Q1 2022 Horizon Therapeutics PLC Earnings Call
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Good day, and thank you for standing by and welcome to Horizon Therapeutics first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be advised that.
Today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to Tina Ventura Senior Vice President and Chief Investor Relations Officer. Please go ahead.
Thank you Norma good morning, everyone and thank you for joining us on.
On the call with me today are Tim Walbert, Chairman, President and Chief Executive Officer, Liz Thompson Executive Vice President Research and development.
Paul Hoelscher, Executive Vice President and Chief Financial Officer, Andy Pasternak, Executive Vice President Chief Strategy Officer and.
And Erin Cox Executive Vice President Finance as a reminder, Erin will be transitioning to the role of CFO on may 16th.
Tim will provide a review of the business, including our first quarter performance. Liz will then review our R&D programs, followed by Paul will discuss our financial performance and guidance in more detail.
After closing remarks from Tim we'll take your questions. During today's call, we'll be making certain forward looking statements, including statements about financial projections development activities, our business strategy and the expected timing and impact of future events or actual results could differ materially due to a number of factors, including the risk factors and other information.
Outlined in our latest forms 10-K, 10-Q, and any eight Ks filed with the Securities and Exchange Commission and our earnings press release, which we issued this morning.
You are cautioned not to place undue reliance on these forward looking statements and horizon disclaims any obligation to update such statements. In addition on today's conference call non-GAAP financial measures will be used these non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and other filings from today that are available on our investor website at double.
W. W Dot horizon Therapeutics dotcom.
I'll now turn the call over to Tim.
Thank you Tina and good morning, everyone.
<unk> had a strong start to the year with first quarter net sales of $885 million and first quarter adjusted EBITDA of $371 million.
We also reiterated our full year 2022 guidance this morning.
And are well positioned for another year of top tier growth.
In addition to strong financial and operational performance.
Made meaningful progress on our strategic priorities.
We continued to advance our pipeline initiating two of the seven clinical trials expected to start this year.
We also advanced our.
Delaware clinical programs announced positive topline results for a phase III trial in rheumatoid arthritis, and completing enrollment of our phase III trial in Shogun syndrome.
The positive readout from our already study serves as an important proof of concept validating the desert pellet mechanism of action as well as providing further validation validation of our acquisition of yellow last year.
We look forward to the readout of the phase II trial in children syndrome next year.
With KRYSTEXXA, we're pleased to be granted FDA priority review of our supplemental biologics license application for KRYSTEXXA plus methotrexate.
This marks an important milestone in establishing KRYSTEXXA plus immuno modulation is the standard of care.
We're also making progress on our global expansion strategy. We recently received approval for replacement in Europe for animal SP, We're initiating its European launch starting with Germany.
We also initiated the build out of our infrastructure in Brazil to support the potential launches of a pleasant surprise.
As we continue to advance our strategy to drive rapid growth over the coming years, we announced today that we've hired Jacobo Leonardo as President Global commercial operations reporting to me.
<unk> is an accomplished sleep science executive with more than two decades of commercial experience, including driving growth of high performing businesses in rare diseases and immunology.
Jack will oversee the U S and international commercial organizations commercial development and global Medical Affairs.
Finally, we continue to receive recognition as the best workplace, including ranking unfortunate 100 best companies to work for for the second consecutive year and retaining the highest ranked positioning the biotechnology pharmaceutical category.
This recognition underscores the strong engagement of our employees, which is very important in our highly competitive industry.
Before I move on to our results in the quarter I want to thank Paul Hoelscher for its contributions that he's made to horizon. During his time here.
Many of you know Paul is retiring this month.
He has been a tremendous partner over his nearly eight years with us and I am grateful for his leadership and dedication to horizon.
His roles as financial stewardship that has contributed significantly to our success and transformation during that time.
We're pleased that Paul will be staying on in an advisory role through May of next year to ensure a smooth transition.
As announced previously Erin Cox will assume the CFO role on May 16th.
Moving on to our growth drivers.
To present first quarter net sales of $501 million were in line with our expectations.
As we mentioned last quarter, the Omnicom variance had an impact on our business beginning at the end of last year as the typical seasonality. Despite that we've generated strong performance in the quarter.
As we discussed last quarter, we continue to drive the next stage of our commercial strategy.
This includes more deeply penetrating our high priority T E D physician targets.
Additionally, we are broadening our reach through general ophthalmologists and endocrinologists in order to further educate them on thyroid eye disease and accelerates the referral of their patients to TEP treaters.
As part of our plan, we are increasing our field force to accelerate referrals through existing treaters and expand the number of physicians prescribing to present as well as continuing our significant investment in direct to consumer another key digital activities.
We expect these activities to accelerate growth as we move further throughout the year reaffirming our confidence in achieving our strong growth expectations for <unk> of this year, despite omnicom replace omnicom replayed it impacts.
Persisting into the second quarter.
The <unk> market has evolved considerably in the last two years since the approval of <unk>.
Which has proved to be a paradigm shifting medicine.
As the market leader, we have continued to do a significant amount of work to further inform our understanding of the market.
This includes additional market analysis payer claims analysis physician and patient market segmentation and commercial strategy work, which all support the growth of the peso over the long term.
And this will really readouts from this had been very insightful and positive first.
We have continued to validate the size of the U S. T E D market and believe it is it is at least as large as what we've communicated in the past if not larger.
This gives us even greater confidence in the long term potential for <unk> and our global peak annual net sales expectation of more than $3 5 billion globally.
Second it is providing us with important information about the patient journey and therefore, how we can further drive execution over the short and long term.
We're finding that patients symptoms, such as diplopia pain, regardless of the time from diagnosis or would drive them to seek treatment and drive physicians prescribed to peso.
And contrary to earlier views, suggesting the majority of <unk> patients experienced less severe symptoms over time.
We now know that Theres, a significant cohort of patients who experienced high inflammation anti proptosis more than two years after diagnosis.
In fact, most of the chronic patients being treated with the purser today have high levels of inflammation along with their proptosis.
When you launch a transformative medicine into a market that has never had an adequate treatment.
Treatment of the disease is continually being redefined.
We see symptoms versus time from diagnosis is a key driver of patient uptake.
As you've seen in our DTC commercials and other digital activities, we're expanding our messaging to cover a broader set of signs and symptoms beyond proptosis symptoms, such as diplopia mobility eye lid retraction orbital pain and swelling around the eye.
We see significant potential to access many more patients with thyroid thyroid eye disease, where appropriate for to puzzle.
For KRYSTEXXA first quarter, net sales were $141 million representing year over year growth of 32%.
We generated strong performance despite the impact of the omicron variant.
This was driven by continued adoption in both rheumatology and nephrology market segments.
Well its uptake of KRYSTEXXA, plus immuno modulation, which is now running at approximately 50% of new patients.
This is up from 35% just a year ago and remarkable considering the mirror data is not currently available for promotion by our commercial organization.
We expect the rate of immuno modulation used to continue to increase overtime.
We're preparing for the July 7th Purdue action date to modify the KRYSTEXXA label with the results of the mirror trial.
Which demonstrated a 71% of patients who received KRYSTEXXA plus methotrexate achieved a complete response more than 30 percentage point improvement compared to placebo patients who receive KRYSTEXXA alone.
With an expanded label our commercial team would for the first time being able to actively promote the benefits to physicians.
We expect this to drive higher clinical conviction broadening our reach to more physicians and deepening our penetration among current treating physicians.
This will help to address the significant ongoing unmet need for more than 100000 patients living with the debilitating effects of uncontrolled gout.
The team is preparing for the potential approval and we'll be ready to launch a new promotional campaign in early July .
Additionally, our clinical team continues to work on mirrored data dissemination and medical meetings and throat key publications.
We will be conducting peer to peer education programs to continue to build a broader understanding of the mirror clinical data.
We're also very pleased that the mirror trial was accepted as an oral presentation at the upcoming European Rheumatology Medical conference or <unk> in June .
We've been significantly investing in KRYSTEXXA to changes perception since we acquired it in 2016.
Rarely if ever as a company been able to completely transform the profile of a 12 year old medicine, as we have with KRYSTEXXA.
And we're now incredibly proud to be at this next step in its transformation to bring the medicine to so many more patients which gives us increased confidence in our peak annual net sales expectation of more than $1 billion.
Moving onto a prisoner, which we began the relaunch in the fourth quarter of last year, we delivered another strong quarter generating first quarter net sales of $31 million approximately $5 million international revenue from our international partners.
We continue to make good progress with our relaunch expanding the prescriber base and driving new patient starts.
In the first quarter more than half of the patient enrollment forms are generated by new prescribers building a foundation for long term growth.
Well the majority of new patients are switching from other therapies, which is in line with our commercial strategy. We're also seeing a good portion of new patients that are naive to therapy.
This speaks to the confidence physicians have any plays as a next generation b cell depleting therapy.
We continue to see faster and higher patient pull through driven by the strong support provided by our patient services reimbursement and site of care teams, which was a critical component of the implicit relaunch.
On the clinical side, we continued to invest in medical and scientific engagement to drive patient and physician preference for a plasma based on its strong clinical data.
It's differentiated mechanism of action and clear patient benefits.
We significantly expanded peer to peer speaker programs with more programs held in the first quarter than all of last year.
In addition, we presented new data at several key medical meetings continuing to build on its long term safety and efficacy data.
As part of our global expansion strategy, we will be launching a pleasant in Europe , starting with Germany. Following the recent European Commission approval.
Yeah.
We're increasingly confident in the prospects for <unk> and <unk> as well as in other indications we're pursuing.
For the medicine and are progressing towards our peak global annual net sales expectation of more than $1 billion.
Across all indications I'll now turn the call over to loose.
Thank you, Tim and good morning, everyone.
On this call a year ago, we shared that we completed the cielo acquisition and we are in the process of integrating the two companies come a long way since then and have a busy year ahead as we continue to drive our pipeline forward.
I'll update you on the progress of our key programs starting with our chip has a trial in chronic steroid eye disease.
We're continuing to enroll patients in our phase four randomized placebo controlled trial in chronic T D.
Through this trial and the emerging literature studying that in patients with chronic T D.
Now expect the topline data readout for this trial in the first half of 2023.
A lot later than we had originally expected and is due to a slower level of patient enrollment, which is primarily due to the impact from the on the <unk> variant. We've since put in and then lease since put in place a number of measures that are helping drive enrollment and we're tracking to a top line readout in the first half of next year.
We continue to advance our subcutaneous administration program, where we are on track to begin enrolling patients in a phase one b trial mid year, and we continue to progress our work on our high concentration formulation.
We also continue to enroll patients in the optic J study in Japan.
We remain focused on developing scientific leadership in T E D to attendance at key medical meetings during the year, including endocrinology, ophthalmology, Oculoplastic and optometry conferences and.
In the second quarter alone we plan to attend seven key medical meetings.
Moving to tax Elena or HCM 773 for the first and only Plasmacytoid dendritic cell our PDC depleter in clinical development.
PDC is are found in high concentrations in disease tissues of individuals with certain autoimmune and inflammatory diseases and the activity of these cells can result in significant inflammation and tissue damage.
The phase III trial for our first potential indication for <unk> still in that <unk> lupus erythematosus or SLE continues to enroll and we continue to expect results for this trial in 2023.
We expect to begin clinical trials in four additional indications this year.
First alopecia Areata is an autoimmune disorder characterized by non scarring hair loss.
As we discussed in significant detail on our last earnings call. We remain on track to initiate the phase two open label trial in the second quarter and approximately 30 patients with moderate to severe disease.
We expect to initiate our discoid lupus erythematosus or DLA trial mid year daily is a chronic inflammatory skin condition characterized by lesions.
<unk> disease that can be significantly just figuring and can also result in hair loss.
What does the Mischaracterizations as Delhi is that it only affects systemic lupus patients.
Over 80% of DLA patients do not have systemic disease, and therefore have primary daily.
We estimate about 30000 patients with Delhi are candidates for novel therapies, including biologics.
The current standard of care is not uniformly effective and is associated with potential side effects.
Our daily clinical trial will be a phase two randomized placebo controlled trial in patients with moderate to severe active primary disease.
The primary endpoint will be the mean change in the closet eight disease severity score from baseline to week 24, we'll also be looking at a variety of other measures of disease activity.
We also expect to initiate our trials in lupus nephritis and Dermatomyositis later this year.
Moving on to Desert, Alabama, or HCN 49, 20 this.
This is our CD 40 ligand antagonist designed to block a central pathway involved in many autoimmune and inflammatory diseases with.
We recently completed enrollment in the phase two double blind placebo controlled trial evaluating <unk> for Sjogren syndrome, a chronic systemic autoimmune condition that impacts <unk>, including the salivary gland, we expect results in 2023.
Yesterday, we also announced topline results from our phase two double blind placebo controlled trial of <unk> in rheumatoid arthritis patients demonstrating that the primary endpoint was met in all four to <unk> dosing arms and showing that <unk> was well tolerated.
We expect to present the full results at an upcoming medical Congress.
The first of what we hope will be many clinical validation of the value we saw in the <unk> pipeline.
As a reminder, our rheumatoid arthritis trial gives us the opportunity to accelerate our learning about <unk> and a large and reasonably accessible patient population using well understood clinical endpoints.
This trial reinforce our understanding of the CD 40, ligand pathway and immune mediated autoimmune diseases and provides us with important insights as we consider dosing regimens for future trials, and Chevron syndrome, and the progressive and rare kidney disease Fcs.
We expect to initiate our <unk> trial in <unk> in the fourth quarter.
Moving to HCN 85, our oral selective <unk> antagonist, which has shown early signs of clinical impact in fibrotic disease.
We enrolled our first patient in our pivotal phase <unk> trial for <unk> five in idiopathic pulmonary fibrosis in January of this year.
This trial and our trial in diffuse cutaneous systemic sclerosis continue to enroll.
I'm pleased that as our anti CD 19, humanized monoclonal antibody indicated for animal SD, a rare and devastating neuro inflammatory autoimmune disease that attacks the optic nerve spinal cord and brain stem.
As Tim mentioned, the European Commission recently approved a <unk> <unk> for the treatment of adult patients with <unk> or <unk> for auto antibody positive.
This is a great accomplishment for the R&D team, but an even more important step in our efforts to bring a new option to people impacted by this disease.
We also continue to contribute to the literature regarding efficacy and safety profile of a close now.
Recently in April multiple new data from the Phase III trial were presented at the American Academy of Neurology meeting.
The new data demonstrated that there were no significant differences in attacks or worsening of the expanded disability status scale between NMFC patients treated with <unk> experienced one pre study attack and those who experience two or more pre study attacks.
A separate new analysis of the phase III trial showed that long term treatment with a <unk> improve pain and quality of life outcomes for at least three years.
We continue to advance our enrollment in our two phase III clinical trials evaluating <unk> for myasthenia gravis and <unk> related disease.
Finally, as Tim mentioned July 7th is the Paducah action date for the SBA law that supports updating the KRYSTEXXA label to include co administration with methotrexate.
Data from the mirror randomized control trial will be presented at <unk> in early June .
All of our KRYSTEXXA and gout related abstracts were accepted.
We also hope to share additional details from the mirror trial and other key medical meetings.
I will now turn the call over to Paul.
Thanks Les.
My comments. This morning will primarily focus on our non-GAAP results unless otherwise noted.
I'll start with our first quarter results, followed by our 2022 financial guidance.
First quarter net sales were $885 million in line with our expectations.
Our orphan segment generated first quarter sales of $834 million driven by the strong performance across the portfolio.
Our orphan segment operating income was $352 million.
Net sales for the inflammation segment were $51 million and segment operating income was $15 million.
Our non-GAAP first quarter gross profit ratio was 88, 9% of net sales.
First quarter non-GAAP operating expenses were $420 million.
This included non-GAAP R&D expense of $92 million or we continue to invest in multiple clinical trials, maybe that we're initiating this year.
non-GAAP SG&A expense was $328 million.
First quarter, adjusted EBITDA was $371 million or 41, 9% of net sales.
The non-GAAP tax rate for the first quarter was 10, 2%.
non-GAAP net income in the quarter was $316 million and non-GAAP diluted earnings per share were $1 34.
The weighted average shares outstanding used to calculate first quarter 2022, non-GAAP diluted EPS were 236 million shares.
First quarter non-GAAP operating cash flow was $223 million.
As of March 31, cash and cash equivalents were $1 $64 billion.
Backed by the strong cash position and expected future cash flows business development will continue to play a critical role in expanding our pipeline.
The total principal amount of our outstanding debt is $2 6 billion with the earliest maturity in 2026.
Our gross debt to last 12 months adjusted EBITDA leverage ratio is one six times as of March 31.
Additionally, in March Moody's upgraded our corporate family rating to be a one from VA too.
And now I'll turn to our outlook for 2022, and how we see the rest of the year playing out.
We are maintaining our full year 2022, net sales guidance of $3 $9 billion to $4 billion.
Representing a year over year growth of 22% at the midpoint.
For <unk>, we expect full year 2022, net sales percentage growth in the mid <unk> for.
For KRYSTEXXA, we expect full year 2022, net sales growth of more than 20%.
We continue to expect full year 2022 gross margin of approximately 87%.
We expect full year adjusted EBITDA to be between $1 63, and $1 7 billion, representing a 42, 1% margin at the midpoint, a 230 basis point expansion compared to 2021.
Our adjusted EBITDA guidance reflects our expectations for strong sales growth, partially offset by our increased investment in R&D, which we expect to be in the low double digits as a percentage of net sales.
As we think about our 2020 to operating expenses, we expect a steady increase over the course of the year, mainly driven by R&D.
As it relates to our debt interest expense, we recently entered into an interest rate swap to move $800 million of our floating rate debt to a fixed interest rate.
Given the expected rising interest rate environment our.
Our new fixed versus floating debt mix, along with our significant cash balance positions us well to manage expected increases in interest rates.
As a result of the swap transaction $1 $4 billion or 54% of our gross debt outstanding is fixed interest rates, which will provide more certainty to our interest expense over the next several years.
We now expect our full year non-GAAP net interest expense to be approximately $85 million to $90 million.
Modest increase from our prior to our prior expectations of $80 million to $85 million.
We continue to expect our full year 2022, non-GAAP tax rate to approach 12%.
As with every year, we anticipate variability in our non-GAAP tax rate on a quarterly basis we.
We continue to estimate that our 2022 cash tax rate will be in the mid to high single digits.
As always our tax rate could change significantly as a result of any acquisitions or divestitures, we may make or any changes in tax laws.
We continue to expect our full year 2022 weighted average diluted share count to be approximately 238 million shares.
Finally, as Tim mentioned, Erin Cox will assume the role of CFO when I retire in a couple of weeks and I look forward to staying involved with horizon in an advisory role for another year.
I wanted to take this opportunity to say thank you I've enjoyed the opportunity to work with all of you in the investment community during my time at Horizon.
I also want to thank Tim and the horizon team for the opportunity to have been part of the incredible growth of horizon over the past eight years with that I'll turn the call over to Tim for his concluding remarks.
Paul.
Thank you again for your many years of service and partnership contributing to Arps amendments.
Transformation.
Yes.
It's pretty amazing to look back in the day, you started with US eight years ago almost today in three medicines is like no rare disease medicines medicines, and a market cap of about $1 billion.
We've had an incredible transformation since superior joined in and it was certainly a critical part of that and we appreciate everything you've done.
Appreciate that you continue to be available in consulting and working with us. So thanks, so much Paul it really appreciate that.
In closing, we generated strong financial results for the quarter.
Listening ourselves for another year of top tier growth.
We made meaningful progress on our strategic priorities, including initiating two of the seven clinical trials planned this year.
Advancing our Delhi does develop the program in two indications evidence of our efforts to aggressively maximize our pipeline.
The positive readout, but where does the <unk> study in rheumatoid arthritis as an important proof of concept validating the desert build that mechanism of action as well as providing further validation of the acquisition of DLR.
We look forward to many more.
With multiple trial Readouts as we move into 2023.
We're significant preparing for the potential KRYSTEXXA SBA approval in July after which we plan to launch a new promotional campaign to drive the use of KRYSTEXXA plus methotrexate.
In our international expansion efforts are taking shape in support of recent and future approvals such as the announcement to the EC approval. This week.
We're off to a good start and look forward to continuing to deliver progress on our pipeline and our strong commercial execution as we build on this foundation and drive increasing value to shareholders with that Tina why don't we turn it over.
Questions, Yes normal. Please go ahead.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound key please standby, while we compile the Q&A roster.
Our first question comes from Chris Schott with Jpmorgan. Your line is now open.
Great. Thanks, so much for the questions I just had two on <unk> I guess first a bigger picture one given the supply disruption last year I think it's been harder for the street to get a clean look at kind of what's happening with underlying growth with to peso. So just it's something you've done some incremental work on the market can you just maybe frame for us right now.
Your penetration rate currently into the acute market and what you see as the primary hurdle for patients who aren't getting therapy that you need to address to get them on therapy.
As a bigger picture one and the second one I was looking for just color on sequential dynamics to keep in mind for <unk> I think in the prepared remarks, you mentioned, you're still seeing some omicron impact, which surprised me a bit and we're just like would be appreciate it a little more color there. Thanks so much.
Sure Chris.
Certainly with you with the peso from within.
Within a few weeks of launch in early 2020, the world changed to pin them again.
We had two years of non normal launch sequence. So certainly there has not been a a normal distribution of normal launch we had the supply issue is you've talked about and we had the delta variance in the third quarter in and play the most invasive bearing with the omicron variant in.
And really from mid December through February .
So when we look at our penetration we feel that we've had very strong penetration of acute market, but with significant upside opportunity.
Based on the numbers.
We are.
I don't know exactly what numbers, we've communicated but I would say roughly.
Minimal penetration relative to the full opportunity in the incident acute population when we looked at the prevalent chronic population we continue to make strides there we've got mid teens as we discussed last quarter.
So I think we're set up really well for growth and as I mentioned in my.
Remarks.
While we've had a lot of them.
Or or atypical situations with overcrowding in the pandemic as well as the supply disruption.
We have had tremendous uptake and we are continuing to learn more and more about the patients and I've talked about in my remarks that we're seeing symptoms being a much more important impact alongside of just proptosis. So we're seeing that significant opportunity to expand to broader patient population. So perhaps.
<unk> plus key symptoms and also use that as a pathway to bring patients in who are sitting in ophthalmologists endocrinologists or or just sitting at home. So our DTC efforts a lot of that our expanded sales force as we discussed is all about driving further referrals and driving further penetration.
Trace and getting physicians.
And patients to the right T E traders so.
I think we're making good progress with significant continued upside.
On the sequential dynamics.
We've talked about this again on the last quarter when we.
We looked at during that December to February period over half of our commercial organization itself was out with homework wrong.
Physicians offices closed sites of care close we had many patients and I would say the first quarter impact for infused medicines like <unk> and KRYSTEXXA was around patients missing infusions, extending infusions and then we work through the first quarter to get people back on track and we were able to successfully do that.
Any impacts on perhaps in that <unk> period, when you have a pet to IV rate of 90 days that is a 90 day delay so anything we've ever done since launch is set up as a 90 day delay given the average time it takes for a patient enrollment forms to convert two infusions. So.
So coming out of <unk>, so coming out of that December to February period. We saw notes are appropriate and trends, we're able to engage in more face to face interactions. So those live calls that are such a key driver performance significantly start to increase in March I'm getting backed out to medical conferences sites of care.
Back to normal levels in <unk> patients.
Omicron leg effect is what drives that delay into the second quarter that we mentioned mentioned and we do expect net sales to be more heavily weighted in the back half of the year as a result, but really excited about what we do is deal with the situations we have throughout the pandemic and drive the business.
Thanks, Chris.
Next question. Please. Thank you. Our next question comes from Madhu Kumar with Goldman Sachs. Your line is now open.
Yeah. Thanks for taking our questions. So I guess, our first one is kind of digging in a little more into the desert that results in our <unk>.
And how to think about the kind of dosing the implications for some of the other indications you'll have kind of already kind of completing enrollment to show great thinking more around <unk> G is what does the data data in <unk> that could be informative for the SGS trial.
Yes.
Yeah. Thanks for that so and we were pleased to see these data it really represents our our proof of concept for the desert all about mechanism of action, which was great. It's the first of what I hope will be many clinical validation for that value that we saw on the Ela pipeline. We did see here positive top line results across the dosing.
Arms and also what appears to be so far are unacceptable safety safety profile I think that this the value of this trial. In addition to those pieces is exactly as you say this is an accessible patient population that lets us look at a variety of doses and regimens that we can then take those learnings and apply them.
On to future trials that we might take things forward and that is particularly applicable for future studies in children that we might do as well as F. S. GFS will be talking in more detail about these results at upcoming medical meetings, including a little bit more insight into the specifics of the regimens we looked out in the results we got that.
Overall, we think this really will set us up for success in picking the right doses to take forward in other indications alright. Thanks Madhu.
Next question please.
Yes.
Next question Norma.
When do you are you so on.
Yeah.
Norman next question please.
Normally we can't hear you.
Yes.
Yes, but it sounds like everybody else Ken.
Okay.
Has lost audio.
We just.
Learn that normal lost audio.
So.
Let us see.
See if we can.
And see if we can get a 10 minute yeah, that's what I tried to dial back in thank you.
Okay.
Karma.
Our next question comes from Yadkin Suniga with Guggenheim. Your line is now open.
Sorry about that everybody. Thank you for your patience.
[laughter], Yeah Guy operator, yes.
Yes, we can hear you go ahead go ahead Jeremy.
Perfect. Thank you so maybe a question on NUPLAZID and a nice quarter. There can you give a little bit more color on the type of patients you are seeing and then as you go into Europe , especially in Germany can you just talk about the size of the market there and the future expansion plans our plans in the European Union.
Thank you.
If a pleasant.
Our primary focus has been to drive switches from existing treatments.
Got a market roughly eight to 10000 U S half of those patients being on Rituximab.
And we've seen over half of the patients that have gone into place a beam switches from rituximab.
But we've been pleased to also see treatment naive patients coming on a pleasant as well so I would say the.
Any of them are switches from Rituximab, but we're also seeing treatment naive patients coming on to replace them.
Tiv to Germany.
When we look at each individual European country.
In Europe as a whole.
First Europe as a whole receives a similar market size to the U S and in Germany on a.
On a percentage basis or per capita basis is similar rates are around.
Any other country, the only country with significantly increased rates of animosity is Brazil, which as a country is the same size as U S or Europe alone.
So our plan is to launch in Germany, and the <unk>.
Upcoming months, and then begin to do the normal sequencing across key European countries.
And then continue to work to expand into Asia, Latin America and in other key markets.
Thanks eating normal next question please.
Our next question comes from Ken Cacciatore with Cowen <unk> Company. Your line is now open.
Thanks, so much and Paul Congratulations Tim just going back to pads and your commentary on the sides of the markets that you know it.
At least or larger.
And then what you originally expected I think previously you should talk about 15 to 20000 patients in and that seem to be segmented on patients that were two years into using steroids. So then you said about 40 to 50000, where on one year of steroids. So as we think about the kind of acute an active market is it now summer.
We're in North of 20, South of 40, so just looking for some new ones now that you're doing more of that work and then on the chronic used to talk about 70 to 100000 again, just wondering if that pool as you've done the work may be a bit better. So just looking for a little bit more nuance on that and then on the increase in the commercial.
Ken we lost the rack.
Oh go ahead, you were saying and cooling commenced.
Yeah.
Yes, sorry, just on the on the increase in the commercial sales force I know Theres been a talk previously about a third of the targeted.
Clinicians are adopted and treated it.
If youre increasing the sales force is that that remaining two thirds I think you've mentioned ophthalmologists endocrinologists or is that really the slower adopters is that what we're trying to broaden out into so just trying to understand the dynamics of the slower adopters in and what your expectations are as we go through the balance of the year. Thanks, So much.
So I'll start with that part when when we look at.
The sales force expansion that were undergoing its really looking at driving referral and new treaters, so less about slower adopters when we look at the.
The.
Top priority our high priority targets at 2500 to 3000 that we're calling on we.
Hi, or early and late and ongoing adopter, so slower adopters within that and we continue to drive penetration as a priority in that group, but when we look at the.
Broader ophthalmology and endocrinology in general the prescribers have been focused on the subset of occupy six surges neuro ophthalmic surgeons and strabismus specialists, we're looking to expand.
Both referrals and treatment into general Ophthalmology, and also within endocrinology to drive referrals to the right T E trade or people that have experience with thyroid eye disease, and we've been doing that for the last several years through our consumer programs, we're never going to answer that with a direct selling efforts with with our sales force.
So we continue to penetrate in those high priority targets, but the expanded sales force is really complementing the broader DTC work that we've been doing to drive referrals from ophthalmology and endocrinology into T E D specialists.
But also to expand the number of writers in general Ophthalmology.
When we look at the prevalent market.
As you've noted we've talked about the annual incident population of 15% to 20000 moderate to severe acute patients coming in each year and then we also talked about the about 70000 subset of what is a several hundred thousand chronic population and we've defined that as patients less than eight years that are most likely in the system.
That we can access and drive towards depends on so if you look at that plus any rollovers that were treated in the prior year.
Looking at about 100000 potential targets for to present in our promotional efforts, we see the population being greater.
But also we're re segmenting it so no longer were thinking just acute or chronic but as I talked about in my remarks, what we're finding is.
Whether you're diagnosed within six months or at four years. If you have high Proptosis and high inflammation that is a very rich population to drive to peso.
And then we're also looking at patients that have moderate inflammation and high proptosis or or high.
Just high inflammation, and then low inflammation. So we're really segmenting based on the symptoms and how patients present versus the time from diagnosis and as we re segment the market that we look at a broader opportunity than before we're continuing to work through what those numbers look like.
And how we're going to segment and communicate them.
But all of the work has validated the opportunity that we've seen the incident population coming in each year, but importantly, the ability to drive that broader uptake is learning that symptoms is what drive action by patients, whether that's through consumer or to see their physician requests. The peso. So that really is what gives us the real.
And about what we can drive moving forward great. Thanks, Ken next question. Please. Thank you. Our next question comes from Annabel <unk> with Stifel. Your line is now open.
Hi, Thanks for taking my question.
So I wanted to know with regards to <unk>.
As you have published a lot of the chronic data has been presented are you, noting yet a change in the way physicians are treating the chronic population versus the acute population and what could that mean for the.
Future penetration and keep chronic and the impact it might have on sales I'm, just curious a little bit about that and then.
Maybe you can talk a little bit about.
Expansion in Brazil, I am curious to see that it was just Brazil that you're focused on the market for you said a business as large as the U S. What is the market for T. He didn't look like in Brazil, and and when might we see some infrastructure build out and.
Contribution from there. Thank you.
Sure so looking at the chronic versus Q2.
It goes back to the segmentation that I talked about high inflammation high Proptosis is a real active.
Tuning to penetrate that's what we're driving we're seeing that regardless of time from diagnosis. So when we are looking at patients coming onto to peso. We really look do they have a high clinical activity score to the high <unk> high Proptosis that has a broad population across the acute and chronic when we look at the lower high fructose.
So by bulging plus lower clinical activity scores.
That is the population that many of our investigator initiated studies have been looking at that's what our chronic trial is looking at so we have over 50 patients of evidence showing that high proptosis and lower castes isn't actively treatable population and we continue to see opportunity to drive penetration there.
From a Brazil standpoint.
We've talked about it from a animal SD, where there's unique incentive population and prevalent population that is equal to the size of U S and Europe . We also see it as a significant population for <unk>.
Similar on a rate basis.
Other countries. So it doesn't have an increase.
Incidents relative.
But we do see.
Ex Europe favorable dynamics to move forward with regulatory submissions Elizabeth if you want to talk anything about the regulatory timelines as we look outside the U S.
So I'll jump in there. So we are looking in international markets. Just like we are in Japan with the start of the optic <unk> trial, we're looking at taking our existing work done from the.
U S approval, along with uptick Jay for Japan, and we're also looking at how can we take the U S approval and leverage that into Latin America, and Asia markets without doing incremental trials, when we see that opportunity in Brazil, and some other markets and we'll update as we move further right.
Thanks, Annabel operator next question please.
Our next question comes from Jason Goldberg with Bank of America. Your line is open.
Hey, good morning, guys. Thanks for taking my questions.
First just on the fees for the study I was wondering if you could talk about the inclusion exclusion criteria and how that compares against all this investigator generator and <unk>.
The Gator generated datasets that youre seeing and do you feel comfortable the studies adequately powered and enrich for subjects with either elevated cask or is there a baseline proptosis levels.
And then my second question.
Tim or Andy just curious how optimistic are you guys can execute a meaningful product transaction in 2022, just given the broader biotech sellout. Thanks.
So let's start with the.
The market environment, if you look at the enterprise value of 830 or 40.
Biotech companies.
With the biotech companies I think the enterprise value has been around 67% since February of last year. So we've certainly seen those valuations come down and we certainly feel a lot of opportunities both of.
Public companies, but also private companies and venture backed companies.
As far as ability to do acquisitions and I think that.
Not seeing a rebound in the IPO markets or even follow on markets for existing companies sit in cash. So we do see it as a rich opportunity for deals.
Maybe back to Liz to talk about the criteria around the chronic trial.
After the chronic trial, we really were looking to inform that you know symptomatology based way of looking at patients that we've talked about here and so in particular, what we're focusing on with patients with low signs and symptoms of inflammation to low kaskel ours, but.
But significant proptosis and potentially also significant diplopia. So this is a patient population where it is representative of some of what we're seeing in those <unk> that a little bit more standardized I think gives us the opportunity to get that gold standard placebo controls more rigorous data we feel good about the power and here we are.
<unk> been informed by some of those case studies.
Case reports and case series that we've seen out in the literature. We are looking for you know looking for and expecting that we're going to see a clinically meaningful impact on patients' proptosis in this disease state.
Thanks, Jason Normal next question. Please our next question comes from David <unk> with Piper Sandler Your line is open.
Hey, Thanks, So just on the chronic T D data or the readout can you just and I apologize if I missed this can you just talk about the the delay and what's driving that and maybe went in the first half of next year, we could see.
And then for a desert dialed up just a clarification question I mean, I believe you said in the past that they are a study was more for dose finding and you're not going to go forward.
But can you clarify that and based on what you've seen I mean, how does that inform how you are thinking about where you might get the best signal and pseudo brands with whether it's a systemic disease or local disease.
Disease, I know that might be early but figured I'd ask.
So starting with the Desert, Alabama question.
So we are certainly we were encouraged by the data that we saw here you know rheumatoid arthritis is a it's a crowded market. There are a lot of agents. There. It will continue to we'll continue to look at that of course, but we really do think that the primary value of this trial is about the validation that it gives us the mechanism of action.
The inside its gonna give us into dosing parameters that we can potentially take forward into other indications and we'll we'll give more information on that as we get to subsequent medical meetings, where I will put out a little bit more specifics around this with respect to the chronic T. E. D trial. We are currently looking at having data for that in the firm.
First half of next year, and you know really what happened here is that like many other areas of the world. We did see some impact from on the crime. There was a significant step down in our screening and enrollment activities.
We have accelerated our activities and put in place a number of things that we think are going to drive enrollment some expansion of science, adding a few more on as well as some additional patient outreach and physician referrals, we're seeing those trends improve but we expect that we will be completing our enrollment in the second half, which again will give us data on the first half of next year.
Thanks next question. Please Norma our next question comes from Derek <unk> with Wells Fargo. Your line is open.
Hey, good morning, and thanks for taking my questions. So just one from us on KRYSTEXXA I know you've talked a little bit about the future marketing initiatives that you plan to rollout for physicians when the New Bureau data are included on the label, but I was wondering if your marketing or any messaging strategy for patients and how that might change.
I think our strategy for all promotion is to leverage the fact that youre going to a significantly improved response with KRYSTEXXA plus immune modulation and whether that's digital activities are consumer related activities or physician related activities Bill I'll focus on the broader dataset.
Within Rheumatology KRYSTEXXA, plus methotrexate is is well over 50%.
And we see an opportunity to drive that across all of those populations.
Right.
Thanks Norm next question. Please our next question comes from <unk> with Jefferies. Your line is now open.
Hey, guys. So at the risk of being a bit reductive do we have a sense on what new patient adds burford you've had that in Q1 and are you able to kind of quantify the impact Omnicom may have had on your performance and would it be fair to say that new patient add need to be north of two K per quarter for you to kind of hit that full year growth target that you put out.
Touching on that as well it looks like consensus is baking in 12% sequential sequential growth heading into Q2, Tim you mentioned that the sales may be back half weighted because of Omnicom do you feel like current estimates are properly accounting for this kind of 90 days of a dynamic you spoke about today. Thank you.
I don't know what people have in their specific models, but since launch and with other infused medicines.
There is a delay from pep to IV to work through insurance and other processes and that hasnt changed with the peso.
So that is when you have a December to February impact.
In the short term we did things just as you mentioned, we've worked very hard to get patients who had stopped treatment missed treatments and couldn't get into their sites of care. The difference with the peso versus of KRYSTEXXA for instance, with KRYSTEXXA is generally rheumatologist office, you're going into with with depends of its sites of care. So.
These types of carriers were more impacted than we saw individual physician offices and that led to delays. So we were able to successfully get those patients back on treatment and that didn't lead to any significant impact in the quarter, we were able to make up for that.
The impact from Omicron is a 90 day delay is as it has been.
Since launch.
Okay.
And then the.
The other question was on new patient adds.
Thinking about we're not counting on new patient adds or anything specifically there.
Alright.
Operator, it looks like we have time for one more question. Thank you. Our last question comes from.
Gary Nachman with BMO capital markets. Your line is open.
Hi, Good morning, first how much did gross to net pressure impact <unk> sales for both the peso and KRYSTEXXA.
Was that a meaningful headwind just order of magnitude and should that be normalizing I guess, starting in the second quarter and going throughout the year.
And then just secondly, unpleasant that just talk a little bit more about the competitive dynamics there, how that's shaking out and any nm LSD.
Especially when it comes to payer access you know how much more work do you need to do on that front or are you pretty comfortable with where you are right.
Sure So gross to net was not.
Materially different for depends on KRYSTEXXA or or any royalties medicines.
From an animal SD and reimbursement process I think if we even go back to when we did the acquisition.
Reimbursement was not a huge hurdle for plasma and the early launch phase with viola and to this day. It has not benefited tissue. The biggest issue upfront was getting those patients from reimbursement through two sites of care and ultimately treated.
Building on our patient services organization, a site of care organizations, identifying where people can get infused and then in helping their patients get through to that.
It was the most critical aspect and that access and reimbursement.
And that has worked quite well and has not been an impediment to driving uptake.
Thanks, Gary and thanks Norma. This concludes our call. This morning, a replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
Ladies and gentlemen, thank you for your participation in today's conference you May now disconnect everyone have a wonderful day.
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