Q4 2021 Biohaven Pharmaceutical Holding Company Ltd Earnings Call
Yeah.
Good morning, and welcome to the Bio Haven Pharmaceuticals fourth quarter and full year 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. If anyone should require operator assistance. Please press star zero on your telephone keypad.
Please be advised that today's conference will be recorded I would now like to hand, the conference over to Caroline Dircks from Bio Haven. Thank you Caroline. Please go ahead.
Thank you and welcome to the bio <unk> fourth quarter and full year 2021 earnings call.
Speaking on today's call are Dr flat Schwartz, our Chief Executive Officer, Matthew Beale, Chief Financial Officer P. J Jones, Chief Commercial Officer and Dr Relief Stack Chief Medical Officer also speaking on today's call are Dr. Michal Kozak and Dr. Stephen Torquay who will be joining Baidu Haven.
President.
I'm senior Vice President I read the labs, respectively.
That's backed off President and general manager buyer, even in Ireland.
We're also pleased to announce the addition of Jennifer for Sally Tobias Haven Pharmaceuticals, as Vice President of Investor Relations.
Earlier. This morning, we issued a press release announcing the fourth quarter 2021 highlights and a summary of yearend results a copy of this press release can be found on our website at Fireeye as a farm on Dot com and we will file our Form 10-K later today.
Before we begin let me remind everyone that today's discussion contains forward looking statements based on the environment as we currently see it and includes risks and uncertainties.
A list and description of risks and uncertainties associated with an investment in biodiesel can be found in the company's filings with the U S Securities and Exchange Commission. Please be aware that you should not place undue reliance on any forward looking statements we make today.
For this call we will focus on non-GAAP financial measures.
Descriptions of these non-GAAP measures and reconciliations to the most comparable GAAP measures can be found in our SEC filings.
An archive of today's call will be posted to bio havens website in the Investor Relations section with that I will turn the call over to our CEO Dr. Vlad <unk>.
Thank you Caroline good morning, and thank you to our investors for joining the yearend and fourth quarter earnings call.
Fourth quarter 2021 has been another standout quarter in what was simply an exceptional year for bio <unk>.
<unk> ODT has become the number one prescribed migraine treatment in its class, allowing patients and doctors the ability to customize a single therapy to treat and prevent migraine.
Business performance continues to exceed all expectations with 2021 year end date sale revenues of 463 million in net revenue and over $1 6 million prescriptions since our launch.
Our strong revenue growth highlights the value that our differentiated product brings to patients and physicians. The only simple to use oral migraine medication with dual indications to stop your migraine attack now and preventing your next one.
Our global strategic collaboration with Pfizer for markets outside the U S is well underway and our teams are working lockstep to prepare for an expanding global launch of our major Pan. This partnership will serve as the catalyst for the creation of a world class migraine Bill business that will open the door to delivering when that Japan for millions of patients around the <unk>.
<unk>.
Imagine what our global commercialization with Pfizer will achieve for patients.
We are extremely pleased to announce this morning, the CH <unk> positive opinion for a renewed Japan and the EU recommending the granting of a marketing authorization for the prophylaxis and acute treatment of migraine I want to congratulate the bio Haven and Pfizer teams for this exceptional outcome and working closely with the <unk>.
H M P to achieve this milestone.
With the recent positive data for our pivotal trial of <unk> in the acute treatment of migraine in China, and South Korea, we are targeting a regulatory submission in the second half of 2022, and if approved this will unlock a market of greater than $120 million acute migraine patients in China, who may benefit from the relief provided by the number one.
Migraine treatment in its class.
In addition to the market growth and anticipate expansion of Nortek ODT around the globe. Our team is completing the NDA submission that Japan and the U S, which we anticipate will be filed later this year does that Japan is the only intranasal <unk> receptor antagonist in late stage development and has demonstrated an ultra rapid onset of action with.
<unk> 15 minutes of administration, if ultimately approved we believe that Japan will provide an important treatment option to enhance speed to migraine relief and a non oral formulations for patients with prominent nausea or vomiting at the time of the migraine attack.
While we are very proud of our robust <unk> franchise and the positive impact that is having on patients. We continue to focus on advancing other novel and potentially best in class therapies for patients suffering from neurological and neuropsychiatric disorders.
We are excited to announce this morning, the acquisition of two new platforms through our pipeline.
We acquired what we believe is a potentially best in class kv seven ion channel activator for epilepsy, and other neurologic indications that we will discuss in further detail later in this presentation.
We are also pleased to report that we have licensed a late stage myostatin targeting asset from Bristol Myers Squibb that is expected to enter phase III clinical trials in spinal muscular atrophy or SMA later this year.
The license of Tau desk, Rebecca will become the third drug candidate to enter the clinic that we have licensed from BMS with the two additions to our portfolio announced this morning in the discovery engine of Bio Haven labs, our clinical pipeline is robust and we believe will fuel the development of new innovative drugs for patients.
Yeah.
In the U S. We have raced ahead of the competition and <unk> continues to be the number one migraine treatment in its class our commitment to innovation in the treatment of migraine as strong as we continue to strive for excellence and look forward to bringing this leading therapy to patients around the world.
The new <unk> oral medications are just beginning to scratch the surface of the migraine market in the U S. The <unk> class is showing strong growth and continues to gain momentum into 2022.
To put the progress in perspective oral <unk> as a class recorded a remarkable net sales of approximately $1 billion in 2021, while only representing a small fraction about 5% to 6% of the overall migraine scripts.
We believe that the <unk> class will show growth for many years and ultimately will become first line therapy for migraine.
Looking specifically at fourth quarter market share versus Triptan. The <unk> continue to gain market share. This reflects the limitations of these older therapies and the advantages offered by the new <unk> class. The <unk> have shown quarterly increases in both <unk> and NV Rx volume compared.
The Triptans as you can see there is a significant growth opportunity ahead of us and we are already seeing the increased penetration of <unk> as patients increasingly become more informed about the fast and lasting benefits of dual acting neurotechnology.
Okay.
We continue to update this slide regarding the <unk> class penetration compared to the injectable monoclonal antibodies <unk> antagonists continued to drive the growth of the overall <unk> market injectable maps are limited to prevention and many patients considering injection less desirable compare.
To a single dissolving pill.
Given the projected size of the overall market, we remain focused and committed to investing in our long term success of <unk> ODT as the only medications that can provide acute and preventative treatment.
Our World Class Global commercialization partnership for <unk> with Pfizer will allow us to bring what is the leading <unk> antagonist in the U S to patients worldwide suffering from migraine.
Our mutual goal continues to be gaining approvals to deliver dual therapy nortek ODT rapidly to as many patients as possible around the world. There are approximately 1 billion patients who suffer from migraine across the globe.
The news release this morning regarding the positive <unk> opinion for <unk> or <unk> as it will be marketed in Europe to treat acute and prevent episodic migraine is exciting.
In addition to our regulatory progress in the EU. We also recently received positive phase II data and our China, South Korea study for the treatment of migraine, we anticipate filing an NDA in China later this year.
Yes.
The global market opportunity of permanent Japan is becoming a reality and the expansion of Nortek ODT beyond the U S continues to be robust with multiple approvals in migraine for both acute and prevention double digit submissions across the globe and multiple pivotal trials ongoing we are seeing the results of our differentiated product we are.
Confident in the power of our collaboration with Pfizer and their long history of successfully launching and building partnered brands around the world.
With the positive phase III data for <unk>, which is another cornerstone of our unparalleled <unk> franchise Bio Haven has the only intranasal <unk> antagonist with ultra rapid migraine relief and the potential to us or usher in a new era of non <unk> targeting migraine therapies.
Mo lease stock will update you on the progress in our regulatory efforts for <unk> later during the presentation.
Now moving from one cutting edge development platform to the next we are excited this morning to announce the acquisition of channel Biosciences, a subsidiary of not biosciences and their kv seven platform and innovative potassium channel platform that is expected to move into the clinic by the end of this year later on this.
Presentation, you will hear directly from the clinicians and scientists to develop this platform.
We believe our lead molecule <unk> hundred 7000 has the potential to be a best in class potassium channel modulator for epilepsy and represents a validated mechanism of action with other broad therapeutic applications.
We are especially excited to welcome the entire <unk> 17 from channel Biosciences, or not biosciences to bio Haven and this includes their leaders Dr. Mike <unk> and Stephen.
<unk>, who will be joining our company to ensure that the lead assets are efficiently advance the patients Mike and Stephen will be discussing the exciting program with you in more detail shortly.
And what has been a morning filled with new announcements. We are pleased to announce more breaking news with the acquisition of talent that <unk> from Bristol Myers Squibb.
<unk> is an anti myostatin adnexa and a phase III ready asset that already had a sizable human safety database in pediatric populations given the recent proof of concept data.
Other myostatin targeting agents, our intention is to initiate a phase III study in the first half of 2022 for the treatment of spinal muscular atrophy. Importantly, this acquisition further extends the neuroscience R&D collaboration between <unk> and BMS. This is our third late stage asset.
From BMS to enter the clinic and Cliff Bechtold, who previously was the development lead for this asset at BMS will speak in more detail about this differentiated product just a few minutes.
Yes.
To summarize we have a strong portfolio of product opportunities that we believe will deliver value for patients and investors in the near term and for years to come. Our goal is to continue to deliver best in class therapies from a promising pipeline for patients across the globe.
I'd like to now introduce Matthew Beck, our new Chief Financial Officer, who joined US in December as a former managing director of <unk> capital, Matt brings to buy even more than 20 years of experience in health care investment investment banking and strategic structuring deals for both large and small cap companies. We're thrilled to have him I would also like to.
Thanks, Jim Engelhart for his long service and dedication of bio Avon, we wish Jim well and as much deserved retirement.
Matt will now review the details and results of our financial performance in the fourth quarter and year end of 2021.
Thank you Vlad first let me say, how thrilled I am to be here for today's call.
As many of you have seen our joined the <unk> team in early December right off the heels of the company announcing an incredible strategic collaboration with Pfizer.
Enabling us to gain access to their industry, leading expertise and global footprint.
To turbocharge global commercialization efforts for <unk>.
I've been following Bob Evans progress for many years, while I was at foresight and I couldnt be more enthusiastic about the opportunity to join this incredible team.
Especially at a time like this as I look at the opportunities in front of us.
Some of the guiding principles that are incorporated in my role from learnings during the transition and my predecessor, Jim Engelhart are threefold.
<unk> value for shareholders is top of mind, ensuring we're adequately capitalized limiting dilution for shareholders whenever possible. This was and will continue to be a critical focus for us.
This dovetails into the next key tenant of our strategy, which is ultimately getting to a place of profitability.
This is critical for us ensuring we are well positioned to realize long term revenue streams. We have obviously made tremendous inroads since the launch of our dual acute prevention label and we see strong growth as we eventually pursue more of the extension opportunities for <unk> and pediatric migraine pain, adjacencies and other non migraine indication and.
And finally, maintaining that steadfast financial discipline, while continuing to assure we are driving access and new patient starts investing wisely in a brand that is still relatively new in a market that only continues to grow rapidly. These are the critical components of our strategy and I look forward to sharing more updates in the months ahead as we make progress.
So with that in mind, let me take you through some of the financial highlights from the past year. The press release. We issued this morning contains details of our financial results for the fourth quarter of 2021 with further details in our 10-K, which should be filed shortly and rather than read through all those details my comments will focus on some key financial results.
Nortek ODT achieved net sales of 190 million in Q4, demonstrating another quarter of strong performance, increasing 40% versus Q3, and increasing 440% year over year, driven largely by increased sales volume and Arctic OTT and expanded and improved managed care reimbursement.
LCD RP market continues to grow at an exceptional pace carving out a small but expanding market share for migraine drugs.
While generating almost.
Rating over $1 billion in revenues last year in total oral <unk> market revenues grew greater than 400% for the full 2021 year well by having grew revenues over 600%.
As the market continues to grow we expect to see higher than market rates of growth for the oral class of <unk> as well as for <unk> and.
In the fourth quarter, we benefited from a large and growing market, which supported higher volume and in addition, we had some favorable seasonality, which impacted us in a few ways.
Higher volume and net pricing per constraints on patients such as deductibles and coinsurance were largely satisfied resulting in reduced co pay assistance for bio <unk>.
This is in addition to direct efforts, we made to encourage refills.
We also experienced favorable payer mix with lower rebate Payors and we discussed the influence of possible seasonal factors as well as market growth and our Q4 results during webcast presentations and investor meetings as well as last year on our year end earnings call.
Many of these favorable contributors we experienced in Q4 typical unexpected with patient supported pharma programs and may pull back along with the typical seasonal changes anticipated in Q1 and it could have an impact on volume as well as sequential revenues now as we go down the P&L R&D investment in the quarter on a non-GAAP basis was $76 4 million compared to $57 8 million in the prior quarter.
An increase of $18 6 million or 32%.
The increase was primarily due to continued funding of post approval international and pipeline expansion spending for <unk> as well as our late stage product candidates, including <unk> to really is owned or dip step, which combined with the vast majority of our spend.
SG&A expense in the quarter, a non-GAAP basis was $189 3 million compared to 114 million in the prior quarter.
An increase of prior year quarter, an increase of $75 3 million or 66% most of our SG&A costs continue to support commercial sales Nortek ODT as we invest behind our novel dual indication therapy with less than 50% of our spend on personnel cost and the rest supporting our promotional spend.
Now moving on to the full year 2021 results Nortek ODT achieved net sales of $462 5 million for 2021 growing $399 million or 627% demonstrating very strong performance. This was driven by increased volume Nortek ODT, which benefited from a partial year of sales associated with the expanded label to include prevention.
Compared to a partial year of sales in 2020 with only the acute label.
Net revenues were also benefit by improvements in net price realization.
R&D investment for the year ended 2021 on a non-GAAP basis was $287 1 million compared to $195 4 million in the prior year period, an increase of $91 7 million or 47% again. The increase was primarily due to our continued investment in our post approval international product expansion opportunities for <unk> as well as other late stage product.
That's in preclinical research.
Our late stage products I mentioned earlier also comprise the vast majority of our spend for the year.
SG&A expense for 2021 on a non-GAAP basis was $623 6 million compared to $428 6 million in the prior year, an increase of $195 million or 45%.
The increase was primarily due to increased promotional activity supporting Nortek ODT commercial sales in 2021 for the treatment and prevention of migraine, which got its dual indication approval in May 'twenty one.
And compare that to the same period in 2020, which reflects pre commercial and promotional nortek ODT spend which was launched in March of 'twenty now.
Turning to our balance sheet.
Pro forma for the closing of our collaboration of subscription agreements with Pfizer in early January we have access to approximately $1 billion liquidity.
As of December 2021, we have $367 million in cash and cash equivalents and marketable securities immediate access to $125 million from our debt facility with <unk>, an additional 500 million of cash we received on January 4th from Pfizer.
Let me Echo what <unk> said about our excitement over our recently announced acquisition channel Biosciences, adding a valuable kv seven program for epilepsy and potentially other indications to our pipeline.
The terms of the deal are as follows a price consideration comprised of $65 million, even stock and $35 million cash.
Successful success based milestone payments broken down as follows THB 7000, regulatory milestones of up to $325 million for U S EMEA, and Japan approvals for epilepsy, and $250 million for additional geographies and additional indications for <unk>.
PHP 7000 sales based commercial milestones of up to $562 $5 million with the full amount achievable on reaching $3 billion in annual sales.
And we'll pay scale royalties for <unk> hundred 7000 of high single digits to low teens and for additional programs.
We'll pay starting royalties in the mid single digits and with that let me turn it over to BJ Jones, our Chief commercial Officer P. J.
Thank you Matt and.
Good morning, all.
2021 has been a transformational year for bio Haven and Nortek ODT.
Remain enthusiastic about the brand success to date.
And significant impact we've had in the lives of so many patients with migraine and their loved ones looking.
Looking back at the year, Nortek ODT experienced strong and steady growth in market as health care professionals and patients became more familiar with the brands unique and what we believe to be best in class profile.
We began the year singularly focused on promotion acute therapy, which produced a healthy growth curve through the spring.
And once Nortek received agency approval for preventive therapy, we witnessed dramatic acceleration in our growth rate.
With early trial, among established subscribers as well as those new to brand.
We remain confident that Nortek odt's unique profile as the first and only medication proven to treat and prevent migraine is well positioned to shift the paradigm in migraine treatment to dual therapy.
We're very pleased with fourth quarter sales of $190 million.
An increase of 40% over prior quarter, which totaled $463 million in our first full year of commercialization.
With Nortek ODT only now a protein its second anniversary and market, we've achieved $526 million in revenue since launch with <unk>.
Certainly proud of our commercial team and was accomplished with passionate support from every member of the <unk> family because we realize that every prescription filled as a potential life changing moment for patients and those they love.
The new year brings with it tremendous opportunity at the oral <unk> class continues to penetrate what is a highly dissatisfied market.
As Brad mentioned earlier, we are witnessing significant penetration of the generic generic triptan market as well as significant growth from patients who hadn't filled a prescription in years and it may do with over the counter meds and other means to address their migraine attacks with a tremendous clinical advance of all <unk>, we see all the <unk>.
What's changing in the most recent sphere staff evidence suggests physicians are optimistic about Japan and expect their adoption to accelerate in the months ahead.
Not surprisingly.
We see a similar dynamic among preventive therapy.
Physicians predict strong uptake of <unk>, specifically nortek, while generic therapies continue to erode over time.
Although changing physician prescribing behavior doesn't happen overnight.
<unk> are a leading indicator of the evolution, taking place across the migraine market. They will come to fruition in the months and years to come.
Another leading indicator is physician satisfaction with migraine therapies and as you can see by this graph for all <unk> dominate.
Even among these impressive class data a consistent theme shows Nortek is the brand of choice among physicians.
And highlighted here, we see neurotechnology and as the brand with the highest level of satisfaction.
As the market leader Nortek is poised to benefit differentially by the growth dynamics. Among all Crp's. We're also encouraged by the class volume growth within the last few weeks.
In early Q1, we anticipated slower uptake for all the seasonal factors that are endemic to our industry I E.
New year insurance plan changes deductible annual resets.
Ascription acceleration and yearend refills in Q4 et cetera.
But we are seeing earlier return to growth trends than in years past.
In closing <unk>.
21 has been an amazing year, we're pleased with our position as market leader in a rapidly growing market with high unmet need we continue.
To perform well across all launch metrics as prescriber and patient trial and advocacy steadily grow. In addition, I am pleased to report we've maintained nortek extremely strong formulary access for both acute and preventive indications.
With that I'd like to introduce you to another nurse patient Gregg with a great testimony to share.
I'm a retired green beret from the Army 21 years, seven combat tours I have of Tbi and bad migraine headaches.
Started to take <unk> ODT and I think it has changed my life.
I used to live in my closet beats.
Between migraine headaches and all my other problems after seven combat tours I had lost hope not.
<unk> has made my life so much better.
We have now started Blue Ridge Safe House, it's a nonprofit to help active duty guys like me.
Yeah.
Patients like Greg and so many others make what we do every day so incredibly worthwhile at this point I'd like to hand, it over to my partner ALLETE stock, our Chief Medical Officer.
Thank you Vijay.
Oh my goodness. So much has happened in this last quarter and I'm really delighted to share it with you.
Before I start I really wanted to.
The fantastic people that I worked with a firewall and because they are really the ones who are delivering the milestones that I'll be sharing with you. This morning.
These talented individuals we will be able to unleash the potential of our multiple assets and bring multiple therapies to patients here in the U S as well as with our Pfizer colleagues across the globe.
So far this year and I'll remind you we're only in February we're delivering on important milestones just yesterday, we received news of a positive opinion from the <unk> and our filing of <unk> for both acute and preventive treatment of migraine.
This quarter. We also had positive topline results from our Nortek acute treatment of migraine study in Asia.
And at the end of last year, we delivered positive results on our second Registrational intranasal does that Japan trial, we're expecting further milestones to be achieved over the course of the year, but I'll delve into each of our most recent achievements just a bit more.
Our impressive <unk> franchise, a firewall that is just unparalleled in our industry Nortek ODT remains our cornerstone marketed product and the only oral migraine product indicated for the acute treatment of migraine as well as for prevention.
Yesterday, we got news from the <unk> that we've been given a positive opinion on our oral on our newer techs admission for the stools treatment for.
For those of you following closely we were not required to attend an oral explanation.
We were quickly able to address all of the issues raised and really appreciate the speed and collaborative nature at the European regulators.
The ability to treat a large number of patients across the migraine continuum is a truly innovative approach to the treatment of migraine and we look forward to an approval over the coming weeks.
Earlier. This month, we also announced positive results from our fourth positive phase III study ever met Japan for the acute treatment of migraine, which was conducted in China and Korea.
This study met its co primary endpoints of freedom from pain and freedom from the most bothersome migraine associated symptom also known as MBS.
Which includes nausea, photophobia and photophobia at two hours following a single oral dose of <unk>.
As seen in the graph a single oral dose of <unk> 75 milligram provides statistically significant relief of migraine symptoms and returned to normal function at two hours.
<unk> delivered sustained efficacy that lasted up to 48 hours for many patients.
When that Japan showed broad efficacy across multiple clinically meaningful endpoints and a favorable safety and tolerability profile that was consistent with prior clinical trial results in the United States.
Our work with Pfizer has brought us great collaborative colleagues and I'm confident that they'll be able to take these tremendous accomplishments and expand our global footprint, bringing relief to patients suffering with migraine across the globe.
As I've said before we will continue to expand our program with lifecycle studies of Nortek ODT, both within neuroscience as well as explore a wide variety of scientifically relevant indications outside of migraine as we followed the science at the <unk> antagonist.
Earlier this month, we enrolled our first patient in in your Tech study of Rhino Sinusitis. This is just one of the Nortek studies, we intend to begin this year.
Investigator initiated trials phase four clinical trials and studies and health economics will add to the wealth of information that will ultimately be available for no tech and will help define the scope of important information for patients providers and payers both within the U S as well as globally.
We recently announced positive results from our intranasal <unk> phase III study.
Its co primary endpoints of pain freedom and freedom from MBS at two hours were statistically significant and replicated the results seen in our positive phase II study.
As we hoped it confirmed ultra rapid speed of onset with pain relief differentiating from placebo as early as 15 minutes with a single dose.
After that that Japan treatment patients, who previously experienced moderate to severe pain achieve reduction to mild or no pain.
And we anticipate a filing as intranasal, so that Japan for the acute treatment of migraine in the first half of this year 2022.
Our oral formulations is that Japan is being evaluated now in a phase III study in chronic migraine.
We continue to just make great progress across all of our late stage assets, including our glutamate modulating agents and our Myeloperoxidase inhibitor platform and over the coming months, we will see top line readout and are excited about all of the opportunities that we saw across both common and rare diseases.
Our bio E. The laboratories also remain busy with early discovery work and it continues just to grow we have more than 10 preclinical programs that include both novel small and large molecule approaches. These currently target over 12 indications with high.
Unmet medical need.
Okay.
Our pipeline is not only advancing but it's growing we're delighted to adjust announced the acquisition of channel Biosciences, and we are really delighted to welcome their team into the <unk> family.
They are innovative potassium channel modulation platform is exciting and we believe that the unique and differentiated pharmacology at their lead compound will allow us to effectively study pediatric and adult seizure disorders.
But I'll, let Mike and Steven Tanger without it in just a moment. Additionally, we've added Helpdesk robot.
On anti Myostatin asset to our portfolio and you will hear more about that as well.
We will continue to make strategic decisions across the portfolio.
<unk> data mature with both external partnerships and internal programs are.
Our pipeline is large and growing and I'm really excited about <unk> future.
It's a real pleasure to be able to turn the call over to Mike <unk> and Steven to our rescue to speak about final payments newest innovative platform technology <unk> seven.
Thank you Elyse, we couldnt be more delighted to be joining.
Haven labs at such an exciting time for the business and we're pleased to be delivering our <unk> platform to the capable and efficient hands of bio Haven pharmaceuticals.
We have found is the <unk> platform channel Biosciences to address an ancient disease and also one of the most prevalent in the United States alone three and a half million people suffer from epilepsy, a disease that can take over and disrupt your life because of seizures that can strike at any moment.
And Comorbidities like depression, and migraine headaches.
Focal epilepsy is the most common form of the disease affecting both children and adults and for many patients it's not easily treated in fact focal epilepsies refractory and one in three adults and one in four children, often requiring two or more medications and highly individualized treatment.
<unk>.
Epilepsy is not only difficult to treat but tragically. It can also be lethal each year more than one in 1000 people with epilepsy die from suit up or sudden unexpected death, and epilepsy and a person who was otherwise healthy.
Clearly there is a missing piece in epilepsy treatment and from the start we targeted a critical regulator of neuronal excitability called kv seven a voltage gated potassium channel present in the brain.
The field discovered kv seven about three decades ago.
Unlocking the pharmacology has proven difficult although targeting <unk> seven has been clinically validated as a mechanism procedure treatment existing <unk> activators carry tolerability risks, we believe our in house team of biologists and medicinal chemists have cracked the kv seven code we.
Have a library of small molecules and the platform with different pharmacology profiles and that have the potential for development in adjacent indications beyond epilepsy.
We believe our lead molecule PHP 7000 shows potential to be a best in class <unk> activator.
THB 7000, the lead candidate to emerge from our platform was rationally designed to target <unk> seven.
Importantly, it's structurally distinct from two other kv seven activators zagha being an ex CN 11 O one with patent life to at least 2039.
Its profile. It's also highly differentiated because we have dialed out the Gaba urgent activity intrinsic to these competing molecules.
We expect PHP 7000 to be in the clinic. This year an important next step in delivering what we hope will be a key missing piece for the treatment of epilepsy.
The molecule also benefits from rare pediatric disease designation from the FDA.
All in all we're coming to bio Haven with a potential best in class treatment for epilepsy with follow on compounds from our <unk> platform with the potential to treat other types of epilepsy, as well as pain disorders and affective disorders.
With that I'll turn it over to my friend and colleague of 30 years, Dr Steven or risky.
Thanks, Mike Let me reinforce being excited about the opportunity to be joining <unk> labs, and working with the team to deliver <unk> 7000 for rapid and efficient development by this organization.
As Mike mentioned, we see BHP 7000, as highly differentiated from the existing <unk> seven modulators zagha being an <unk> 11 O one.
Those first and second generation drugs clinically validated <unk> seven as a compelling targeting an epilepsy, but with attributes we have worked hard to overcome.
For example on the left panel Zagazig is chemically unstable to light and its label sites the risk of blue skin discoloration as well as a boxed warning for potential retinal effects in vision loss.
In contrast, the HV 7000 is stable photooxidation.
Shown in the Middle panel <unk> 11 O. One like <unk> had significant activity at the Gaba a receptor, which may account for the off target activities responsible for somnolence, dizziness fatigue, and other tolerability issues that have been reported.
In comparison as you can see BHP 7000 has negligible activity for Gaba a receptors.
Our aim from the start was to avoid these liabilities, while also maintaining potent anti seizure efficacy in vivo.
Put another way, we want to maximize the therapeutic index by putting as much distance as possible between efficacy and tolerability.
As shown on the right panel THB seven attain that goal as both a potent activator of the KD seven channel and was effective in preclinical assays and was well tolerated.
Allow me to share more detailed evidenced in the following slides.
Epilepsy happens to be a disease, where the preclinical assays have excellent predictive validity in humans.
What we're showing here on the left graph and the green circles is the number of animals protected from seizures with increasing dose.
We demonstrate excellent potency with an 80 50 <unk> five mix per kick.
Now I'll take a look at the open red circles, along the bottom of the graph.
That is a measure of tolerability according to a neurological deficit with zero, reflecting normal animal behavior.
As you can see these animals are normal.
The shaded area between the Green and Red results calculate the therapeutic index greater than 40 fold.
On the right you can see the similar experiment for us auditing.
The green triangles represent the anti seizure efficacy, which you see has an $80 50 of about 20 mix per gig. So the potency is much lower than for PHP 7000.
Let me turn your attention to the Red triangles, which you can see shows the neurological deficit, increasing with increasing dose and as close to the efficacy dose thus.
Thus the therapeutic index is approximately threefold compared to more than 40 fold for BHP 7000.
This approximates the clinical experience with his auditing as the drug was poorly tolerated.
We do not have the same experiment the results for <unk> hundred one but based on xenon reported data we estimate its therapeutic index at approximately six fold.
Somewhat better than the zagha being dramatically different than the greater than 40 fold therapeutic index of BHP 7000.
Our aim is to develop and deliver the third generation best in class <unk> seven modulator and we hope this will give people with refractory epilepsy better control over their diseases and their lives.
In closing, we believe the HB 7000 significantly differentiates from other molecules in this class of <unk> activation.
The graphic shows where we believe the superiority of our lead asset will provide the potential best in class for the treatment of refractory epilepsy and other neurological hybrid excitability disorders. Thanks.
Thanks for the chance to share a bit of the 7000 story and now back to you at least.
Thanks, so much.
I'd also like to introduce Chris <unk>, who will.
Ill provide a brief update on our recently in licensed anti Myostatin inhibitor. Thanks, Elyse, we're very excited to add <unk> to the portfolio.
<unk> is a well characterized negative regulator of muscle growth.
Based on a number of disease models and clinical studies, we believe our molecule that can target the signaling pathway of <unk> has potential in many different disease areas that could lead to improved strength in function and.
In patients with muscular dystrophy, and other neuromuscular diseases as an adjuvant to the current therapies.
<unk> Alpha is an advanced development program that has extensive human data, especially in the pediatric population with this robust package, we will be able to rapidly enter phase III in neuromuscular diseases, including SMA.
I know this asset very well I'll, let the program wells at BMS oversized development into from the lab into phase III.
This program will synergize with bio havens experienced in a taxi and other rare diseases and we're looking forward to partnering with SMA community of patients physicians and advocacy organizations to find novel combination therapies.
With that background I'm going to hand back to flat.
Thank you, Matt BJ lease, Mike, Stephen and Cliff and once again welcome to the entire channel Biosciences team. We're so excited to have you part of bio Haven and also on behalf of the whole team at Bio Haven, We just wanted to say how excited we are to be working with Mike and Stephen again.
You may not know this but they were both important leaders at the BMS Neuroscience group that many of US were all part of years back. So it's somewhat of a homecoming to have them in the company and working with us again.
In closing bio Haven has demonstrated robust growth in our commercialization of Nortek ODT and important maturation of our late stage innovative pipeline, we continue to expand our clinical pipeline as well as our early stage portfolio with the goal of increasing value in growth year over year.
Our commitment to people with migraine around the globe has never been stronger and our global expansion with Pfizer, We will open the door to the 1 billion people worldwide, who suffer from this debilitating disease.
Before opening up to Q&A I would like to thank the entire <unk> team for their relentless commitment drive and value creation for patients and investors I also want to take the opportunity to thank all the patients who have enrolled in our clinical trials that are family members.
And Theyre invest and investigators who participated in advancing our pipeline.
We will continue to work hard to bring novel treatments to patients living with the burden of <unk>.
Devastating neurologic and neuropsychiatric diseases.
Finally, thank you again to our visionary investors, who have helped fund our studies and bring Nortek ODT to patients operator, we'd now like to open up the call and take some questions.
Thank you, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star one.
One moment, please where we poll for questions.
First question today is coming from Ken Cacciatore from Cowen and company. Your line is now live.
Hey, good morning, and congratulations on all the progress I was wondering with no formal guidance could you give us a sense of comfort around the streets Nortek specific revenues for this year around $850 million and then maybe Matt could you speak a little bit to the <unk>.
Its on spending this year is a Q4 run rate good and then a general question for you glad obviously really exciting new pipeline additions, but some investors do worry that increasing the pipeline investment, which should further enhance today could.
Detract from Nortek value, it's just hard to value the pipeline versus easier to value Nortek. So can you talk about the balance of really huge spending to support nortek need to invest in pipeline versus potentially an exit or maybe even a split of the business are all options on the table to talk us through that thanks, so much.
Alright, I'll have Matt start off and then ill jump in yeah, Ken as you know.
We don't provide.
Guidance, so can't really comment on the.
The 850 and as it relates to.
Sort of the Q4 run rate for expense, we do expect modest increases on the expense side.
Just have added a few really promising assets, which would be part of that.
Calculation.
So again were.
Excited about <unk> and as you know.
From prior discussions when you look at where we are in our net revenue generation and where we and others believe will be in future years Theres very few drugs that have this type of potential both for patients and net revenue generation for our companies. So I don't think we have a large spend to support that I think it is an approach.
Brigit infrastructure size and spend to what we believe ultimately will be multi billion dollars net revenues.
It'd be at peak sales and give you a little bit of a glimpse as to how early we are and how much growth is ahead of us and so in addition to the revenue from Nortek, we do want to make sure. We have other assets that can mature into the commercialization infrastructure that we have and I think what you saw today as it has in addition.
Of what I would view as to de risked mechanisms of actions that are very much fast follower approaches.
And when you look at some of the external data that's been generated in <unk> seven in epilepsy, and the predictability of assays to how those assets will perform the clinic. We think these are high probability or higher probability wins in neuroscience.
And that's why we're so excited to be incorporating them into the pipeline. Your question about M&A and other activity as you know we can't comment too much on that other than say that look acquisitions like today and broadening the pipeline just strengthens our company and strengthens I think our ability to organically generate increased revenue in future years or.
For something that would be of interest to other parties to put together a pipeline like this so we're going to continue to run our business maximize investor returns and grow value and we're going to continue to do that until there is a reason not too. So thanks for the question, Ken and I appreciate it.
Operator next question. Our next question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.
Yes. Good morning, Thanks for taking the question congrats Brad and team.
Continued good commercial execution as well as the.
News flow. This morning wanted to ask a commercial question for BJ and that is that P. J you mentioned in your prepared remarks that you have seen earlier returns to growth in the first quarter than perhaps you would've expected given your experience in previous years and I am just wonder.
If you could provide some more color on that and then relative to the current.
I'll call it the adoption rate of the oral <unk> and specifically <unk> ODT, what message would you like prescribers to here that could drive further adoption of the class and drug specific right.
So thank you for the question I appreciate that and I would say just provide a little context around.
The comment around the earlier growth is that.
Yeah.
It is a little bit slow in regards to what the uptake is in Q1.
Normally again, that's not just <unk>.
Neither <unk> or a migraine issue in some sense right. It just more broad.
Across the industry, but I will say that again in recent weeks basically started in February we start to see what you just kind of that return to growth again, and I'd say across the class, which is a positive news for US again. There are good reasons for that I think a lot of it is the incremental promotion that's happening.
Because of different products actually entering the market as well, which actually benefits everyone, especially patients. So that's a good news story overall, so that points to greater growth and so we're pleased about what what that means for coming weeks as it relates to the adopt.
Right, that's happening and what I'd like to say to prescribers and this is essentially what we communicate.
On a day to day basis, right with with all of our customers out there is that essentially now they have an opportunity to utilize a product for efficiencies and suffering in this space for so long, we really very very little risk.
But tremendous upside for those individuals and they can use it in this convenient.
<unk> platform, which again is one product, obviously that can treat and prevent and it's one dose and again does not have the same kind of baggage if you will of that.
The older medications that had in the past and so I will say again I think it's part of what is the fire.
Just kind of under this marketplaces it commissions perceive that they see it they actually get trial and get tremendous feedback from patients and that is what we believe really will fuel this market going forward. Thanks.
Operator next question.
Thank you. Your next question is coming from Chris Raymond from Piper Sandler Your line is now live.
Yes. Thanks, just a couple of questions on some of these new assets if you don't mind.
So I guess the anti Myostatin.
Did some digging on this molecule looks like it's been studied already in DMD.
<unk>.
And failed to show impact on ambulatory measure DMD in SMA are different a lot of ways, but just kind of what are you guys or are you seeing in the data that sort of gives confidence.
In this indication and then just thinking about phase III design is it contemplated this should be looked at in combo with a disease modify our like spin Rosa.
Any details on that sort of plan would be great.
And then I.
I guess on the cave seven.
Asset.
It looks like this is <unk>.
<unk> website anyway.
It is in development for epileptic encephalopathy.
Can you maybe is that still on the table as an indication that youre targeting as maybe sort of a quick path to market.
Just maybe talk about that a little bit and then maybe if.
If I can put one more question could you guys maybe more strategic.
How youre thinking about guidance.
Are there some elements around the business that youre looking for before guiding or is there maybe sort of some philosophical reason to not guide. Thanks.
Great. Thanks, Chris.
Turn it over to Mike in a minute to talk about <unk> seven respond to that comment on Myostatin also have cliff chime in here, but the mechanism of action.
Has not been demonstrated in DMD to establish efficacy.
We have a very large safety database from that experience and as you know the scholar rock data in SMA with a similar myostatin targeting did suggest efficacy and thats really the clinical proof of concept.
That is.
Advancing our interest in this area. We also note that there is other competitors Roche who have myostatin.
Targeting agent as well so rosanne scholar rock are both adding into SMA given the recent clinical POC there.
We believe that this has the potential to be a best in class <unk> targeting agent and excited to quicker.
Quickly advance into SMA, given the emerging data Cliff do you want to add I think yes, just really quickly I think what we learned at the Duchenne areas that this molecule is very safe as well tolerated pediatric population, but we also learned that it is a monotherapy it's it didn't hit.
Significance to see clinical benefit with different than SMA is the presence of SMN up regulating there.
Therapies that are approved in the market, which we think and demonstrated by our preclinical models, we will show a synergistic effect and so that's why we're targeting an SMA to begin with and you have to say it would be in combination with standard of care therapy and others.
And then Mike do you want to comment on.
<unk> seven.
Sure.
We're really excited to be joining the <unk> team and their commitment to advancing PHP 7000.
<unk> for the treatment of epilepsy.
And answer to your question.
The drug has great sort of clinical proof of concept as a treatment for.
Adult refractory focal epilepsy, so we'll clearly be advancing the drug along that path.
It's an established clinical development pathway, you're following footprints in the snow. So so that is that has a strong commitment we're equally committed to exploring the potential of the drug.
A pediatric epilepsy treatment, including the opportunity to treat patients with case in Q2 epileptic encephalopathy. So we will be advancing the molecule in clinical development. As you know there are steps that you need to take before you can treat.
Children, and certainly young children, and so will be.
Doing taking the steps that we need to.
To be able to walk down that path.
Okay, and Matt you want to.
Got it yes.
Yes.
From a guidance perspective, I think we're going to be more comfortable getting into a place where we're guiding next year. At this point, we have a lot of variables a lot of moving parts, including.
Pfizer and sort of how they're looking at this.
You from a contribution we are prevention, which.
It's still kind of early ish in the launch phase.
A highly competitive environment.
So they're variable there as well so.
As we get more comfortable with all of those.
We will start to provide kind of great. Thank you operator next question.
Certainly our next question is coming from Paul Choi from Goldman Sachs. Your line is now live.
Thank you good morning, everyone and congrats let me add my congrats on all the progress as well.
My first question is for Vlad and BJ as well, maybe as you're thinking about the commercial execution strategy here in 'twenty two.
Launched in the pandemic environment, which involved a lot of virtual selling how are you thinking maybe about pivoting to more feet on the street to grow grow the nortek franchise over the course of this year and next year as we exit the pandemic and then second on the pipeline maybe maybe for a lease as you think about that the clinical strategy for SMA.
It's going to be a particular focus on a subpopulation, whether its type one where you see the highest probability or type two and so forth.
And just maybe any special specifics you can provide on <unk>.
What about your high level thoughts on clinical trial design here would be great. Thank you.
Thanks, Paul and.
With regard to this this year.
The pandemic, we demonstrated the success of <unk>, despite the pandemic and I think it reflects how debilitating this illnesses and that people will go out and get another treatment because theyre so disabled by migraine when it strikes. So we've demonstrated the ability to do this well in a very harsh environment and what we see from the data.
Is that is.
Patient traffic and volume in physicians offices increases, we do better and so we believe as the pandemic gets behind US there will be a greater opportunity to increase <unk>.
And we are.
Not planning anything other than modest changes to our sales force there'll be some like always some optimization to ensure we are remaining highly competitive and maximizing.
Sure.
But youre going to see a continued emphasis on digital.
And virtual in addition to the in person of course, but the things that made us successful during the pandemic, we're going to continue to optimize.
That alleviates Vijay you want to add anything to that.
Only thing I'll add.
Well said, thank you I would say is that we are absolutely committed to what is kind of our digital first approach and again that is in the full light of day hopefully as this pandemic passes.
And the beauty is what we can and will do is build this capability. So that we can actually integrate that with our feet on the street as Vlad mentioned, we will do kind of what is kind of a modest incremental investment in feet on the street, but we are focused on increasing impact of each one of our folks out there and we look forward to.
The full year.
Cliff and Lisa maybe you can comment on the design of the SMA I mean, one thing that the field has changed significantly and we've been partnering with thought leaders and experts in the area to understand that with the.
Advances in the marketed products that are operating with SMN, you look where we're seeing the move away from the classification of SMA, two and three because they are performing differently. So partnering with experts in the field with patient advocacy, we're still coming up the right design to move forward great Alright, operator last question.
Thank you. Our final question today is coming from Laura Chico from Wedbush. Your line is now live.
Hey, Thanks, guys for squeezing me in just two on the pipeline. So first BHP 7000 could you talk a little bit more on how you see clinical points of differentiation manifesting it sounds like you're highlighting GAAP activation.
And I'm just curious if this how this plays out is this more on the adverse events side and I guess, how would you elaborate or could you elaborate on how you would tease that out from a trial design perspective, and then just with respect to very different stat. I know, we're getting results in around the middle of the year, but could you talk a little bit more about the communication strategy around.
Topline results. This is obviously a unique design evaluating a couple of different therapies in the study. So I just want to make sure I understand.
Perhaps how the degree of disclosure might work or who will be leading that effort.
Sure. So we'll invite Mike and Stevens comment.
Comment and reclaim that <unk> seven Mike let's start.
Sure so as <unk>.
Probably know the first and second generation <unk> activators or not.
Specific for <unk> seven.
Gaba activation component to their pharmacology, and we specifically dialed out the Gaba activity, because we're very confident and we have the preclinical data to show that <unk> seven activation alone is sufficient for for efficacy and potent efficacy at that.
And then what has really limited KD seven activators to date is the fact that as you become effective you bump up against side effects Somnolence, Vertigo diplopia and when you hit those side effects.
You can't go further and so you have efficacy limitations and you also have compliance limitations.
And we.
Preclinical evidence that we don't see this so we will be.
Looking for differentiation in terms of side effect profiles and there are other.
Liabilities that the first and second generation activators of how it including.
Events of urinary retention. So we think will be differentiated both as a more potent.
<unk>.
Activator of the of the target.
Which we hope will translate into very good.
You can see as well as a compound that will be very well tolerated and patients will stay on the drug.
Great. Thank you and just to wrap up on the question about the Healey.
And the AOS trial, so although thats a platform trial with multiple different assets they share a placebo arm as a asset reads out we will get the top line on that asset. So we're not waiting for other assets.
Read out at once.
We get to that top line data it will be revealed in we're thinking somewhere around mid year. So I know we have to wrap up now as we're out of time. So thank you everyone for joining us today, we deeply appreciate the support of our employees and investors as we move forward.
We're delivering life changing therapies to patients and talk to everyone very soon thank you.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.