Q1 2023 BioCryst Pharmaceuticals Inc Earnings Call
Good morning, and welcome to the Biocryst Q1, 2023 earnings Conference call.
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I'd now like to turn the country John Bluth at Biocryst.
Please go ahead.
Thank you very much good morning, and welcome to Biocryst first quarter 2023, corporate update and financial results Conference call. Today's press release and accompanying slides are available on our website participating with me today are CEO , Jon Stonehouse, CFO , Anthony Doyle, Chief Commercial Officer, Charlie Gayer, and Chief R&D Officer, Dr. Helen tax rate following a remark.
We will answer your questions before we begin please note that today's conference call will contain forward looking statements, including those statements regarding future results unaudited and forward looking financial information as well as the company's future performance <unk> achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results performance or achievements to be materially different from any few.
<unk> results or performance expressed or implied in this presentation you should not place undue reliance on these forward looking statements for additional information, including a detailed discussion of our risk factors. Please refer to the company's documents filed with the Securities and Exchange Commission.
On our website I'd now like to turn the call over to Jon Stonehouse.
This is John the launch of Orla Dale remains very strong now entering the third year, Charlie will share the details and when you hear the total number of patients on therapy, and the growth rates of adding new patients both year over year and quarter over quarter.
The large base of patients on therapy, and the consistent number of new patient starts each quarter reflect a steady upward trajectory.
And this is just the beginning as there's so many more patients yet to try or the data.
We have a once a day therapy in an injectable marketplace.
It makes sense that more and more patients are wanting to try it.
Great benefit and tell us it's changed their lives.
Beyond this we will continue to invest in order to de R&D to reach more patients and create even greater value.
We will do this by adding more countries around the world where patients gain access to Orla Dale.
And by expanding the label like we're doing with the pediatric program.
We will also continue to invest wisely and find the next door the Dale through our pipeline and discovery efforts. Our goal is to find another rare disease target, where we're able to bring our best in class medicine to patients while balancing the risk inherent in drug development.
Lastly, we have improved our already strong financial position by the recent refinancing.
This was hard to do in the current environment, but Anthony and team got us better terms in our debt and pushed the repayment out to a time, where we should be much closer to peak sales.
This dramatically reduces our dependence on the capital markets and allows us to focus on the execution of our plan.
By growing Orlando and finding another molecule.
Or we can repeat the orla deyoe success.
That will lead to adding real value today, and even more value in the future for patients and shareholders.
Now I'll turn the call over to Anthony.
Thanks, John .
Q1 was a great quarter for <unk> with revenue up $18 $7 million was 38% compared to Q1 of last year. Additionally for us to see the kind of underlying patient growth that John mentioned.
And to overcome the reauthorization headwinds with revenue just slightly below the prior year.
<unk> gives us a lot of confidence as we move forward to what we believe will be a strong Q2 and onwards to our full year goal of no less than $320 million.
You can find our detailed first quarter financials in today's earnings press release, and I'd like to call your attention to a few items.
Total revenue for the quarter came in at $68 8 million $68 4 million of which came from Orla deyoe, putting our trailing 12 months revenue at over $270 million we.
We expect Q2 revenue to be strong and we should see our 2023 quarterly rhythm play out similar similarly to prior year.
We are making a change to our approach to revenue segmentation moving forward, we will segment, our revenue into Orlando and known Orla day of revenue.
And for all of <unk> revenue, we will be segmenting into U S Index U S to that end of the $68 4 million of global early day of revenue.
60 days came from U S sales with the remaining seven six coming from ex U S.
This ex U S revenue represents approximately 11% of global sales for the quarter and while this percentage for ex U S is higher in Q1 than we expect for the remaining quarters of the year because of the gross to net headwinds in Q1 for the U S. We do expect ex U S revenues for 2023 to come in at or above 10% of the global total.
Operating expenses, not including noncash stock compensation for the quarter were approximately $83 million. This is a decrease of $7 million from Q1 of 2022 and down $27 million compared to Q4 of 'twenty two most of which is in the R&D area due to reduced clinical invest.
Following the termination of an ongoing close out of the 90 930 program.
We at REIT.
Iterate, our full year Opex guidance at 375 million flat to prior year as we continue to invest in maximizing the Orla day, our launch globally and continuing to invest in R&D.
For R&D, we are investing mainly in three key areas continuing to develop poorly there by identifying opportunities to expand the label such as the pediatric trial, while also continuing to invest in real world evidence generation.
Our oral factor D program <unk> continues to move forward to determine if we can get to a safe and effective dose with a potential once daily best in class profile and lastly, we continue to invest further discovery and early development capabilities with the goal of developing differentiated treatments and selected rare disease.
Cash at the end of the first quarter was at $403 million.
Following the debt refinance deal that we closed last month, what pharmacon net proceeds of that deal, bringing pro forma cash of $429 million.
I think it's helpful to add some extra color around that deal and process. It was a very competitive process with more interested parties than any deal that we have done before the strength of our execution throughout the launch date.
Days and the belief in our plans to get to $1 billion on peak was the main driver for that interest and it was great to secure such a strong deal and a lender of the caliber of pharmacology.
This deal helps us to achieve a number of goals that we have set out an advanced in the process. Firstly for me. Most importantly, it enabled us to delay the bullet payment from 2025 to 2028 at which point, we will be much closer to Orlando peaks out.
Next and a very tough environment, we were able to secure.
Our significantly reduced margin spread on the loan to much more competitive rates.
Then we're able to pay interest in kind for 50% of the interest for the first six quarters, which preserves cash is that option had expired in our prior agreement with with this area.
We also have the ability to draw an additional $150 million up to September of 2024.
These funds are committed and the decision to draw them or not is ours, we will only draw the funds. If we can generate value by doing so but access to it gives us additional flexibility and continued optionality.
Lastly, it significantly reduces our reliance on the capital equity markets. This is our third refinancing our third financing events in a row not to be centered around equity.
At current prices the equity markets do not reflect what we believe to be the true value for breast a company with a product on its way to $1 billion in peak sales and discovery and development engine capable of bringing additional drugs to market behind us and a strong balance sheet.
And so being able to use non equity instruments is the best option for us.
With this refinancing growing Orla day, our revenues and our continued disciplined approach to capital allocation, all moving us closer to profitability.
We have the financial strength to allow us to unlock greater value for the company and for our shareholders and I will pass it over to Alan.
Thanks Anthony.
The word of the day lunch is succeeding because we have delivered to patients the best in class oral once daily medicine that is differentiated in the marketplace. We are making R&D investments to reach more patients with orla Dale and to deliver our next best in class molecules to the market.
This is the standard we have set with all of that and our goal is to develop and commercialize more highly differentiated products for the treatment of rare disease.
As we shared before we are studying the use of oral <unk> in children with <unk> under the age of 12, we've initiated dosing in the pediatric registration trial and in fact, we've had tremendous support and excitement for the pediatric program and the medical and patient communities.
Enrollment is off to an excellent start and the initial dose groups and we are pleased to be on our way to building the dataset for the evaluation of boiler Dale in children under 12 with H E.
In complement mediated disease, our once daily oral factor D inhibitor VCX 10, Seer 13 has an opportunity to be our next differentiated best in class molecule.
While this program is still early and therefore has risk if we succeed it would bring a unique therapy with substantial benefit to patients.
Also in the complement system, we are investigating the single target and combined targeted approaches to address diseases mediated by any of the pathways, the classical and lectin alternative and terminal pathways are complementary.
This includes our oral <unk> inhibitor program currently in lead optimization.
As we look at we are investing so we can deliver additional best in class medicines in the future for targets within the complement system as well as for other select rare diseases outside of the complement system.
Our approach is to bring multiple candidates and programs forward through discovery spreading risk across an early pipeline with a variety of targets, it's a therapy and diseases.
We are focusing our efforts, where we believe our structural biology based discovery capability provides an advantage. So we can do what we do best develop potent selective by available molecules against difficult targets.
We look forward to sharing more detail on these additional programs at an R&D day later this year or early next year.
In the meantime, we continue to make disciplined investments in the compounds. We believe can offer best in class differentiation, just as we have done with oral it out.
Now I'll turn the call over to Charlie.
Thanks, Alan I'm.
Supports our confidence.
R U S team got off to a great start this year with new prescriptions in Q1 up 20% either over a year.
We generally expect new starts in the first quarter to be softer because there is so much focus on payer reauthorizations, but.
Q1 starts were greater than three of the four quarters in 2022.
Prescribing was again balanced across all deaths house with about 50% of new starts coming from the top 500 physicians and.
Patient retention remained consistent we retained 60% of patients through their first year on treatment and lose very few patients after that.
What this means is that we add many more patients than we lose each quarter.
And we see this consistent growth pattern continuing for years to come.
As expected revenue was down slightly from Q4, because many patients moved temporarily to free product during Q1, Reauthorizations and commercial patient co payment assistance and Medicare Donut hole obligations are always larger than the first quarter of the year.
I've commented before that the percentage of patients on free product, particularly longterm with our patient assistance program crept up in the second half of 2022.
We're starting to reverse this trend through increased focus on high quality prior authorization and appeal submissions and we exceeded our queue one Gulf removing commercially insured patients who had been on longterm free product over to pay it therapy.
As you've seen we're reporting X U S revenues for the first time.
The great majority of these sales in Q1 were from Europe , where our initial launches are progressing well as physicians continued to move towards modern prophylaxis as the standard of care for patients with H E.
<unk> gained access in international markets, we're seeing steady consistent growth in patients on therapy similar to the pattern in the U S.
We expect international markets will drive slightly over 10% of sales this year.
And this early growth gives us confidence that X U S markets will account for about 20% of peak revenue.
Based on the strong demand and consistent growth, we're seeing in the U S and globally, we remain confident that peak revenue for <unk> will reach $1 billion.
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Our first question will come from Chris Raymond with Pepper Sandler.
You May now go ahead.
Hi, guys. This is alley propylon for crass, thanks for taking our questions. So first just found the pipeline apologies if I missed us in the prepared remarks, but just what is the current status on.
C X 10013 program I think the latest update with chronic clocks work is underway and should complete this year, but but just curious if you had any other visibility on timelines are our next steps towards the clinic.
Yeah sure. Thanks for the question, there's not much to update at the moment, we are preparing to initiate a trial in patients with P. N H and that's just ask the ability to dose one Dale once daily say, we're currently working through the regulatory process and we'll have more on this later in the year.
Great and then I think I you had discussed today opportunity for early on in pediatric patients could could you just remind us on the development path there.
And just how we should think about the the pace of enrollment and and potential timeline to S. N D. Eight filing I think clean trials, what's the primary completion date for that trailing meant 25, but we're just curious if that's accurate or what your expectations are there.
So that's our pediatric trial is as he said his enrolling we had good interest and excitement amongst patients and the investigators is too soon to predict the pace of enrollment there and the timing for that so I will update as we have more as the trial proceeds.
But this is a really important unmet need I mean think about kids and injecting them with therapy. We have a formulation. That's granules that you can sprinkle on yogurt or Apple sauce, and so patients are in their parents in particular are really excited about this program.
And so are we.
Alright, well, thanks for taking my questions.
You're welcome.
Our next question comes from Jessica Fi with J P. Morgan you May now go ahead.
Hey, good morning, because it's J L. For just so we have a couple of questions first.
A day on the percentage of patient a free drug and one Q that you can provide to us and how should rethink about the attempted to a free drug patients for the remainder of the year and then secondly.
Is there anything regarding the authorization process you can share with us for example.
Does the authorization process require the same or similar <unk> that require for the star forms and then lastly regarding your for your guidance does it imply a substantial step up in terms of revenue with four two Q and beyond and can you explain.
Oh can you come to elaborate on your conviction Oh Dear Thank you.
Charlie Rangel, Yeah, I'll I'll start with the first two questions that have Anthony cover the cover the third one so on the percentage of free drugs I'd mentioned in our last update we were we were trending up towards 30% of patients I'm pretty drug and we think longterm. We can we can bring this down into the lower twenties and.
Eventually down into the teens, so we actually in the first quarter as I mentioned in my prepared remarks were ahead of the game in terms of converting patients from commercially insured patients who are on long term free product over to paid so we're we're doing well on that we are a little bit over 30% of total patients.
<unk> on free drug and the reason for that is that we had an unearned unanticipated headwind in the quarter, which was the external charities that help Medicare patients or.
Afford their co payments for.
For drugs like Orla, Dale ran short of funding and so they had so some patients who otherwise would have been on paid therapy, we're not able to afford their co payment insurance and thus we made the decision to convert those patients over to patient assistance, because that's something that we can control. So what that means is those patients will.
On free product for the rest of this year, but they're doing great on rodeo and we expect that in 2024 will be able to convert many of these patients back over to paid therapy. So right now we're a little over 30% of patients on free drug, but we expect that percentage to come down over over the year because of the teams making real.
Good progress with with getting people to paved therapy overall.
Just just to add I mean, this was a real crisis in the first quarter for these patients because you can imagine a senior in all of a sudden they don't have access to their medicine anymore, and so with our free drug program, we were able to step in very quickly and and.
And take care of a good number of patients we even got some switches as a result.
Of that but this is an investment by our company because as many of you know with the freight inflation reduction Act. The co pays are capped at Charlie helped me again 3200 or something like that next year and then $2000.
I think in 2025.
So we believe that we're gonna get these patients back to paid in fact, Medicare some of our best paid patients.
And the population of paid patients. So it was a move that we thought was a smart one for patients and a good one for our business longterm. So jail had had this Medicare issued not been there we would be under 30% of patients on co pay at this.
Free product at this point.
Your second question on just the re off process, Yeah, there's nothing new there. It's just the standard reauthorization for for patients. Sometimes this means reconfirming for confirming lab tests, sometimes it's just reviewing clinical history, but it's standard stuff nothing nothing new there. It always is a time consuming process and so that's why.
Across our overall patient base a lot of patients step back to free product temporarily while we were helping them through that process and Charlie.
Because we had a bigger base, we had more people switched a quick start as a result of that in the first quarter Craig that's right.
It was a busy quarter overall, so the impact of free product.
Definitely depressed Q1 revenue and so maybe Anthony turning over to the sheriff the pace.
I think I'd use 2022 as a surrogate for how we would expect the curve to play out so.
There'll be a step up and revenue in Q2, and then in Q3 and Q4 I would expect revenue to continue to to increase so I wouldn't just take the remaining year divided by three.
I think the step up in queue to be a healthy step up and then Q3 and Q faulty steady growth from from there on out.
And there are conviction is that these the reauthorization process is going fine and that these patients will be switched to paid in the second quarter. That's why we're we're convict or very positive around 320, yeah.
Our next question will come from John would then with JMP Securities you.
You May now go ahead.
Hey, Thanks for all the color and congrats on the progress a couple from me.
Very helpful to have the number of patients on all of the other day wondering if you could tell US you know.
What number of patients have started or <unk> in total.
Then also as we're looking throughout the year with the step up and SG&A spending where do you think that additional adolescent needs to go to continue the growth you're seeing today.
Sorry, I missed I missed the last can you repeat the last part of your question.
Yeah. If you guys are spending additional SG&A this year to maintain the growth where are you.
Capital.
Okay. So the on the total we have.
Haven't disclosed the latest number but in the fourth quarter of last year actually it's something we use in our promotion.
We disclosed at the allergy the.
College of allergy meeting in November at that point, we'd had over 1500 prescriptions and so with a thousand patients roughly at this point, it's consistent with what we've talked about with patients.
We retained 60% of patients at a year and then a year on therapy, and then very few drop off after that and so that's why we're growing so consistently quarter after quarter and as far as SG&A Atkins I can start on that and Anthony can add color. So the the vestments on the <unk> side commercially that we've made this year we've.
About before we made some expansion into our U S field team just to add more regents in particular, just a couple of new territories, and then supporting team to help with market access in patient services and so that's something we do to just improve our efficiency and our ability to reach customers.
And we may make incremental investments like that in the future and then of course international expansion. We're building out our way of two countries like Italy, and Spain, and Europe will continue to make those kind of international investments before we go to Anthony Charlie.
You said in your comments that the and one of the biggest challenges. We have is switching patients from longterm free drug to paid and you said that we exceeded the progress of our goal for the quarter can you just talk about you know that's an investment that we may can you talk a little bit about what you're seeing in while you're confident yeah. So the.
The the main thing that I've I've talked about it and this is just focusing on.
Really making sure that the health care practices and the patients provide all the information that that the insurance companies want and so as we've expanded our market access in patient services team.
Allowing us to put on a greater focus on educating our customers and making sure that all of that information is collected and then helping them in the case of writing the right prior authorization or appeals letters and making the proper case to the insurance companies. We've got the team, they're ready to help with that process and so.
That is the investments we've made there and the people is directly correlated to the improvement that we're seeing in moving people from free product to paid products and we expect to keep getting better as the year goes on.
Yeah, I think the only thing I would add to Charlie's comment is increasing investment that will see any SG&A site it'll be incremental right it'll be mostly driven by the area is Charlie talked about and an international growth.
The step type increase that we have between Q3 and Q4 of last year predominant driven by the.
Larger investment by Charlie made Charlie's team made here in the U S. But at the moment I think it's just gonna be incremental as opposed to anything of kind of major significance like that.
Got it very helpful and one more grand if I may are you guys, taking the option to pay that 50 per cent of interest on the Pharmacon facility.
I'd say at the moment, it's hardly likely we did take advantage of it while we have this for the eight quarters with a theory something that we do have to select on a per quarter basis, but I think given what it does for us in terms of cash preservation as we have the opportunity to see dot net cash utilization.
Kind of start to converge between revenue and Alpex.
You know I think it's safe to assume that at least in the short term yeah, we would likely take advantage of it.
Alright, Thanks again guys.
Our next question will come from Tagine Ahmad Bank of America you.
You May now go ahead.
Hi, good morning, and thanks for taking my question just wanted to have a little bit more color, maybe John about your longterm available every day of thousands talked about that target of achieving about 1 billion in peak, what's your assessment I got some from where you stand today, you have a great and echelons from here on in what do you really need to.
The key that in order to get to that target is it a matter of just having a lot of patience on drugs.
Thrill or is it also needing to have a certain amount of compliance and uncertain drop out rates in order to receive that target.
Yeah, I think on the discontinuation piece I think we're getting really comfortable that the pattern and the rate have stabilized and so just to remind you of the pattern, 50% of the people that discontinue discontinue in the first few months and if you <unk>.
Pick it out to a year, we got Ya I mean discontinuation right. After that is really really low and it it just.
Discontinuation rate drops from three months to six months six months to 12, so that has not changed now Charlie for what almost a year, maybe maybe even more now and so I think we we feel very comfortable with that so then it's about adding more patients and I think a really important point is that.
We crossed this thousand patient threshold of patients on therapy and that we grew from last year almost 50%.
Is remarkable in you know in a couple of years of launch and so and the consistency of new patient ads quarter. After quarter is just unbelievable. So there is no slowing down there there's no low hanging fruit here. This is fighting it out in the marketplace, it's a very competitive market but.
We have an oral drug where everything else is injectable and so it's a steady upward trajectory.
The one problem. We had was you know a free drug debate and we're seeing that change with the changes that Charlie made in the team and so very confident in our ability to get to the billion dollars and and we we think this is a fantastic molecule for patients in therapy for patients.
So when you have that your chances of doing well as high.
Our next question will come from Stacey <unk> with.
You May now go ahead.
Hi, Thanks for taking my questions. We did have S. P. O. So first you've kind of discuss the stabilization, but can you clarify where exactly you see the retention Corolla day hope beyond 12 months is it very close to that 60 per cent are you willing to provide some more details. There. We're just hoping to get a sense of has to keep these patients might be.
<unk>, a very long time since they can probably talk all done and asked that free drug program steps first question. The second question is your guidance. Four Q2 is that you expect to see a step that will it be similar at quarter over quarter in terms of the percentage correct from last.
Yeah, which would imply you too could be closer even exceed that consensus number around 80 million. So curious to get your thoughts and then the last question, how and it sounds like the timing for any pipeline update is gonna be around here and our early 2024 is that correct and if you could.
Are you having are you planning on having any discussions with the F. D. A around the Nonclinical talk findings for 10.
13 and.
If so what are the major factors that you would like to have covered higher doses duration treatment.
I smell color would be appreciate it thank you.
Sure. Let me, let me start because I want to make sure that people get this point because this is really important that if you've been on our drug for a year, there's not a 60% fallout post a year, it's like one or 2%.
Posted a year and so that's why I say, if we got you two a year. We've got you so that base, just keeps getting bigger and bigger and bigger and that is a really important.
It's gonna make the same point and then just kind of add that you can you can do the math with the numbers. We gave you today. We're at about 1000 patients we grew 46% so.
What we're adding consistently on a 12 month basis because of the demand and that really stable retention is we're adding 300 plus patients every 12 months and so that's what we based on all of the signs that we see in the market are forward looking market research the trends that we see.
We are still in the early stages of growing demand in this market and so we have a lot of confidence based on the demand and the retention that we're going to keep the same pace of growth towards the $1 billion.
Yeah.
In terms of Q2, we're not gonna give specific guidance, we've talked about how we looked out last year bear in mind last year. There were some different dynamics right. We were still in the last throes of of figuring out the contracting on the the Pbms and the insurers and getting all of that in.
I think in terms of last year also Charlie talked about the significant growth that we have seen.
So with the base.
Significantly higher now than it was at that point in time.
I I wouldn't assume that the percentage it'll be.
What I said in the remarks, we expect four Q2 to be a step up and we do expect Q3 and Q4 it to grow on top of what we are seeing you too all within the confines of metering exceeding the 320 guidance for the year.
And then Helen.
Timing.
Stacy Thanks for the question so on on R&D day, and an update on the pipeline, we think will be talking about something at Leighton here. Early next year, we will certainly have more color on what's going on in the discovery part of our pipeline and.
In terms of 10, G or 13 and any discussion. So we are always in discussions with regulators around the program. It that's coming.
Coming in from the program with this Nonclinical program and study that's ongoing and so for that we would need to complete the study to understand you know what we Ah we conclude from it the focus at the moment in in a regulatory process in discussions of going through the regulatory process to start the PNA itch study.
And so we have what we need for this in terms of the data set to get started but that's the focus of where we're looking at for a regulatory interactions with the goal of moving into patients to assess if this drug can be safe and effective switch once daily dosing.
Thank you very much.
You're welcome.
Our next question will come from Justin Kim with Oppenheimer and company.
You May now go ahead.
Hi, Good morning, Thanks for taking my question, maybe just under 320 million guidance.
And in terms of reaching at least that number how much of the assumptions rely on conversion of patients who are on free drug beyond sort of seasonality of Q1 222.
Justin there's some of that built into our assumptions, but the major part of of this is just organic growth in our patient base. So it's the continued demand and then the constant gradual improvement we always expect to make the biggest improvement in getting people to pay it therapy in the first quarter just through.
<unk>, but then we will make incremental improvements over the years. So we expect the.
The percentage of paid patients to drop into the twenties as as the year gone, but the biggest part again, it's just as new patients coming in and then that base constantly growing John described.
Okay.
And could you provide any color on the background of these new patient AD, whether they're switched patients prophylaxis naive are coming from community versus academic low prescribed for low volume verses high volume prescribed for sure. So.
Really all sounds very repetitive here, but it's it's it's great to see the consistency. So it's it's we're still getting about 50% of the patients who are appropriate switches, 50%. The other 50% mostly from acute only.
And then the mix of prescribers I mentioned, we're getting half the prescriptions from top 500 docks those are the bigger traders that cover about half the the patients in the market place and.
And so the other half is coming from the.
Not so much the community doctors, but the smaller haa trader. So the ones who have 123 patients in their practice our team is able to reach both those segments and even more effectively with some of our team increases this year and so we we've seen this pattern continue over the last couple of years and we <unk>.
Aspect those same patterns to continue going forward.
I think another piece, that's really important that we haven't fully tapped into is the.
Patient word of mouth spread and Charlie said this a bunch of times before but.
The patient summit that takes place in the U S. Every two years hasn't taken place into 2019 due to Covid and occurs in July and we're really excited to be the first time, we actually have a booth with a product that's on the market.
It's just a great place where patients are talking to each other and and an opportunity for that word of mouth to spread. So so we're looking forward to that.
Okay, Great maybe just the final one as you think about breaking out the X U S numbers are so curious should we expect the X U S sort of growth rate too.
On a percentage basis.
The U S and and so I'm just wondering.
Whether we might see that line item reached the peak potential book for you.
Yeah, So I think for for kind of a.
Indefinite period of time more of our growth is still going to come from the U S. It's the bigger market, but X U S. As a little above it is Anthony said, it's about 11% now we expect it to be and you know just a little over 10% for the year at peak it will get to 20%, but it's gonna evolve more slowly because it's all about launching a new mark.
It's getting market access and building in those markets, but what we're seeing in the places we've launched in Europe . In particular is the same kind of steady growth once were launched.
Adding more patience and growing steadily just as we are doing in the U S. But U S is going to dominate in both.
Pace in sales for the next few years.
Dynamic is it takes three to four patients outside of the U S to make up the value of a patient inside the U S. And we haven't you know for example in Europe , we haven't gotten to Spain, Italy, Benelux, Portugal, and we expect to start to launch next year in those countries, but it's just rolls out slower.
But at peak, we're really confident that we'll get to the 20 per cent and we're really pleased with how Europe is performed even if you know it isn't a big chunk of the business yet it is still important.
Okay, great. Thanks, so much for taking the question.
You're welcome.
Our next question will come from Serge Bollinger with medium and company.
You may not go ahead.
[noise] Hi, good morning, a couple of questions I guess for Charlie.
The first one was the was the impact of patients on free drug.
And the first quarter larger than it was in 2022, just trying to reconcile the difference between the.
38% a year over.
Increasing sales.
You had a 46% increase in pay.
Patients on drug and a 5% price increase.
Started in January .
And then secondly.
It looks like you had a stronger level new patient starts in the first quarter of 23 of 20 per cent.
A significant uptick from prior quarters in 2022 and.
You think that's sustainable for the rest of the year.
Sure. Thanks, Thanks search.
So on your first question in in the free product in the quarter, yeah. The the overall impact of free products.
Was greater this this first quarter that in 2022, even considering the relative size of the patient basis and so that was for two reasons. One is as our base was bigger and the reauthorization process. It's just it's always a complicated time consuming process and so.
Patients on average were on free drug just a little bit longer as we were doing the free.
Are the Reauthorizations. So that's the first factor the second factor is what I've mentioned earlier around the Medicare.
Patients not being able to afford their co payments and not having as much access to outside help doing so and so that was that was something new that happened. This year that did not happen last year. So you put those two things together if the Medicare had not happened.
Our revenue growth would have been comparable to the patient growth at about 46%.
And then the price increase we expect the net for the price increase we took a 5% price increase at the start of the year, we expect to over the course of the year to net out at about a 4%.
Prudent and Aspie that just doesn't I'll show up in Q1.
And then as far as the new starts yeah. We were really pleased to have the 20% growth over last year in Q1, because as I mentioned this re off process is keeps everyone, particularly the healthcare provider's busy and so the fact that they prescribed that much in Q1 is a is a great sign.
[noise] ticket necessarily means we're going to be 20% up for the rest of the year, but we will do our best to try that.
But with many new members of the team as we went through our expansions I'm just really pleased with how the team's doing and how well they started in Q1.
And just one last one on the Ah pediatric.
Going pediatric clinical trial towards a go here to expand Orlando's IP.
With a pediatric label expansion or it's really just an additional market opportunity for for <unk>.
Yeah, I mean, we have incredibly long IP, so the pediatric pieces not critical to that in our opinion I mean, this is a high unmet need.
When you think about kids six seven years old having to get injections for their therapy. Instead, you can sprinkle something on an oral sprinkles on yogurt or applesauce. It just it ended bill shared I mean going way back when he and I would attend these patients summit's. We had parents just like what is the pediatric.
Nation coming.
And so there's a there's a pent up demand there, it's not a huge market, but it is a patient for life right and and.
We think it's an important.
Segment of the market deserved so but.
This was really all about Ah high unmet need and serving that high on my knee.
Okay.
Again, if you have a question. Please press Star then one.
Our next question will come from Lisa Baker with Evercore ISI.
You May now go ahead.
Hi, there thanks for his pleasingly and aside from the free free drug Neil what was the gross to not on the rest of them.
X free drug.
Yeah higher so in Q1 is always going to be the highest from Ah the numbers effective as it relates to the.
Ah reimbursed part of it so we've previously guided to 15% to 20% for the year.
I would say that Q1 is right at the top end of that range and then we continued to get better.
As we move through the year to get towards about 15% to 20%.
But again driven by Reauthorizations co pay assistance a lot of the things that by the time you hit the end of Q1, you're you're starting to normalize and that'll have minimal effect in Q2, and then as you go through the year, even less again.
Okay, that's helpful and why for the the Medicare.
Issue you're facing.
<unk>.
These patients about <unk> Bible next year they no.
No longer bound freight drug I guess I'm trying to understand what.
What changes.
Give her some sense of the co pay now.
In the future. So so based on the way Medicare part D is right now.
For a rare disease product like orla down depending on the person's plan their their copayment responsibility for the year is going to be north of $10000, often north of $20000. So for a senior citizen that very few could actually afford to pay that out of pocket. So these outside charities help them.
Afford this because we as manufacturers by law not not allowed to do that when the cope with the the inflation reduction act roles in part of it recognizes this challenge for patients. So next year. The maximum that part D patient will pay is around $3200 across all the drugs that they take.
Not just individual drugs and then in 2025 that number is capped at $2000 and so what it means is the overall copayment burden goes down which means more patients will be able to afford out of pocket.
And also it may mean that these outside charities will be able to help more patients because the average assistance that they provide will be much lower and so that's why we're optimistic and we're very much supporters of that part of the I R. A.
Okay, and so why then would that Medicare.
Why would they be on free perhaps for the rest of this year because my kitchen.
That's just that's just by law that once we put a patient.
Longterm patient assistance for the rest of the calendar year, we have to keep them on it and so it's all part of a kind of a complicated rules around meant.
Government insurance.
That's helpful. And then just like more broadly what percentage of of the 7500 patients are now on prophylaxis like when does your market research tell Ya.
North north of 70% in the U S and we see we still see that growing to 80%, maybe even 90% over overtime.
One of the reasons for that is you've got three companies now promoting it as each new entrant of injectable appropriate comes out you're gonna have more companies.
We think that'll go to 80 or even higher when everybody's talking about why would you put somebody on prophylactic therapy.
Okay any inventory changes for the corner.
No and we you know again inventory is really not a not an issue for us because of the sole source pharmacy every patient shipment is.
Every sales Ah direct flash sale to patients. So we don't have it in inventory factor.
Okay.
Okay.
And what what kind of compliance are you seeing these days.
Alright.
Yeah. So overall compliance remains strong.
90% plus.
They're always there is going to be some smaller percentage of patients that struggle, a little bit more but with some of the a team expansions that I described.
Part of part of their job to on the patient services side will be to help identify patients were having compliance challenges and help educate them and make sure that that they do their best to take one pill once a day, but overall, we seek compliance very high 90% plus.
Okay, Great and then just one point of clarification on the piano study.
Are you clear to start faint to N. P. N H or are you just kind of having a conversation with that day now, but what exactly with that so.
So so.
Again, we're looking at countries, where the benefit risk where.
Where patients don't have access to other therapies and so the you have plenty of other therapies for patients to have access to so we're looking outside the U S and we're working through the process.
We can't give you more of an update than that our goal is to start a study and we will announce that when we do and if we do but at this point I can't give you an update.
And how long you May you. Please clarify again why why PSNH why we're going there first.
S. So we're pursuing PNA just the fastest path to be able to assess the drug to understand if we have.
Alright, Okay. Thank you welcome.
Welcome.
Our next question will come from Brian Abrams Arby's capital markets. You May now go ahead.
Hi, good morning. Thanks, so much for taking my questions up to for me first off you've been able to gather more and more lines of tunnel data here anything you can take from the learnings around this really high retention rate after patients or through a year.
And apply it to potentially reducing the drop out rate within that initial year and then secondly.
It sounds like the newer patients being added are quite consistent in terms of the switchers versus naive and.
Is there anything different about them versus those who started earlier just in terms of region insurance coverage time on existing therapy that might make it more or less challenged going through the free drug process on to pay drug or more or less likely for them to stay on therapy.
Longer term thanks.
Sure questions, Brian So so first on the the the long term data yeah, I mean, we collect a ton of data and I think the biggest learning and this isn't really surprising and <unk>, but the biggest learning is it's about patient confidence in physician confidence.
They've fortunately patients have so many more therapies today, then they did a decade or more ago. So.
So they want to know that now that they've got access to these therapies that that their drug is really working for them and so switching is something that stress is a trigger for hav attacks and switching can be stressful. So what we've learned is the biggest thing to do is set expectations of this is how the drug works here things that could.
Happen side effects or breakthrough attacks, that's normal, but you need to give this a period of time three to six months to really figure out. If this drug is working working for you. So that's a big part of our promotion and educational message and it just we just have to keep repeating and we're seeing over time.
That that's that is improving and stabilizing our retention rate.
I would just add Charlie you asked a question Bryan why are they stabilize the retention rate so high after a year because they're doing great right. I mean, they are taken one capsule once a day, it's controlling their disease and they're tolerating it really well and so it's almost the ideal therapy right. So that's why and we're absolutely learning from our data that when.
Patients, who are doing well low attack rates rarely with breakthrough attacks on other injectable therapies when they switch over to Orla Dale they're having the same kind of outcomes on orla, Dale and so making sure that patients and physicians understand that is part of the the education than your question on just the types of patients.
I mentioned the mix of of switching has been similar I think that the difference there's really no difference from getting patients to insurance. That's that's been consistent probably the biggest difference is.
These are as we're getting further into the market. There are patients who have been taking more of a wait and see approach they've been wealth on other other therapies as as we were just describing so we need to just keep pushing and educating and sharing data and John mentioned word of mouth driving word of mouth before the biggest challenge.
Just getting someone who's doing well in another product.
To take the chance of switching and we see that happening, but we haven't gotten to everyone. We haven't convinced everyone, but we will convince them over time and that's what's leading to the steady growth of this product.
Great. Thank you.
Welcome.
[noise] R. Max Costco call from General Wang with Barclays. You May not go ahead.
I have a three quick questions. The first one is sappy corny.
Prescribers, you mentioned S for Sam from Pier one.
[laughter].
And also for the <unk>.
Switch from other people.
50%.
<unk>.
Apply.
1000 patients that correctly.
Okay that was the first question.
My second question is that.
Guidance regarding guidance, if a 320 million.
You expect.
11% is from X U S was that consistent with prior.
<unk>.
Guidance picking up this year.
Lastly, any plan too.
Prof profitability.
Sure I can I can do the first one and then.
I'll turn it over to Anthony so.
The 50 50, the 250 50, so half half of the prescriber state top 500 have being lower tier and then have roughly half the patients big Profi switches have from acute only.
And then how that relates to the 1000 patients so of the thousand patients. It's all very consistent all around so retention amongst our patients is very similar weather. They came from another proceeds therapy or whether they came from acute only whether they were prescribed by our top K O L.
Or whether they were prescribed by a smaller haa trader so across across the board, it's really really consistent and all of these different segments no matter, how you slice it.
And as far as the 320 guidance I think it's it's consistent you know the the X U S split is X U S has been growing and we've we've this year waited with are consistent with our plans and so we see it being consistently above 10% and that's why we're splitting it out at this point.
In line now with when we initially put up to 320 guidance kind of the same assumptions.
For your question on profitability.
I mean, we're we're in a much better spot them.
We have been previously rights or a combination of revenue growth.
On our way to 320, and then up to a million I think slash guidance that we gave for Opex I'm a control that we've put in place there and then the deal about we signed with Pharmacon last month.
I think puts us in a great spot to be able to to achieve this.
I think our focus continues to be on.
Not just the speed ash.
That we got there both the longer term term level of profitability and so I'm, making sure that we continue to invest in Orlando and the label and real World evidence generation and then in the pipeline system. When we get there is as significant as we can make a b.
I think we're financially and a great spot to be able to achieve profitability when it'll come will depend on on those variables.
But this is the best financial position in the company has been it's so different from the past I mean, our reliance on the capital markets has dropped dramatically and what that allows us to do is execute our plan and not worry about all got one's an X ray where are we getting the money from your words, such a strong spot now compared to where.
[noise], we were before and we can make smart investments and have growing revenue I mean, it. It's it's like night and day compared to where we were.
Thank you.
Welcome.
Our last question will come from <unk> Mare right Crawford Jeffries you may not go ahead.
I. Thank you for taking my question I was going to ask about the new loan optionality to draw another $150 million can you provide perspective on your decision tree on what would trigger pulling down more of the loan and talk about some potential way you can create value with the additional capital.
Sure so we.
We have up until September of 2024, So you know the goods of a year and a half give or take I think during that time period will obviously expect revenue to continue to will have I think additional clarity as to where we are for tens.
13 will also continue like we've talked about previously to invest in the in the pipeline we've talked about that there's C. Two and then other areas that we're investing in.
I think.
It gives us time to see those dynamics plan [laughter].
As in when we get there if we see value in where would we create value we're constantly creating value in Orlando.
So if there's something that we can do to accelerate growth whether it's here in the U S or international if there's something that we could do to accelerates one of the clinical trials. Then we think will continue to generate value. Then that's that's another area that we could we could use it or if it was to bridge ourselves to.
Ability.
That would be another.
Value creation opportunity for the company so.
It's fully at our option as to whether we do it it's committed funds. So you know I I I.
I think the optionality and the flexibility that it gives us maury.
It's huge for us and only if we only if we can kind of meet some of those targets will we will we draw those funds.
And remember too I said that we're investing in R&D for all the data in the pediatric trials just one thing that we're investing and there's other ideas that we have that are too early to share with you.
But we're looking at ways of expanding the label getting more patients on therapy.
And is Anthony said and then the pipeline and those things can create real value.
There's a real return on investment there. So that's how we look at it.
Got it.
Maybe just one quick clarification question for the for the patients going back to a free product temporarily for the <unk> process. Charlie you mentioned they were on drive a little bit longer and first order twenty-three versus the first quarter 22 are you providing more specifics on whether it was one two or three months of the quarter on pre drug and should we.
Expect the matrix around this to change your stayed the same in future calendar cycles.
Yeah, no I'm not providing specifics on average there was just more use a free product, but the vast majority of those patient the patients are through the <unk> process now and and as I mentioned, we were actually ahead of our plan in in the commercial segment of the market, which is over 60% of our patients and so those pay.
<unk> will beyond paid therapy for the rest of the year. So.
And then as we go through the year, we'll we'll just keep making incremental improvements on getting people to paid therapy. So we we with a patient base that we have with the continued demand and the retention and then doing better and better on paid getting people that paid therapy. We're just really confident in the year and particularly the along with the long term.
Based on what we see now yeah. When you have a bigger base of patients I'd have to go through the rehab process. It can take longer so next year it might take longer as well right with a bigger base next year. So.
Got it okay. Thanks for taking my questions.
Welcome excellent.
[noise]. Thus concludes our question and answer session as well as the conference. Thank you for calling today's presentation you may now disconnect.