Right I can provide.
Before I get to the pipeline I want to quickly touch on our regulatory approval in the European Union.
This is an important step in our global expansion plan as we take steps towards the opportunity to reach more than 350000, and sickle cell disease patients around the world over the next several years.
As we make progress against this goal we will continue to explore strategies to bring on a Friday and future therapy to patients and limited resource geographies, such as Africa and India.
Now, let's turn to the pipeline.
For a lack of map R. P selectin inhibitor for reduction of the Oc.
Enrolling patients in our two phase III studies collectively named right.
One is evaluating the reduction of the Oc over a 48 week treatment period based on a lack of massive potential for quarterly dosing.
We believe this would be a meaningful improvement for patients compared to monthly dosing and aligns well with a typical sickle cell disease practice schedule of quarterly checking.
The other phase III study is evaluating the 90 days, you'll see readmission rate. Following an initial V O see hospitalization, which tragically occurs and around 50% of patients.
This study an opportunity our unique two and cracking that further supporting its best in class potential.
Turning to GBP 601, our next generation hemoglobin polymerization inhibitor that we believe has the potential to be a best in class therapy.
We presented compelling proof of concept data at ash as follows.
Doses were well tolerated with no safety signals detected.
Our target of greater than 30% mean hemoglobin occupancy was achieved with 100 milligram daily dose.
We saw a corresponding improvement in hematological parameters, and we saw improved red blood cell health as demonstrated by oxygen and data.
We are extremely pleased with these results, particularly regarding GBP 600 one's increased potency.
Because of this increased potency some have raised theoretical concern about impairing oxygen uploading two tissues.
On the contrary the totality of clinical and real World data suggests improved oxygen delivery with that right I N G. B T cell line.
Specifically GBP 601, it's more potent than us brighter with it with regards to its anti polymerization activity and much lower dose requirement, but it's not more potent with regard to oxygen affinity.
At the annual <unk> meeting in June we aimed to share more data on these points, including for example, sickle cell disease patient Epo levels from the GBP 601 phase one study.
We also aim to share new preclinical data that we believe further supports its safety and efficacy profile.
We are on track to initiate a GBP 601 phase III study by mid 2022.
This study will evaluate daily dose levels intended to achieve higher average hemoglobin occupancy than we saw with the 100 milligram daily dose.
Our phase one study and we also plan to dose over a longer period of time.
We believe this will lead to higher average occupancy and hemoglobin increases and importantly consistently improved the red blood cell health, a patient to resemble that of a sickle cell trait individual.
We believe this has potential to provide a functional cure.
Once daily pill.
Our goal is to present, new sickle cell disease patient data from the planned phase two study by end of the year.
I am so proud of the progress, we're making not only expanding access chuck's brighter, but also meaningfully dancing in the pipeline.
I will now turn it back over to Ted.
Thank you Kim.
In closing GBT continues its leadership in sickle cell disease and is well positioned for long term success.
We are entering a period with multiple new growth opportunities for ups Ryder.
Both in the U S and internationally.
We have a robust pipeline, which we are working aggressively to advance.
And we remain laser focused on our mission to help patients with sickle cell disease.
Not only by discovering developing and providing access to new medicines.
But also through a variety of initiatives to support the broader SCD community.
On this note we want to bring awareness to an initiative we are working on with GBT.
D Health equity Council.
We are collaborating to advocate for federal legislation to address the unmet needs of patients by significantly increasing the funding and support for treatment research and education.
The central piece would be more federal funding, specifically for STD treatment centers to improve access to care for patients.
I want to thank the health equity Council members for their dedication and support to this issue.
With that we will now open the call for questions.
Thank you we will now be conducting a question and answer session to start please limit yourself to one question. If we have time remaining we will take follow up questions. If you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question is from Gregory <unk> with RBC capital markets. Please proceed with your question.
Hey, good after good afternoon, Ted and team thank.
Thank you for the update today and thanks for taking my question.
Maybe just starting with some of those market dynamics that D J and Jeff alluded to I'm. Just curious if you could comment a little bit further on what you mentioned at the top which some of the things you can control versus those what you you cannot control certainly with them, a cron, peaking and maybe now in that declining trend.
What are your thoughts on some of those recent trends that you've seen has really exemplifying how the the early 2022, you can look when it comes to returns interactions and also generating those new patient starts.
Hi, Greg and thanks for the question.
Well I mean, a couple of other things obviously, we can control.
So our messaging.
The materials that we're making available for our M. S. L. A for our representatives.
Our training and educational materials all of those are things our DTC campaign.
Those are things that we are controlling and I think we're utilizing very effectively.
One of the things we can't control obviously.
Is the Covid infections, how they are impacting physicians being move sometimes completely out of sickle cell care.
The rate of decline of patients actually making.
Visits to centers some of those things as we noted have been getting better.
But obviously those are things that we have no control over but again were pleased to see that with Covid cases declining we think those things are showing early signs of improving and we think well continue to improve.
Yeah.
Great. Thank you very much Ted.
Thank you. Our next question is from Mark Breidenbach with Oppenheimer. Please proceed with your question.
Hey, guys congrats on the quarter and thanks for taking the question I'm. Just wondering if you have plans to break out the pediatric launch metrics separately from the adult launch data or if the numbers are going to be pulled going forward and also I guess I'm wondering if there's any potential.
C a differentiated or maybe even improved safety profile for the dispersal formulation of <unk> spread out relative to the non dispersal pills are given that I think it's only really been assessed.
For for PK PD equivalents in healthy volunteers, so far thanks for taking the question.
Okay, Mark Thanks for the call good to hear your voice.
First with regard to breaking out pediatrics versus adults, we do not plan to break them out.
We would break them out if there was a difference for example in price.
That would help you in some way.
But we think it's better that we stay on the total enrollment number as a kind of global indicator product demand and not break it out by by age group.
With respect to the Tolerability profile.
Now the Tolerability profile of box Friday has always been quite good.
As I've mentioned many times.
The only real signal that we see are occasional rashes, which I don't think we would expect to be any different as the formulation changes that's probably a reaction to the actual Kim.
Chemical ingredient itself.
The other thing that we've seen is about a 10%.
Increase in diarrhea.
Our loose stools would yourself resolving over placebo and would that be better you'd probably be pretty hard to pick up.
Now something going from 10% to 5%, but maybe over time, we would see something I think the bigger issue with kids and Kim can certainly comment on this is kids often don't like taking medicines.
Uh huh.
And that's something that we're aware of anyone who makes therapies for children is aware of that and so there does need to be education efforts around getting kids are comfortable and happy taking.
A medicine.
Okay.
Thank you Mark are you still there yep yep. Thank you.
Thanks Mark.
Thank you. Our next question is from Rod you Prasad with William Blair. Please proceed with your question.
Thanks for taking the question.
Just wanted to.
Talk a little bit more giving more color on the metrics that you provided and kind of new.
New prescriptions, and where you see the incremental increases.
You mentioned.
800, new prescriptions in the fourth quarter and potentially an incremental increase.
And then the Covid.
Kind of <unk>.
Headwinds kind of going away in the back half for the quarters just wanted to see if there's any extra color that you could say.
Is there any messaging, that's working well with with physicians or is it kind of just COVID-19 .
Subsiding, that's causing kind of the incremental increase as well as kind of the new prescriptions in the fourth quarter.
Yeah, I think there are a couple of things I think we can speak to one is I think Kim might pick up on some of the real world data and what you've been hearing and maybe DJ you could elaborate a little bit more on some.
The late numbers that you've been seeing and why you think there are moving in the direction.
Yes, I think that one of the things that is really obvious to us is that we're still seeing impact from the.
COVID-19 pandemic.
Know that Oh mcclain surging towards the end of the year and the beginning of the year had an incredible impact on the sickle cell population with infections in the first part of the year being so frequent that they outnumbered those for the entire calendar year previously in the pediatric population.
So I think that as Ted mentioned with staff in the sickle cell community, having to be repurposed to go to other areas.
So having staff shortages, having an impact on the ability to do in person and having to switch to telehealth.
Really greatly impacted and I'm, hoping that will come out of this as omicron continues to subside.
And maybe Kim you could mention the reaction to the real world data that you've been hearing yeah, I think that the real world evidence is really resonating with the pediatric and the adult sickle cell community.
Know that we had really impressive data at ash with our Symphony claims data that showed we had decrease in pain ozkok all cause hospitalization.
Decrease and medication use such as opioids and chelation therapy.
As well as a decrease in transfusion.
That alongside some of the compelling evidence for protecting the kidneys and mouse models and most recently published in humans.
So is resonating with the sickle cell community.
Okay.
Yeah, I'll just add a couple of things.
Q4 was kind of bookends by by the the two surges are at the beginning of Q4 had the Delta surge. The end of Q4 started in the Omicron surge and then we had the two holidays as well so that all kind of took.
Took its toll on Q4 now the omicron surge really.
Haven't really shown its impact until the beginning of Q1, we had the highest infection rates in the country in December and January and the highest hospitalization rates in January . So it did have some impact in Q1 that said the reason we have optimism about this quarter and this year is all the totality of tax.
We've rolled out and that we spoke about we now have a track record with the DTC campaign and seeing impact with that we have to cover my Meds program that we started last year and we're seeing good metrics on that and then of course, we have the pediatric launch.
But it's on its way now it's early but it's a it's on its way and we're already seeing prescriptions written in coverage and that sort of thing. So all of those things give us confidence in the demand picture going forward.
And you know you have to take into account things like inventory at the end of the year. When you think about revenues in Q1, but from a demand perspective, that's why we have some confidence as omicron has started to go down and these other programs that started to kick in it's looking good from that perspective.
Great. Thank you.
Thank you. Our next question is from Alicia Young with Cantor Fitzgerald. Please proceed with your question.
Hey, guys. Thanks for taking my question Congrats on the progress I wanted to ask a little bit about Europe .
Obviously, you'd probably core countries, Germany, United Kingdom can you just talk a little bit about like the market dynamics. There and then they send the prevalence is maybe a little lower but how do you think about the cadence and those particular early stage council countries versus what you call me I think.
Hi, Elyse, it's good to hear your voice.
So.
As you know ALLETE, yet the first country that.
You typically launching in Germany is because like the U S. You have pre pricing available in Germany for the first year, So Germany will be the first country.
That we launch in given the approval, we don't have a specific date, yet, but we obviously working a feverish.
He recently to make that happen.
The other two countries and the countries, where the majority of sickle cell patients reside as you know our France.
And the U K and in those two countries are after the regulatory approval you have to get.
Pricing approval and that process can take.
Typically anywhere from six to 12 months. So it really won't be until 2023 that we began to get revenue from the.
The two geographies with the vast majority of the sickle cell patients.
Is there anything in particular about those like countries like the cadence and how they are treated that would affect the upgrade of lunch.
I'd defer to D. J D do you want to add to that.
No I mean, there's nuances in every in every market I mean, the good news, it's very similar to the U S. In terms of it's a very concentrated grew.
A group of patients the 17 states make up the majority of patients in the U S. While in France, and the U K they're.
There are centralized in certain cities like Paris.
In London in particular, so that does help our footprint, which we have already established in those key markets to.
To be very concentrated and focused in terms of our educational efforts, which is which are underway currently.
I'm not.
Yeah.
Thank you. Our next question is from a cautious <unk> with Jefferies. Please proceed with your question.
Hey, guys. So look this is more of a holistic question, but.
Any color on why you didn't guide for occupied in 2022, or perhaps give mid to long term guidance for this product Covid cases are back to pre omnicom level then several companies have guided.
In 2022, while pointing out that if you know COVID-19 returns than their guidance. Just note. So curious why the company didn't take that approach today.
And I guess, maybe on the pipeline if we were to longitudinally followed the hemoglobin levels for the patients treated on 601 at Ash did we see any signs of hemoglobin levels continuing to increase even after two weeks on the drug.
And is there any possibility that for 601, the hemoglobin data could get better over time and if so when would we be getting any updated 601 data on that original proof of concept trial that we showed that that was presented at ash. Thank you.
So maybe I'll ask.
Jeff to take the the guidance questions and Kim.
I'll take on the 601.
Sure higher costs, we did actually consider at this call about potentially giving some guidance, but reflecting on history with Covid. There was just too much uncertainty I don't think people were anticipating delta happening in the fall of last year and certainly omicron wasn't on the cards looking back in January but that doesn't preclude.
US from potentially doing something in the following quarter. If we do think that we're on a clear pathway. There is the potential that we could give.
I'll say nine months worth of guidance for year end for both Opex as well as revenue. So that's not off the cards in the near term and it's frankly, our preference is to be able to do something like that.
Higher costs and then for the proof of concept data I was just going to start with the phase one we would theoretically say that you may see improvements in hemoglobin over time, that's going to require doing longer periods a follow up.
On 601, hopefully in our phase two study.
But theoretically you may see increases over time am I want to say that we hope to have incremental data available at <unk> am maybe some epo levels on that initial cohort.
And then later in the year.
Hoping to have more information new information on.
On individuals with sickle cell disease.
Thanks, so much.
Thank you. Our next question is from Danielle Brill with Raymond James. Please proceed with your question.
Hey, guys. Good afternoon. Thanks, so much for your question I guess I'm just wondering if you could maybe quantify a bit more.
And our expectations for one Q I know you said incremental but can you give us a sense.
And then how many.
Have you gotten for pediatrics, so far and was there any contribution.
From from those from Pizza in Park Hill. Thank you.
Hi, Danielle this is sad to hear your voice.
I'll I'll defer to D J to elaborate but I suspect. The reason you said incremental is that he wanted to have some latitude and not be too specific.
And I think with regards to breaking the numbers out.
The planned Danielle to just report a single number and.
That reflects overall demand and not break it out by age group, but P. J. Please please feel free to add yeah. I mean, just maybe unsatisfying. It's just early days right. So so we're just at the beginning of this launch the metrics. We do have in hand that are there that are promising we talked about in the script, which are the awareness.
Of the new dosage form is very very high with our target audience, specifically the pediatric hematologist. So they've been anticipating and are now well aware of the approval and rapid time. So we did that survey just two three weeks into launch in January .
So we feel really good about that we are getting our enrollments.
Mostly really starting in January no no appreciate of enrollments would be expected in Q4.
Because we got approval right before the holidays, there and we had to be honest, we needed some time to get it into the channel.
And to the pharmacy, so really starting in January is when we started to see the enrollments.
And we will be looking at those over time everything is going according to plan is what I can say at this point.
Thank you Jay.
Thank you. Our next question is from Paul Choi with Goldman Sachs. Please proceed with your question.
Hi, good afternoon, everyone and thanks for taking our questions I wanted to revisit the Q1 guidance for a moment here and the range that you provided.
And just given what seems like a positive exit exiting commentary here coming out of Q4 and midway through Q1 is the range here, which seems conservative to me, primarily reflecting the COVID-19 headwinds that you spoke to about in January or are there additional factors that you would call out such as you mentioned 340, <unk> as being part of the mix.
That you expect to abate over the course of Q1 and then how are you thinking about the contribution from those factors over the course over the remainder of 'twenty two thank you very much.
Yeah, Hi, Paul This is Jeff.
We do think these dynamics are somewhat unique to Q1, we did see last year. If you remember some impact also related to the inventory buildup, we saw that and anticipate that again here for Q1. The other aspect is the gross to net which you mentioned the copays reset we typically see a higher co pay assistance.
It's.
Reduces or increases our gross to net.
That should subside in the subsequent quarters, but we will start to see a bump over time to probably around the 25% gross to net probably by middle of next year.
But it should spike a little bit in the first quarter.
The other aspect is the early impact.
Impact of <unk> and in the first part of the quarter here, we have seen that sort of taper down in the second quarter and we certainly hope that we're through this this.
Sort of continual variants that come around here and if that's the case, we would expect growth. We do think it's probably going to build up more in the second half of the year. Just typically what happens is these patients come in for a wellness visit and then perhaps on the second visit these patients.
Get offered ox Friday or some other therapy for sickle cell. So that's why we're guiding to the second part the other aspect of seeing an increase in the second half of the year as we.
We expect really robust coverage on the pediatric side by the middle of the year. So that would also add to further growth in the second half of the year.
Okay, great. Thanks for the additional details Jeff I'll hop back in queue.
Thank you. Our next question is from Jason <unk> with Bank of America. Please proceed with your question.
Hey, guys. Thanks for taking my questions.
Just following up on the phase two plans for 601 curious if there is any latest thoughts as it pertains to trial design.
I'm not sure.
Slight timeline shifts was you know.
Is there any interaction are you thinking about this as a phase two slash phase three or more of a mid sized dose ranging.
Phase two with the placebo arm and just a point of clarification on what we'll get at Ehealth. My understanding is those patients that were dosed three weeks post their washout period that was the extent of getting 601 treatment not extended treatment. So when you give us the pro data for those patients who will not only be sort of for the post three.
Week washout period of treatment just curious thanks.
Tim do you want to take that sure hi.
Hi, Jason I'm going to start with the latter part of your question about the Epo levels and I think that will have remember two phases from the Mad one of Mad too. So we should have some indication for greater than two to three weeks because with a mad one part of the study we had a longer treatment period. So I do anticipate that we will have <unk>.
<unk> levels, reflecting longer than three weeks on.
601.
Or the plans for the further development of 601, I remember that we still have to finalize the protocol. We're working on a very thoughtful yet comprehensive protocol and that we need to set up a meeting with FDA and what her to present our plans.
Once we have those two things accomplished I think that we can anticipate steady initiation.
Mid year this year in 2022.
I think that when you think about what our goals are we continue to be very thoughtful because we have the potential of getting to a a good therapeutic level of hemoglobin occupancy on a relatively low dose and a single.
Once daily pill.
Okay. Okay.
Thank you. Our next question is from Joon Lee with Jewish Securities. Please proceed with your question.
Alright, Thanks for taking our question sorry for the update.
Can you talk a little bit about the phase three trial you initiate this month.
Your cognitive equipment, what's the objective of this study given you already have real world data from Symphony Health supporting clinical benefit profile and also you know the study duration of 12 weeks how feasible do you think it is to see a cognitive improvement in such a short period of time or what is the powering assumptions.
Yes.
Hey, Jim. Thank you for those thoughtful questions. You know that study is an eight to 18 year olds and it's specifically focusing on executive functioning through the NIH toolkit I agree that 12 weeks is a short period of time, but as you know for.
<unk> a functioning that's more than enough time to be able to see an improvement. This goes along the lines of what we see in real world with Ox Brady use with an improvement and overall wellbeing I'm pretty shortly after initiation of box by that.
So the goal is to really look at Delta and executive functioning over that 12 week period.
But in a group a young group of children and adolescents.
Well, we know that we have seen changes in executive function in other studies prior.
Junior you there.
Oh, yes, yes. Thank you so much.
Thank you. Our next question is from Ritu <unk> with Cowen. Please proceed with your question.
Hi, guys. Good afternoon. Thanks for taking the question I wanted to just follow up on the interactive.
The next quarter.
As mentioned that you expect incremental an incremental increase in Q1.
Play more in Q2 should we is it reasonable to expect that the interaction should be back to approaching about the 1000 level that.
You guys had seen last year and the year before especially for Q1 and then.
What do you think will happen with compliance and dropout rates going forward as the initial interactions increase person sales force and patient and clinician interactions do you think that you could also see reductions in dropouts more.
Their tape so to speak of all the programs that you have to improve.
Clients and persistence.
D J you want to take that Hi, Ritu.
Sure Hi, Yeah.
Ritu we are yeah.
It's early and you know we don't have any data to report here on Q1, yet we're just signaling that we did see omicron Spike and then go down in Q1, so while it had an impact on the beginning of January as you might expect.
We don't think that's going to be long lived throughout the quarter. So that gives us some optimism because we have all these other things has tailwind, helping us, namely the pediatric approval.
As well as these programs, becoming much more mature and having a impact as well things like the DTC campaign. For example, we're seeing big spikes in Ah patients seeking education on our websites on our social media campaigns and that sort of thing. So all of these things are pointing in the right direction. If we can just get past these omicron spikes or we're optimistic because of the spike is over.
Are coming down so I'm.
That gives you an idea of if.
Why are we think we can we can certainly do better than Q4 Q4 also has the headwind of the two holidays. So that's another reason why we might expect demand to be higher in Q1 as well in terms of adherence rates. Yeah. We look at that very closely as a chronic therapy. That's something we're always going to focus on and always going to work on we.
We've seen it stabilize Q4 was no different than what we've reported before which is a stabilization consistent with the analogs within a range that.
That we think is is common but we're not satisfied. So we do think some of the new programs will have an impact over time, we're really excited about our ability to do proactive communications outbound and inbound communications via text E mail through our S. P partnerships and GBT source solutions are access navigators in the field.
Being able to proactively reach out directly to patients in certain situations and and walk them through the support process. All of these things were initiated last year. We think they will have an impact on adherence going forward.
Got it and if I could sneak one last in you mentioned.
Denials in pediatric and.
And pediatric comprehension and some negative prior off decisions.
Administrative in nature could you just elaborate on that thanks.
Sure. Yeah. This is just around the kind of the part and parcel with launching any product we had similar things happen. When we first launched two years ago and that is in the very beginning until the Payors are formerly add it to formulary.
They they oftentimes will reject the first prescription that comes in.
And because it's not in their system, yet and they require a follow up either an appeals process.
Secondary prior authorization as well as education from our from our strategic account team, which are very actively engaged with the payers right. Now. So we are getting them paid for oftentimes through a denial process in an appeals process, but that's what you would expect in the early days. It does take us some time to get around and get get all the meetings on the.
<unk> for them to have a formal formulary decision, we expect that to go smoothly by the way and that's why we're optimistic we can do even better than we did last time.
Got it thanks for taking the questions.
Thank you. Our next question is from your non Jew with Wells Fargo Securities. Please proceed with your question.
Thanks for the update and thanks for taking our questions. We just have a question on fixed line.
So I think.
So I was wondering in terms of trial design.
Sounds like you're still working on it it would you contemplate a comparator arm with ox brighter.
And also Ken.
Correct me if I heard this wrong I thought you said data from this phase two study can be affected by year end initial data by year end, if I heard that correctly.
What kind of what kind of follow up with those data be and what are some of the major endpoints I know hemoglobin.
A level of at least probably one.
What other metrics.
Will you be looking at too.
<unk> analyzed.
The potential for <unk>.
For the truck.
Thank you for that question I think the comparator arm with ox bright is in an interesting thought. However, we really are we're planning on really looking at the mechanism of action and the potency.
One of our sickle hemoglobin polymerization inhibitor. So wanted to really focus on 601 here as we continue they.
Continuing to gather real world evidence on ex Brighthouse.
I think that your questions regarding the phase two data are spot on we are really looking to provide new information on individuals with sickle cell disease, receiving 601 for a longer period of time and this will include of course, you know the usual.
Occupancy the hematological parameters, but of course, hoping to get some early signals on other clinical endpoints.
It's 601 does what we wanted to do we should be able to provide hemoglobin modification to higher levels more consistently.
Using a lower dose and this gives us the opportunity to really consider clinical endpoints, including pain and other things that have been.
Signals that we've detected in our real world evidence.
Great. Thanks for the color appreciate.
I appreciate it.
Thank you. Our next question is from your 10, Sunni SUNY, John <unk> with Guggenheim Partners. Please proceed with your question.
Couple of question for me can you just talk about how are you guys thinking about.
Breakeven are achieving profitability.
When can it be a chi what what level of sales that can be achieved can you also talk about the optimal capital structure normally Anthony up close to 600 million and that's not all just thinking about the capital requirements in the future.
And then finally, if you can comment on the new dynamic you mentioned de Minimis contribution in 2022 what does that mean is it like 1 million Prime and then $15 million.
Can you just comment there thanks.
Hi, I will ask Jeff to take that all three yacht and.
Yeah, we ended the year with about $735 million in cash and cash equivalents, which I think puts us in a good place we haven't given any specific guidance on time to breakeven or revenue thresholds. At this point I think we really need to see how the pandemic plays out here, obviously revenue can have a big impact on that but what we can say is that our balance sheet.
Is it sufficient to meet our goals here and these are long term goals.
A launching in Europe .
Also making sure we have enough capital to complete the two phase three o'clock am Hap studies and.
And into registration as well as 601 moving that into pivotal studies and so you can data read out there so.
Totality, we think that our balance sheet is sufficient for us to be able to achieve those and I think down the road, we look to be in a position to provide more guidance both on top line revenues as well as.
Spectra time to profitability.
Yeah, Tim does that answer your question.
Yes. Thank you.
Thank you. Our next question is from Tessa Romero with Jpmorgan. Please proceed with your question.
Hey, Thanks, guys. So much for taking the question.
I think P. J gave an update at total prescribers remember in his remarks, what are your expectations for growing the prescriber base for <unk> next year and how do you think further penetration of existing prescribers versus adding new prescribers.
Prescribers might play out in the year ahead. Thanks, so much.
Yeah. So thanks for the question you're right. We we announced that are that we're closing in on 2000 unique prescribers throughout the U S. We call on about 4500, and our target list. So as you can imagine we still have a significant amount of prescribers to continue to educate and get started.
On <unk> right. So we have growth potential there.
The penetration of the patients within the prescribers are highest.
Decile physicians with the most patients.
You know they haven't even a higher rate of adoption almost 60% of them have written a prescription for ox brighthouse. So the ones that are that our most experienced certainly have the most experience with ox bright as well and that makes sense, that's where we spend a lot of our time.
With those physicians.
But now we're calling on.
Primary care doctors nurse practitioners, but also a cure for patients as well too to grow walks bright out going forward, we do think ox bright as new indication in pediatric down to four years old does create a new opportunity. We added about 200, new prescribers to our target list that were not on there before so that's just a.
Another group of physicians to get and introduce talks brighter throughout this year.
Okay, great. Thanks, so much for taking our question.
Thank you. Our final question is from Ben Burnett with Stifel. Please proceed with your question.
Hey, Thank you very much.
I have a question around 601 and inflammation.
Tim I appreciate the comments during the prepared remarks around some.
Some of the oxygen release points Vegas inflammation. It's another thing that comes up and I would just ask based on on what you've seen so far with six of one. It also ex Brighthouse could you just talk about the timeframe that you might expect inflammation to resolve with the drugs such as 601.
Yeah.
Thanks for the question Ben You know I think this is really and opportunity for us to think about this more and what we seen in real world evidence and long term follow up.
Is S ox brighter and improves the red cell health.
By.
<unk> primary mechanism with hemoglobin modification, we really see over time that pain episodes start to decrease.
And as you know a lot of what stimulates pain is that steady state inflammation and individuals living with sickle cell.
So I theorize that what maybe happening over time is that because spider is acting upstream on the root cause it takes a little while for those downstream hemolysis.
Hemolysis related inflammatory.
In point to start to change and so I believe that this will be further explored in ox bright at studies.
Either the externally sponsored or some of our internal studies and we're definitely planning on looking at this parameter with 601.
Yeah, and I would just say just add if you look at the actual hope VLC data you began to see the curves are begin to separate.
After probably about four to six weeks.
And they continue to separate over the period of treatment. So.
So I think that.
It does take some time as Kim said and that's something that we'll obviously be looking at with it.
At 601.
Okay.
Okay I appreciate the color. Thank you.
Thank you Doctor loved there are no further questions at this time I would like to turn the floor back over to you for closing comments.
Well, thank you and I'd like to thank everyone for joining our call today we.
We continue to hope that you all stay safe and healthy and want to extend a welcome to you to reach out if you have any additional questions.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Yeah.
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Okay.
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