Q4 2021 Pharming Group NV Earnings Call
Hello, and welcome to the coming school year 'twenty 'twenty. One result school my name is Jordan and I'll be coordinating your call today, if you'd like to register a question you may do so by pressing star followed by one on your telephone keypad.
I'm now going to hand over to farming C. O. So I'm into freeze to begin Simon. Please go ahead.
Thank you very much Julien good morning, and good afternoon, ladies and gentlemen, and welcome to our full year results conference.
I have here with me our CFO , you don't walk along and our Chief Medical Officer.
He will be taking you to our conference to a short presentation of course, there's a question as announced as afterwards, but before I do that I would like to look to take you to take a look at the next slide.
Forward looking statements as we will be making some forward looking statements that are based on our current beliefs and assumptions and expectations and those can obviously as you know James.
So, let's just move on to the next slide and then that there you see some pictures off.
All of US are and maybe we can move on to slide number, Florida as well so that's out.
And.
You know what are we we are a we are a well funded business and we are very happy of course that we are supported by a strong commercial sales operation.
On both sides of the Ocean the Atlantic Oceans, and we have a growing pipeline for rare and ultra rare diseases with unmet medical need and our lead product as you have seen from the press release and a recorded Donaldson $99 million of sales in 2021.
And we see that so we continue to see over the years that more doctors are prescribing to reconnect and it was again. This COVID-19 case in 2021 and more patients are using glucanase. So there is definitely a positive underlying a continuing trend in the use of any user through goodness.
And then we are very excited because we are at this point in time for the second time in our company's history. The last time was in 2013.
In position.
If positive the results from our pivotal trial for new compounds. So that means that we are looking to actually be able to within a year from now.
Subject of course to approval of the product to go into the market with our second product linearly Sip for the treatment of another orphan disease a P. D S which of course is a significant change for the company because last time when we had this the company was in dire Straits and we did not have the product in our own hands.
Now we have this commercialization capabilities on both sides of the Ocean, we have a very strong balance sheet and we can actually I have been already as you have seen from the results investing seriously into the preparations for launch because we can do it ourselves now and the good news is when you have a commercialization operation already the marginal cost Ob itself.
<unk> are not nearly as significant as when you have to lose the first time. So we're very excited about this prospect in an anorak whalen, especially here, we'll talk a lot more about linear or is it later in the presentation.
We are in this in addition to that we are able to because of our strong a commercialization.
Results in the continuation of <unk>, we're able to actually leverage in house expertise to drive further R&D, including.
Continuing to hunt for additional in licensing opportunities that are around for late stage compounds and also we're able to work on early stage compound for instance, Oh T. L. One O five which we in licensed from Orchard Therapeutics, a potentially curative gene therapy for dairy and juice demos to which an raki relative the talk a little bit later as well.
So we're very pleased with both results and with where the company is and we think this is a historical moment for the company as we turned into restock tuning into a different a different company. It is not only relying on this one product one market combination, but as looking forward to build a business in the European side of the Ocean.
As well and how are we going to do that in the next slide you see the three pillars here.
The last one is the commercialization pillar where of course, well known euronext will be continued to be rolled out in additional countries. As you have seen earlier this year, but also where commercialization will fit of a P. D. S is important with say with Lady obviously, but then in the middle you see via that importance of that.
Important pillar here, where we look for near term expansion of the portfolio with rare or ultra rare diseases with in licensing or acquisition of late stage assets in the router ultra rare diseases.
But also of course the development of C. One inhibitor in subsequent indications, but also P. I V <unk> kinase Delta Ie Lady ownership.
<unk> has some interesting prospects of additional indications where the compound could be developed for it because that was already although the research done by Novartis.
In research collaborations to to look at additional indications for this compound. So we believe that could be potentially more in India in the Indian into future, Florida Fellaini ownership as well and then we have an interesting a genetic testing effort going on before identification of a P. D. S patients and we're building gradually building up a database of.
Genetic genetic profiles of patients that have undergone this genetic tests, there, where we can see patterns in other genetic mutations and other immune disease. Other primary immune diseases, which had not been properly diagnosed yet that can direct and that's the third pillar for the long term.
Our business development efforts into the direction of new identification of new primary immune deficiency.
Opportunities and direct our colleagues and business development to look for such assets.
Or develop them ourselves in the in the very long term and then do you see on the desk pillar as well.
The development out of O T L. One O five the ex vivo and potentially revolutionary here and what extent cell gene therapy, but for heritage Judy My last northeast from our own platform.
Offer glucose today's program thoughtful bompas disease.
So, let's just take a look at our look back at what happened during that 2021, and you can see that on the next slides.
You see we've been able to expand the reach of <unk> now, we all know that inherent dairy angioedema because of historical reasons.
Outside of the United States, the commercial opportunity is not so significant because we believe investing in extending the presence of <unk> is not only helpful to be able to sell more tokenist, albeit for rare disease.
Modest commercial returns are outside of the U S. But also to put R to P.
<unk>.
Our organization down and build networks in the markets ahead of the launch of leno's. It because that will be very different story, there will be no pricing reference surprise referencing there will be no additional.
There will be no competition in that market and basically you know when we are in that market is easier to do axis. So do you see North Africa, the middle East Spain.
We actually reached I reached out and were further we are working still on further expansion of the root cause of the farming presence in some of the other European markets in 2022.
We renewed our strategic manufacturing agreement with <unk> with Sanofi, we're very pleased with US enough. He has been our ex excellent partner for the last I would say 12 years already and we were very glad to be able to renew that.
And that gave US also the opportunity to take a sharp think about whether we wanted to build their own a drug substance.
And we decided to step away from that which is going to save us. Some 44 zero million dollars going forward, which can be put to good use in four investments in linearity Sip, but also for in licensing or helping them in and M&A transactions.
So then we took a look at the late stage pipeline. We saw the positive we already referred to that earlier the positive topline data of the pivotal study for linear ownership.
And then of course as that was referred to we already started significantly investing in in a linear ownership.
Or do you anticipate head of the anticipated global regulatory filings, which will start later on in this in this quarter and then of course the launch of that AR. That's genetic testing program that navigate a P. D. S that collaborations with Vijay without refer what I was referring to which will be significantly stepped up.
Later on this year as and when we deploy significantly more people in the U S market to actually find a P. D. S. Patients ahead of the of the launch of the product and then last but not least here. We received a positive decision on that from the EMA on the pediatric investigation plan for <unk> in Europe , which is important because that means that the.
There is a clear pathway to approval in Europe as well as the EMA accepted the primary endpoints that are exactly the same for the pediatric study as for the for the pivotal study and also.
As the email bought into this whole thing you know this is a pediatric investigation plan that covers patients up to 18 years of age, whereas our city already includes patients from 12 years up to eight so we already in a way has done some of this work for the pediatric the could it be their development program by means of the pivotal trial.
Let me I was already referred to it earlier, we in licensed the OTR 105 is potentially curative scheduled date for a JV for Orchard Therapeutics. We also finally got our phase II <unk> study going for the prevention of acute kidney injury with silver competency, one SaaS inhibitor and we have some interesting top line results from a clinical trial in severe <unk>.
Tony as result of the COVID-19 infections. So we had a very very busy year in 2019.
And then we move on to the to the next slide because of course, you all want to know what's going on what's underlying <unk> and how does it look like in the heritage DUBA markets and then on the next slide you will see a picture of how we see.
The markets are Florida, Ohio to Reengine Demount, what you cannot spaces traditionally and of course, that's a big difference as I was already referred to earlier, we were late to the market with <unk>. There was a lot of competition already around.
This is not the case with Aps, but when you are late of course through the market and then you need to have a very efficacious product and we have a very efficacious product and that is on the right hand side you see debit severely affected patients that has been a natural position for recognition in the beginning onwards.
Of course, when you come to the market and there's already a products available you got patients that can't get by on other products and they found a place that who can asses highly dose protein replacement therapy.
Actually covers all the three pathways that are effect that are.
That are actually evolved inherit Terry angioedema attacks, whereas the bradykinin colloquy products, albeit efficacious.
Suffer consistently from breakthrough attacks because the early cohort one of the three pathway. So that is where <unk> finds its place.
And then.
The good news for the patients was of course that these markets.
It was offered a lot more possibilities for prophylactic therapies and prophylactic therapies have become significantly more popular United States. However, all these.
Both productive therapies, albeit that it was great great.
Great advances made in efficacy and there is very good for the patients obviously.
There is still a consistent consistently almost half the patients from time to time or sometimes heidi frequently, especially from breakthrough attacks.
And as the paradigm for prophylaxis shifted from the original C. One inhibition to wisely bradykinin colloquy inhibition. It has become natural dress you have a C. One inhibitor refinanced available as breakthrough therapy.
But it is also the reason why we see consistently more patients being treated with our way through it with you could ask because we see that reconnects. This is increasingly also prescribed as breakthrough medication. When these patients get the new prophylactic therapies prescribed. So therefore, we're very confident as <unk> continues to serve in a unique position.
And in the Harris, Terry Angioedema market I E on the right hand side.
Where the severe patients are that cannot get by with the with the existing therapies and also increasingly so in the breakthrough attacks segment. There on the left hand side of the market, where the weakness is prescribed as breakthrough medication for patients that continue to have a breakthrough attacks.
So that's why we are guiding for the first time in our history, we have given some guidance on sales for Luke and ask them if guys for.
Single digit growth rejoined the single digit growth for 2021 versus 2002, a charge for 2022 versus 2021 for the for the sale. So from a recognized on the basis of these trends that we see underlying in the market.
The next slide.
Illustrates that point I was making that prophylaxis is basically shifted the market from the beginning it was like 60 40 and now it seems to have stabilized at 70% of the patients in the U S market get prophylaxis, whereas 30 are being served with the acute therapies, but as you have seen on the bottom line there <unk>.
Market share has caused has stayed consistent over all those years and therefore.
Therefore, we have.
We strongly support the idea we strongly believe in the idea that weakness has this stable position in that area to area and Judy my market for the for the time to come.
So this is what I wanted to share with you about <unk> and I would like to now switch over switch gears and share with you some of the excitement about the possibility to help patients with a P. D. S. A with the product Lenny ownership coming hopefully coming to the market soon and I'll hand over now to my colleague, our Chief Medical Officer Doctor Adler at ground and.
<unk> over to you please.
Thanks, Simon and yes, we are very excited about the possibility of helping these patients with EPS EPS is a serious unmet need patient.
Patient population that is currently underserved.
Different populations.
As we see on the next slide we think that there's more than 1350 across the U S Europe , and Japan will live with a PBS many of these patients obviously are still on diagnosed.
We have actually identified through our own efforts and really just beginning with these efforts we have identified more than 350 patients across these areas and as we get a better understanding of primary immune deficiencies of which <unk> is one of them we have.
The potential to identify even more patients.
Again, these patients because of their symptom complex they end up seeing numerous specialist and.
Because the condition itself. It's only been described for less than 10 years. There is still a lot of an awareness about the disease.
As a genetic disease the symptoms begin in childhood and disrupt their school and social development.
It can impact on their quality of life. These patients undergoing numerous surgical procedures as part of this work up in evaluation.
<unk> seen by numerous doctors impacting their mental health and when we look at the symptom complex, it's really across the body we see.
Damage from recurrent infections, we see gastrointestinal disease, we see really the hallmark of the disease, though.
Lymph nodes and rapid result also.
And large school liver.
We also see autoimmune phenomenon because there is not only this immune deficiency because of the disease, but we also have activation of the immune system and these patients can get.
Another side of Poodles and unfortunately, many of these patients go on to develop lymphoma because of this hyper activation of this pi three kinase Delta pathway.
<unk>.
Unfortunately, the truth is that right now the treatment options for these patients are quite limited.
To manage its management of infections like they develop trying to prevent infections with immune globulin replacement therapy trying to control the hyper activation of the immune system.
With non specific inhibitors and then in rare cases patients go on to receive stem cell transplantation with all of the resulting complications.
Again, there are no approved treatments available for these patients and so this is why based on all of the things that we see with <unk>. So far we're quite excited about the possibility of being able to help these patients.
Essentially dramatically transform their lives.
Please.
And one of the things that we're doing is really going out there and working with physicians on education and understanding the disease and we built a network.
Physicians, who are experts in atvs and on top of that now as we're doing that we're beginning to understand.
The clinical phenotype of these patients and using that clinical phenotype to potentially identify additional patients and there's a big part of that was this program that we launched last year called navigate atvs.
This was a partnership that we have with <unk> to provide sponsored genetic testing. So genetic testing that is no cost to the patient that allows for patients with primary immune deficiencies, who have the features of <unk> to obtain genetic testing to obtain an ultimate diagnosis.
We know that there are barriers currently to obtain genetic testing, especially in the U S and by having this program in place we'd hope to eliminate those barriers and really allow these patients with any primary immune deficiency to get a specific diagnosis not only atvs and the feedback that we have so far from the from al.
Just any knowledges and others, who are using this program has been quite tremendously positive.
Next slide please.
But then onto lineal suite and what we see with <unk> is that we have an effective.
<unk> K Delta selective orally bio available inhibitor and really the goal here is to use this.
We treat delta inhibitor to which to take care of the hyper activation.
<unk> K pathway.
<unk> addressed the root cause.
By addressing the root cause we hope to address the issues that this hyper activation causes and really looked at hyper activation resulted in us.
Normal development of the immune system abnormal maturation of B and T cells, and other immune cells and the immune system and because of that abnormal maturation, we see all of the clinical phenomenon.
That I've been talking about.
And with the genetic test that we have we hope to be able to.
Now patients with primary immune deficiency.
Obtained this diagnosis or feedback in working with regulatory agencies. So far has been quite positive.
I haven't already mentioned that we received in pediatric investigation plan approval from EMA and we also have orphan drug designation both in the U S as well as in Europe and remember the other nice part about this is that we continue to work with the same doctors that we have been working with for the past 20 years in HIV either can be now.
Allergist, who who also see patients with HLA E and now we're adding on to that capability by allowing them to work with them in the field with primary immune deficiency.
Next slide please.
I'm going to talk a little bit now about the pivotal trial design and the design really was in two parts part one was the dose finding part and this wasn't six patients that received.
Three doses of millennials soup over of course, a total of 12 weeks.
Once were individually dose escalated and again these were patients with the confirmed diagnosis of <unk>. We looked at the typical outcomes in this type of study safety Tolerability pharmacokinetics and the ability to actually stop that hyper activation.
In this pathway.
The dose that was selected based on these results.
Was the 70 milligram twice daily dose and that was being used in the placebo controlled part the randomized placebo controlled part.
Two of the study in which patients were randomized two to one to receive lineal assume 70 milligram twice daily dose.
And this study than it had the following a co primary endpoint looking really at the hallmarks of the disease, namely lymphadenopathy or swollen lymph nodes and normalization of the immuno phenotype and what I mean by that is that these are the features of the disease that define the disease. These patients have become.
That hyper activation in that pathway.
How that immune cell.
Issues with development and maturation and because of that their lymph nodes swell up and they're in their b cells and other other immune cells don't develop properly. So we specifically looked at those features.
The primary endpoints in the study.
And then of course, there were safety assessment.
On top of that all of these patients that had the ability to go on into an open label extension study and we're actually in quite a unique position here with a.
Therapy lending, you'll feel that we have not only randomized double blind placebo controlled data in a rare disease, but we have data in these patients going on for several years.
Some patients including patients from part one.
The therapy for more than five years and continue to be on the therapy and I'll share with you. Some of those results because I think when we think about the totality of the data when you look at all the data that we have with like New York ship, what what really shows us what this drug is doing it's not only that we can say okay.
Improved how they are these patients' immune cells work you've improved there.
Clinical features of lineal.
Swollen lymph nodes, but you also can show that you can do this over many years and again I think that's a unique position for the therapy, that's been developed for a rare disease.
Next slide please.
And in part one what we saw was that when you mix. It was well tolerated at these doses and then again, we selected the 70 milligram twice daily dose.
And what we saw also was that there was significantly less disease activity in patients felt better there was a suppression of this pathway, we were able to normalize some of these things that I mentioned without in terms of the biochemical aspects demonstrating the improper maturation of their immune system and as.
As a result, we also source reduction in the swelling of the root node and spleen and you'll see those reductions in the table on the left.
A 40% reduction in just 12 weeks of therapy with lineal is sort of an unknown.
Right.
At the bottom you can see that these patients who would have on an enlarged spleen for years and then immediately go on language, which is labeled <unk> CDC 173, you can see their spleen size decrease and that's just one example, and we have beta now.
All patients showing very similar phenomenon.
Next slide.
And here, what we can see as the long term results and you'll see this is the results from those initial six patients that were part of a dose finding study and these are their IGF levels. IGN is an antibody. That's produced early in the immune response and because these patients immune cells.
Don't mature property don't develop properly.
And in essence, they have a problem with what's called class switching or they have a problem with transitioning to produce a <unk> response.
Did that continue to produce high levels of IGN antibody and you can see each of these six patients when they went on when Youll suite for those first 12 weeks and those are those bolded line.
IGN levels dropped.
What's even more interesting is then because of some logistical issues not all patients could continue and youll see that immediately in the extension study. So they had to stop and you see those are those gas lines and unfortunately their AGM level started to go up when they went off and in some cases you can see for one patient it was off the drug for almost two years.
Her levels went up significantly.
Again once these patients resumed levy also beginning with bold section, you'll see those levels start to come back down again, it's a clear sign to us of the effects of the drug.
Not only in the short term.
It's also durable effect that these patients continue to tolerate the drug well and that they were IGF levels come down, but you say, okay. So the ICM levels come down you might be wondering well what does that mean and those are those symbols that you see above the numbers and those symbols indicate are these patients were able to reduce or.
Sometimes completely eliminate the need for IAG supplementation.
<unk> a replacement therapy again, indicating that these patients physicians felt okay. Your immune system is functioning normally I don't need to give you antibodies from someone else's immune system.
To fix your own immune system. So.
It's all coming together quite nicely when we look at this kind of information.
Where we see.
The immune phenotype, where the immune system functioning properly, we see reduction in their lymph nodes and screen sizes and we see that.
We're actually having to use less.
Immune globulin replacement therapy, again, a clear indication that their own immune system dysfunction.
Next slide.
And what we have now also is the data from part two of the study and this was the double blind placebo controlled part of the study where we showed both a reduction in their lymph nodes.
Slowing as well as a normalization of that immune dysfunction and we saw these results and we will be presenting these results actually the position from the NIH Doctor Canetti ROE will be presenting the results. These results later this month epics clinical Immunology Society meeting.
And we're quite excited to have those results presented and we'll be continuing to share. The results from this study as well as from the other patients who were in the open label extension study throughout the course of this year.
Medtronic.
And where does that lead us well that leaves us with these results now that we are in regulatory discussions and we hope to be able to file with the FDA later this quarter or excuse me later this and this first half of the year and and then eventually.
Also across Europe , with EMA and in the U K.
Because we know that this condition also X children and we've talked about this pediatric investigation plan, we want to begin our pediatric studies in the second half of this year, we've had discussions with the Japanese regulatory authorities also and look forward to beginning of the study in Japan. Because they were also there are patients there and physician to contact with us there.
Look we'd like to be able to use when he also in these patients.
Test when he also.
Japanese population of EPS patients. So we've begun that work and then as Simon said, we'd hope to be able to obtain regulatory approval in the U S as well as other territories across.
2023.
Okay.
Next slide please.
Now I'm going to turn and talk a little bit about the partnership that we have with Orchard therapeutics and this is the compound called <unk> 105.
The next slide.
The reason, we we looked at this and the reason that we are eventually.
Eventually licensing the compound one of course, we saw the potential benefits to offer a.
Cure to these patients but on top of that we really have been working in <unk> for 20 years.
And the commitment that we have to <unk> he.
Is real and we wanted to be able to move when we look forward to say, okay. What can we eventually offer these patients that could completely change their lives and that's that's what led us to this partnership.
And the concept here is to use an ex vivo autologous stem cell gene therapy for HIV.
The lentivirus that was going to be developed by Orchard therapeutics will be able to insert a copy of the serpent <unk>, one gene into patients into their own cells and do this outside of their Bobby Audi and then put those cells back into their body to get their own.
Blood cells can then produce C. One inhibitor and can really hopefully cure their disease.
In terms of what we've seen so far we've seen that.
We can express the protein and the protein works and that we're able to measure that.
Validated way.
The study.
All of this development is still early stage, but based on the expertise that Orchard house and that we have in HIV were quite motivated and positive about the prospects here and I look forward to providing further updates.
Later this year.
And I will turn it over to your room now to give us a little bit more on the financials.
Yeah. Thank you very much on Iraq.
In terms of the revenue the revenues for the full year of 2021 landed at $198 9 million, which is a 6% decrease versus the previous year.
And as you can see on the on the graph.
We had a very good Q4 in 2020 and that was because basically because of COVID-19 at the time patients were pre filling.
Refinished, ER prescriptions and that hit us in Q1.
So in in Q1 2020 wellness, we have reported before that we had lower prescription refill rates and also a reduction in new patient enrollment and I'm very happy to tell.
Tell that over the year it it recovered and in Q4 for example, we had a 3% growth in the U S. So I'm sure that also brings hope for the remainder of the 2022.
Next slide please.
So the revenues from sales in the U S and in 2021 where one of the $93 4 million, which is a decrease of 5% previous versus the previous year and we saw ongoing recovery in sales following the COVID-19 impacts in the at the beginning of <unk>.
A year.
In 2021, the sales in Europe decreased to $4 9 million from eight point too and that was caused by a number of issues, but mainly phasing of ordering for example, we got a very big order at the end of 'twenty 'twenty.
In one of the countries, where we deliver and that was not really caught up in the remainder of 2021 and the rest of the world revenue decrease to half a million from $1 3 million in the year before.
Looking at the gross profit it was 177.
47 million, a decrease which is in line with our revenues, but it's also good to say that the gross margin.
It was very healthy at 89, 4% and that was an improvement of 50 basis points versus the year before.
Next slide please.
Looking at the operating profit and the operating costs in 2021, and the operating profit was $36 9 million before.
One off costs of 23.3 million, it's important too to note that because they had an important important impact on the operating costs and therefore on the operating profit and $23 3 million of one off cost was related to the Orchard therapeutics a transaction we paid them.
The $13 1 million for the for the in licensing of the compound that underwriting just to just told you about and we had impairment cost impairment losses on assets.
The two assets really one was on bummed out and that was a project to modify the current products Ruger and asked for more convenient forms of administration for use by the patients. So we are we about $4 7 million, there, which is a noncash item obviously.
And we also embeds a $5.4 million on the development of our own downstream processing facility, which we which we consoles at the end of the of last year.
The operating profit after the one off costs. So the real operating profit were $13 6 million and a well we continued significant investments in the farming so long term growth.
And that's ranges across including the increased R&D expenditure.
But also increased costs from Lenny ownership. So that is a prelaunch marketing preparations about $3 million and additional manufacturing costs for that for that component of about $9 million.
So in total $11 6 million linear ownership costs.
We also increased the employee numbers to support the future growth of the company.
<unk> cost increased by $8 2 million and the number of Ftes went from 239 Ftes to three <unk> at year end, So an increase of 61 ftes.
And lastly, we have additional insurance costs because of the of the NASDAQ listing and also there were some other cost related to the NASDAQ listing to further professionalize the internal.
Organizationally.
Net profit was 16 million, which is a 58% a decrease and that was well because of the increase that I've just mentioned and the operating expenses and it was partly offset by favorable currency effects.
Then on the next slide we see are the developments are the key items in profit before tax from 2022 2021.
Okay.
Oh, that's like Michigan, yet okay.
Sorry for that so moving onto to cash and cash equivalents.
Which decreased by $13 7 million are.
From a to a $6 7 million at the end of 2020 to 193 million and that was driven by mainly a positive cash flow from operating activities of 37 point H and again that includes the the licensing fee paid to <unk>.
Therapeutics.
They were offset by negative cash flow from investments and financing activities of the in total $49 million and more than half of that.
Negative cash flow and our investments in financing activities was because of the payment the milestone payment the last milestone payments to Bausch health in relation to the re acquisition of the North American Route goodness commercialization rights, which was a transaction done in 2016.
If we then go to the next slide.
Okay.
That's the profit before tax.
So that's the development from Ford from 2022 2021 are we started off last year. We ended last year and starting in 2020 are with a profit before tax of $44 1 million.
And in 2021, we had.
A decline in underlying business.
Business gross profit as I've, just mentioned by 10.9 million.
We have the Oh Gee I want to find the investments of $13 1 million, we have the impairment that I've. Just mentioned, we had an increase in R&D expenditure. This is mainly related to to Lenny ownership development and manufacturing costs.
We had an increase in SG&A expenditure and that is mainly the insurance costs related to the NASDAQ listing that I've just just mentioned.
And we have increased our marketing and sales expenditure and again a big part there was also from Lenny illicit.
And then we had a very positive effect relates it's a in 2000 2021 versus 2020 and that was a $34 1 million positive and because we had a negative foreign exchange impact of $19 million in 2020 and a positive.
The foreign exchange effect of $15 million in them in 2021 and that was all related to the cash that we have on the balance sheet.
And the eurodollar moving from.
One point 23 at the beginning of the year to one point 30 at the end of last year. Although elements are cost that we had last year for a settlement of a loan.
And some other calls so that brought us to a profit before tax.
2021 of 23.1 million.
And then going to the next slide please.
Yeah. That's the cash flow developments are in 2021, we started off with a 205.2. This is the cash excluding the restricted cash baidu.
Hey.
We have the operating cash flow before changes in working capital of 42.3, So very positive operating operating cash flow.
The negative impact of the changes in working capital that was a mixed in of increased inventory and reduced debt and reduced our payables.
And $21 3 million in them in our investing activities and that was.
The 11 million 10.7 to be exact of us related to the to the downstream processing facility at.
But also we build and finalized a third upstream production facility and that was delivered on time and in budget.
The same goes for a ERP implementation that was a $3 4 million intangible assets investments now that was also delivered on time and in budget and we went live with the ERP system is a pea on the first of January 2022.
We invested $4 6 million in the Orchard shares, which was part of the licensing transaction in the year.
And we paid $2 5 million on the linear ownership license in this year. So that's totaling the 'twenty one.
0.3 cash flow for investing activities.
The cash flow used in financing activities has got two buckets. One is that a 2.9 million is related to interest in lease costs and a $25 million is as I mentioned, the bausch final payment for the recognized license. So we won't have that anymore in the future and then we have some smaller exchange rate effects and brings us to a.
Cash and cash equivalents at year end of 192.
<unk> million U S. Dollar so a very strong financial position that we have and it also provides a great opportunities for future growth and with that I would like to hand over to Simon. Thank you very much your own man that yes that is the final part of our presentation I would like to share the outlook here for the tour.
2022, as I was saying before it's the first time in our company's history there'll be guiding on sales.
Levels that we are expecting for <unk>.
Driven by the U S and and EU operations, but also subject still to the progression of this COVID-19 pandemic because that was referred to earlier.
Everything is far from normal in our India, India. The clinics are so so far but we travelled hopefully going going forward, obviously quarterly fluctuations in revenues are expected.
As before.
And as I was sharing the beginning we're very excited and interact don't you about.
Some of the interesting features at plenty of ZIP half to bring the regulatory filings to FDA and EMA are.
With you know subject of course to visa approvals and commercial launches expected from early on in 'twenty, one and in Q1, so within a year from now and we expect that that could happen of course, so you expect to start in the United States with the launch.
And this is a market where you can immediately go into market and get reimbursed.
But as I would say also before.
Although we have this commercial infrastructure in place.
We still have to significantly invest in this are in there.
Preparations for the launch of our Lady ownership and that is for US a very important point, we want to do this.
We want to get this opportunity to bring this product to democracy that proper way. We can now this is historical for our company. We can launch a product direct ourselves and we will therefore significantly invest on the launch preparations and the focus clinical development and anorak was mentioning the pediatric studies.
For instance for linear ownership and that will significantly increase and will so significantly have an impact on our profitability, Florida for this years, but with the continued cash flows as union was alluding to from <unk>. These investments will be funded from our own sources. So they will there is no need to do we anticipate any.
<unk> financing to support our current business I think that's an important statement to make here.
However, we also Oh, well look for continue to look for potential acquisitions and in licensing of new late stage compounds.
Do you actually be able to launch additional products within the timeframe between now and three years time in Radnor Ultra rare diseases and there of course, depending on the size of the deal. We do have a strong balance sheet of course.
We do have access to capital by means of raising debt for instance, but there's also a possibility of course that we could actually raise.
Equity money or pay in equity money and most notably we of course have the NASDAQ listing it put it in place for that occasion to be able to you bought base such acquisitions in issuing a D S as in the future. So.
That is of course, the exception here, but otherwise we do not expect any additional financing needs to support our current business, but for the expansion.
It might be the path that that opportunity. So we really are continue focus on our strategic development in and ensuring that our growth and are potentially expanded pipeline to provide further a lifesaving therapies for patients with unmet medical needs and we do look for increased returns for our shareholders.
Especially in the long term here because that is the name of the game at the moment of course, when you're standing in front of a possible launch for new products that will transform our company because as we stated before because this is a new disease. Because there was no competition and were first to market, we believe bots and the numbers of patients that we are starting to it.
<unk> five we believe that video is it is a significantly larger commercial opportunity than bedroom munis for this company.
And that continues the presentation bought all five of this.
This conference operator, I would now like to open the floor. Please for questions and we will provide to ounces. Thank you very much.
Of course as a reminder, if you'd like to register a question. Please press star followed by one on your telephone keypad.
If you change your mind. Please press star followed by two and please ensure you're on mute when speaking.
Again, not star followed by one to register a question.
Our first question comes from potash, saying with Oppenheimer I'll touch. Please go ahead.
Yeah.
Great. Thank you for the question.
And also all of the.
The transparency on the slides I just want to ask a question on Iraq going back to the long term data that he presented on.
On slide 16.
It seems you're having benefits for these patients.
Does it go longer out on therapy.
Does that help you in terms of getting patients on therapy.
You know for example, vertex when they presented their long term data with their CFO modulators, they've seen increased uptake by patients physicians and actually even the payer community likes it because from a pharma economic background, it's actually pretty useful so just any thoughts there and then how much just a second question would be how what's the long term follow up data you will have.
By the time, you get assuming you get approval of the annulus ask a quick question.
So thanks archive.
<unk> I think this long term data is critical not only for regulators, but for physicians and eventually payors to because they can see the clear benefits that the drug is having in these patients' lives.
And with.
The data that we have seen so far.
Quite encouraging I shared some of that with you today and that's data let's see.
Some patients going out that's two years of data there, but we have data going out for more than five years in some patients.
With respect to your second question, we will have data. We currently have data on more than half of patients for at least two years and then for the other half even harder.
Further out so I think we have this unique situation where before we're even.
Applying for approval, we have significant long term data plus a double blind placebo controlled study.
And then the ultra rare population and I think that's.
That's quite a good position to be in and then it gives me a lot of confidence when we look at this again the totality of the data.
Great. Thank you and thanks for the questions.
Okay.
Our next question comes from Joe Pons Keenness with H C. Wainwright Joe. Please go ahead.
Hey, guys. Good morning, Thanks for taking the question.
Simon I wanted to start with first hey, there you've made some interesting comments there that I'm happy to hear regarding <unk> market share you know in the 70 30, you know prophylactic versus acute so do you think it's.
It's a fair statement to say that you're not being fully appreciated that while the treatment landscape continues to change your market share remained stable. That's the first part and then the second part is how would you define your primary or beyond initiatives to be able to grow that market.
Sure.
Yeah, Thanks, Joe I concur with that statement.
Indeed.
So that's the first one secondly, how do we grow are all you know we keep on keep working on it and as I was saying, we see positive continuing positive trends.
Year on year on year, and including in 'twenty, one we see more DOCSIS prescribing to reconnect and we see more patients being treated with <unk>. So that gives us the confidence that.
This and I was already alluding to that this under this changing a prophylactic landscape a note that the hypothesis that we positioned years ago that you know, although you know the patients have got a lot better prophylactic options now.
They're all bradykinin telecommuting inhibitors, and Theyre, all still suffering from breakthroughs.
That is that means that it is we had become very rational without paradigm change to bradykinin color cream away from C. One for prophylaxis to have the C. One inhibitor, because if you're already blocking fully that pathway and you still get a breakthrough attack it doesn't make much sense to put additional bradykinin concrete inhibition in place right Pfizer breakthrough and I. Thank God.
We positioned at long time ago, and we see that actually gradually happening and of course. This is something that is a slow process because as you know in markets. When products are established you know it takes a lot to actually move market share away. That's why do you feel very confident not this is a relatively stable market and we should be able to actually continue.
To grow gradually into this market going forward and that's why for the first time as I said you know we're guiding for.
A single digit continued single digit growth or return actually better to single digit growth because you know all of these underlying trends I hope that answers your question Joe.
No. It certainly does as the market dynamic continues to change so thanks for that and I guess My next question I guess, you know not necessarily looking for.
But when you consider your R&D expense going forward you, obviously have the cost savings from the recent Santa Fe announcement, and but you know you have the potential for portfolio expansion. So I guess when you link these potential in license products to either.
Your current manufacturing is this something that you would look to do in house or sort of you know add on to what Youre doing with Santa Fe and the overall impact to your you know your R&D for manufacturing, especially.
Yeah, Yeah and manufacturing.
Lady ownership, obviously is there is a small molecule. So that's a different a quite a different animal.
He is our long term partner for you know a ruinous, which is of course, a biological and we feel very confident and very very happy with them and as mutual.
So basically manufacturing is not our game rights, we decided so.
That's why you know we have also outsourced now although we are responsible for the manufacturing over and he always stepped up was that transferred by Novartis to us, but we are of course outsourced. The manufacturing also Lenny ownership to a contract manufacturer that can do these things much more efficient and much better and who have a lower risk than if we were doing.
<unk>, although we have expertise in house, it's better to actually not do that and stick to your strengths and our strengths are really the clinical development of compounds in rare and ultra rare diseases and of course, the commercialization of a rare and ultra rare diseases, you really understand that that's why it was relatively easy to bolt on these additional opportunities for portfolio.
Expansion.
In licensing our acquisition, but also I think Joe what we also see is you know novartis is a very solid company and they have done some very solid research collaborations on then he owes hip and additional indications with renowned institutions and that is actually something you were looking into as well.
To actually see whether we can actually formulate an additional clinical trial program in the not too distant future due to investigate a subsequent indications, Florida for linear only said beyond a P. D S and ethics that is a very exciting prospect as well that will not bring any complications obviously to the manufacturing, but just add synergies I would say.
Yeah.
Okay very helpful. Simon Thanks, a lot.
Thank you Joe.
Our next question comes from Alex Coca with Kempen, Alex. Please go ahead.
Hi, good.
Hey.
Good day.
Or afternoon.
Hey, I have a couple of quick on the guidance.
But in your.
Single digit top line growth, how much is that due to volume growth expectations or the 5% increase that you've enacted for this year.
Yeah, Alex as I saw that the you know start this.
This morning.
We actually are.
In line with industry practice, we sort of take a you know a typical price increase year on year and have been doing that but there's two there's underlying there was underlying volume growth as always hopefully explaining earlier in the presentation.
And if you want a sort of Oh I don't know what precisely the mix will be because it's a little bit more complex than that of course, because there's a gross to net effect as well, which is always difficult to estimate how large that will be going forward, but I would say 50 50 is probably a reasonable guess.
With regards to print to pricing and volume effects, but it's definitely a positive volume trends underlying the said these remarks here I hope you understand that by now.
Yeah of course, thank you and.
I also noted that kind of thing.
<unk> or in your outlook on no longer investing in our current business does that include other indications.
Got it.
Yes, it does but that's a really long term game.
You rightfully pointed out and I think you all the very best case of course is that we will be working on for a while with the R. A T I study.
Which is to be study, which has to be followed by a pivotal study and this is of course a different animal. This is gonna be large studies. So definitely that's a long term. That's the long term of this long term perspective, but for the short term I think it's much more important to realize that we are going to significantly invest in linear ownership our preparations for launch.
But also as I was just saying earlier in actually.
Trying to formulate these research collaborations that Novartis has done for linear ownership and coming to hopefully filing another R&D in the not too distant future for linear only support a secondary indication.
That will of course drive growth much sooner than that said these are long term projects as a for instance, AK I would be so I would say for the near term growth lineal Sip is not only a significantly larger hasnt significantly larger commercial potential. We believe then refinanced but also theres a second indication possibility and of course, we continue.
Our search for additional acquisitions and in licensing opportunities, which we can afford of course, because as I was saying earlier, we have access to additional debt capital if necessary.
Our balance sheet of hundreds of 90 million euros.
As your room has shown very strong cash flows.
From from operating from our operating business. So that those all those elements together I think those things will drive a far more important to drive the growth prospects of the company going forward and to help us up.
Grow significantly over the coming in the coming years.
I hope that answers your questions Alex.
Yeah, so just indicating that theyre, putting clumps that study will never pretty stark.
I think we will have a critical look at these kind of projects. Indeed, what's the what's the prospects of those projects would be.
For the growth prospects of the company and as you already heard me say the.
Most important ones are not related to the C. One in the in the in the short to medium term, but are related to the linearity Sip and other opportunities.
Got it and then on linear.
As I mentioned, there's a second potential indications can you give us a bit more details on that.
No because there's several our research collaborations that novartis have engaged in and you know we're very happy to have our chief Scientific officer and says since last year August he's diving into these things are in a in a very enthusiastic way and we're trying to of course to make a selection, which all of these research collaborations.
These research results are the most promising ones at.
That we could actually develop but those are additional rare.
Rare indications, where the <unk> kinase Delta pathway is involved and as you know the <unk> kinase Delta pathway is quite an important one.
We'll of course update the market as and when we have decided on all such thing to move for us to move forward, it's not going to be tomorrow of course, obviously, Alex but not too distant future hopefully.
Fair enough and just a last one on that.
Get into local craft that you mentioned that it can be a bigger drag than require so shall we think that is official guidance that picks LCR overdrawn anyway.
No no there's no official guidance, because you know I I leave our guidance to two I need these kind of predictions are heavily to the professionals I E. You guys the analysts.
But you know if you sort of look at the the number of patients in either act was alluding to that.
There's already a without any systematic systematic ah patient search there's already 60 patients identified in France by a couple of the doctors are starting a registry.
That means that there is already a million one in a million patients identified.
And we haven't even started looking Florida for these patients in earnest. So we will significantly amp up the search.
Search for these patients by means of deploying a significant number of medical call. It new medical colleagues in the in the U S and the European markets to find those patients and of course as and when these patient numbers come up you can make your own calculations I would say, but we definitely at.
At this point in time, our confidence that the product will have a potential that is significantly larger than the new connect.
Okay. Thank you very much.
Thank you Alex.
Our next.
Churn comes from Christian Glennie of Stifle Christian Please go ahead.
Yes, good afternoon.
Three questions and take them in turn.
I'll answer the first one in terms of the U S potential reconnects, great, but thinking about rest of Europe and rest of world growth.
Or some sort of guidance on 'twenty two numbers, obviously, you had a bit of a step down last year in Q4.
I had a pretty pretty low number that just some idea about how revenues recognized revenues might might recover will grow in 'twenty two.
Yeah, I mean, yeah of course, you know that there's little commercial.
Opportunity in Europe for all sorts of reasons historical reasons, mainly so that's one thing.
It could leave you heard to say that yes, we are spending and of course, we will again, we will sell reconnects and make some money at not the.
<unk> territories they'd be exploiting exploring and exploiting.
I think the main thing is of course that we are we are looking to put to our network out for the year the rollout of Phlegmy owes it because there we are not in.
And inside our reference pricing system up with historical prices, but there of course, we will introduce the product in a certain price band worldwide. So therefore, the commercial potential and death respectful any ownership is significantly larger than very significantly large andrukonis, so which mean that we can have proper commercialization operations on both sides to Atlanta.
And you heard already Anoraks say in Japan, as well and with regards to those fluctuations in and look at as you mentioned is an interesting one.
The fluctuation in Ruger is also off to a great extent was because there was before Brexit and the end of 2020, there wasn't a significant order place.
To make sure that you gave us had sufficient supplies of <unk> available and that order actually meant that for I think with the most part of 2020. When there was no order from the from the United Kingdom that was a big swing in our in the negative result versus a 21.
<unk> versus 'twenty in Europe . So you had this big swing in the U S Q4, 'twenty, one with regards to the Covid.
Ah patients, where we're at with hindsight.
Feeling more prescriptions that and filling their prescriptions quicker just to make sure. They had drug with the same say never into Brexit. So Q4, 'twenty 'twenty 'twenty was really.
A super quarter, I think one of the best quarters, we've ever had but now we know why it otherwise.
And of course that Brexit.
Thing has been mentioned before so it should be a little bit more balanced out as said this year, we believe but the guidance overall is not specific for the U S. It is for the company as a whole right. The year the single digit growth that we're expecting in a in 'twenty two over 2021 alright Christian.
Yeah. Thank you.
And then on a sort of a modeling one opex.
Well two things one of them is G&A stepped up quite significantly in the fourth quarter.
Yeah.
What was driving that and then the overall.
Fourth quarter run rate if you exclude some of the one off from impairments and things is that is that a run rate to take forward into 2022.
Well I think I think Krishna.
S G and a big part of the expenditure and the whole year, but also in Q4 was because of this this these.
Additional insurance costs.
And yes going forward the the impairments that we that we had were in.
Splits in R&D for combat and D.
D. S. P was are these b impairment was in SG&A are those of one option that will not happen obviously again this year.
Proceed.
These kind of big impairments are anyway, and this year with the current information that we have.
Yes.
But the I think you agree that review will significantly invest right in them in preparation for linearity of course, but you were talking about impairments, but indeed, we are we are stepping up our linear ownership. The investments we did so into 2021 and we will do so even further.
In 2022, that's that's clear that will have an impact on the profit as we said before yeah.
The key for accounting.
We'll continue 322 yet.
Before run rate as the new base.
Yes, yes, but but I think a linear ownership will even be more than what we did in Q4 and throughout 2020 to Christian.
Okay. Thank you and then.
<unk>.
A related point, maybe on just to clarify when you call out.
The manufacturing cost and a $9 million of manufacturing cost linear.
Let's see what does that assume.
Relate to that is is it part of the tech transfer.
Have you ever in CMI from Novartis or walk.
But he.
Correct correct.
Correct the cost exactly as you say, it's because of the tech transfer and of course at the CMO that they are are they there have been producing the first our first tablets. That's just basically development cost at the CMO to Gpus are the first products of linear ownership.
Okay. Thank you and then just finally.
And then you talked about Japan is as a potential new market.
He was quite development there.
Is that typically people will look to partner find a local partner.
Take the program through development through regulators is that something you.
You need to see you need to have in place.
Before.
And the product in Japan.
Yes, I know, we're working now together with a oh.
One stop shop, if I may call it that way.
That can help us a with eat it helps us with the regulators and that helps us already with the regulators that will help us with the clinical trial.
But again.
This is not something where you have to put a ton of people in the market to actually go around the country and in Japan. The as in some of the European markets in opposite to the U S. The.
And off these kind of patients is relatively well concentrated at the pool of patients. We find there are it is located in one or two or maybe three centers. So initially that's not a necessity we would say and then we take it further from that so we think that you know our idea is to keep as much as the.
Yes value chain insight farming as.
As we are doing with <unk> and we see the possibility of maintaining nuts in with linear ownership as well for those reasons as I just described.
There will be some partnerships are aware, but it's more that youre looking for distribution partnerships, where you know the vast majority of the proceeds will still end up in our part of the value chain.
Okay. Thank you you bet.
Right or some things.
We have no further questions on the phone line, so I'll hand back for any closing remarks.
Yeah. Thank you very much thank.
Thank you very much for joining this conference as always the strain in the beginning all five of the conference. We're very excited to afford a second time in the history of our company to have paused the cervical data in our hands.
But this time to be able to launch a product ourselves.
This will mean all of that so we can actually keep the value of the product in house going forward.
Which means that the company can transform from a one product one market. It's currently is depending on two two products in multiple markets on boats or actually both sides of the Atlantic, but also of both sides of the Pacific, which excites us very much. However, as you also noted in the in the conference that we will.
Continue to invest very heavily obviously going forward in 2003 to English launch and that will have a significant impact of course on the profitability of the company for the short term.
To stimulate that growth from.
The new product linearly shift that we anticipate to be launching in within a year from now I would like to thank you very much for your attendance. Thanks. My colleagues you don't walk a moment underwrite revlimid as well and we look forward to updating you in the in the future on the next occasion when we have the results available. Thank you very much and have a good day.
Yeah.
This concludes today's call. Thank you for joining you may now disconnect your lines.
Yeah.
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