Q1 2023 Apellis Pharmaceuticals Inc Earnings Call
Okay.
Good day, and thank you for standing by and welcome to the Q1 'twenty two 'twenty three appellate Pharmaceuticals earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question answer session.
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Be advised that today's conference is being recorded.
Now like to hand, the conference over to your Speaker today Meredith Kaya. Please go ahead.
Good afternoon, and thank you for joining us to discuss.
First quarter 2023.
With me on the call our co founder and Chief Executive Officer, Dr. Cedric Francois.
Commercial officer, Adam Townsend Chief Medical officers Dr.
And Chief Financial Officer, Tim Sullivan before.
Before we begin I'd like to point out that we will be making forward looking statements that are based on our current expectations and beliefs. These.
These statements are subject to certain risks and uncertainties and our actual.
Results may differ materially.
Or would you to consult the risk factors discussed in our SEC.
Finally.
Now I'll turn the call over to Cedric.
Thank you Meredith and thank you all for joining us today.
I note that the launch of say a.
Top of mind for everyone. So let me jump right in.
We received FDA approval.
For the treatment of geographic atrophy on February 17th.
Thanks.
First it's only treatment.
A disease that affects more than 1 million patients in the U S alone.
Let's see.
Each division loss.
Prescribing little details safe low risk proven ability.
Progression with increasing effect over a 24 month period.
And it will demonstrate the safety profile.
<unk> thousand injections.
This approval is the culmination of more than 20 years of hard work and dedication by our team and we are in.
Incredibly proud to rig sexual recoup patients who until now had no treatment options.
The property was launched in the U S on March 1st.
In that first month, just over 6000 commercial valves for ships to physicians.
Full regenerated U S net product sales.
$18 $4 million for this first quarter.
We are continuing to see the strong momentum in the second quarter so far.
Encouraged by this early market adoption.
Initial demand.
Professionals as well as patients has exceeded our expectations as we view this strong start.
Leading indicators of longer term demand.
However, let me temper this by saying that she is a new uncharted category.
We have been in the market for two months and are just starting to learn about how various adoption trends may impact the amount.
So while we are pleased with our progress in March.
This should be except situations and uptake through the temporary J code to periods.
Okay.
More color on what we are seeing in the market. Some of the recent analyses presented at ARVO.
And our progress with the commercial launch.
We are also making important steps in our efforts to bring <unk> to patients globally with applications now under review at the European Union, Australia, Switzerland, Canada and.
The United Kingdom.
Turning now to <unk>, we are continuing to see strong momentum with empathy as we close out its second year on the market.
Net product sales were $24 million in the first quarter.
We're pleased with the approval of our supplemental NDA, which includes the Pegasus and previous results and look forward to the book.
Thanks for the approval of the project.
Injector.
What really continues to stand out are the compliance rates for poverty, which remain around 98%.
This is outstanding for a drug of this far in switch launch and we view it as a clear testament to how much better.
We're thinking about it.
We recently made the tough decision to discontinue treatment as the open label portion of the Phase II study.
Our recommendation.
Payment data monitoring committee.
The committee's recommendation was not based on any unexpected safety signals.
Patients in the study have completed the randomized treatment period, and we will analyze the data as planned.
I would like to say, thank you to the people living with Alice and their caregivers who participated in this study and for the partnerships we have built within the community.
We continue to advance nearly a dozen clinical and preclinical programs and you'll hear more about some of these today.
We believe we have only just begun to unlock the potential of a concert in science and look forward to sharing our continued progress with you going forward with that I will turn it over to Adam.
Thank you Patrick.
I am thrilled with the initial enthusiasm that physicians and patients are showing it looks like February .
As I shared on the approval call in February we have built best in class commercial and medical teams with extensive experience in retina.
Went into the <unk> launch well prepared and highly energized and have shown flawless execution on the launch to date.
On day, one our commercial leaders joined 10 retinal specialists.
They treated the first patients providing us an opportunity to gain operational insights and feedback.
Many retina specialists posted about their experience on social media recognizing the importance for patients and the historical nature of the first ever approved treatment for <unk>.
Let me share some of the initial metrics from March.
The commercial and medical teams engaged with nearly 2000 physicians at least once.
And we have now seen slide five reorders with it every sales territory.
6000 commercial side <unk> was shipped to physicians. In addition to commercial vials. We also distributed more than 3400 samples to physicians upon request, which is an important indicator of future demand.
We have also seen several academic institutions put <unk> on formulary, which is faster than we expected.
As planned we submitted our application for a permanent J code to CMS and expect to receive all code.
October .
In summary, the launch is off to an excellent start and we're encouraged by what we are seeing already in Q2.
A significant amount of demand has come from private equity backed groups. However, the majority of demand to date is coming from independent non p/e backed practices, which tells us that there is real patient demand across the country.
But as Patrick said earlier, while exciting to see these initial positive indicators. It is still early in the disease category that has had no approved treatments until say February <unk>.
Stockholders will continue to be an important component of the launch representing a meaningful proportion of overall vials.
We have more to learn about market adoption and how certain factors such as reimbursement and dosing frequency may impact demand.
As a result, we should expect some lumpiness in both demand and sales until we obtain the permanent J code.
Looking forward. The teams are focused on continuing to educate both physicians and patients on <unk> and geographic atrophy, we have been particularly encouraged by the patient requests for treatment.
The media coverage, especially the segment on CBS morning was a strong push for patients to reach out to their physicians and ask about <unk>.
We will continue to educate patients with GDA two off physician engagement as well as through our <unk> direct to.
Consumer campaign.
Which is aimed at encouraging patients to monitor and talk to that I talked about vision changes.
Now turning to <unk>.
In the second half of 2022, we expanded our field team and strengthened our partnerships with key centers.
Our efforts are taking hold as there were more than 200 patients on therapy at the end of the first quarter.
We are gaining momentum in 2023 to date as we received FDA approval of the NDA with the phase III <unk> results and the 48 week phase III Pegasus data, which enables us to have even more robust discussions with physicians.
The effects of <unk>.
We are also looking forward to the potential approval of the <unk> injector, which we believe will significantly improve the patient experience.
Therapy.
Now, let me turn the call over to Carolina.
Thank you Adam and good afternoon, everyone. It has been a tremendous start to my journey at a pallet.
Following the approval of Stifel great.
I'm proud to see my fellow physicians and peers embracing the transformative potential of cycle of rate on patients' lives.
I have attended several retina meetings since the launch and the feedback from my retina colleagues has been positive.
Just last week, we were at the association for research in vision and ophthalmology or ARVO.
<unk> had a strong presence with a presentation showcasing our leadership in GAA and retina.
At this meeting we shared new phase III post hoc functional analyses.
And a presentation given by Dr. Alan Shang patients with extra foveal lesions, who were treated with <unk> showed a visual function and quality of life benefits.
<unk> demonstrated a preservation of five six letters compared to Sham, which is equivalent to more than one line of vision as measured by best corrected visual acuity or BCB over 24 months.
Patients also reported a clinically meaningful benefit on V F Q25 <unk>.
<unk> visual function questionnaire, which measured quality of life outcomes, such as social function driving and dependency on others.
And then a separate presentation given by Dr. Eric Schmidt, our first patients treated with Nexobrid demonstrated a substantial reduction in photoreceptor cells loss as compared to sham.
Data were also consistent when comparing spiked over treated study eyes to the untreated fellow eye.
Remember that both retinal pigment epithelium or RPE and photoreceptor cells are required for visual function.
RPE cells, maintaining integrity of photoreceptor cells, which are the light sensitive cells responsible for vishay.
We are also continuing to progress our three year extension study and look forward to sharing data from this study in upcoming medical meeting.
Now that <unk> is approved and we are.
<unk> other indications, where interim vitriol headset Copeland may offer value per patient.
Dark heart disease.
We also plan to evaluate the impact of say celebrate and those patients who are on the verge of developing GAA and specifically the impact <unk> had on preventing photoreceptor locked in these early stages of disease.
In the rare disease space, we and our partner <unk> are continuing to advance <unk> in additional indications.
We are enrolling patients in a phase III trial for immune complex remember now proliferative lemaire neural nephritis Etsy, Greek Lemaire Youll apathy, both rare kidney diseases.
And Sylvia is enrolling patients in a phase III trial for cold Agglutinin disease, a rare type of autoimmune hemolytic anemia.
And in a phase two trial for hematopoietic stem cell transplantation associated thrombotic microangiopathy.
A severe and common complication following hematopoietic stem cell transplant.
I will now turn the call over to Tim for a review of the financial.
Yes.
Thank you Caroline.
Since we issued a press release earlier today with the full financial results I will just focus on the highlights for the first quarter of 2023.
Total revenue was $44 8 million, which consisted of $24 million and <unk> net product revenue.
$18 4 million and <unk> net product revenue and the remainder in collaboration revenue from Tobey.
A few comments on Tysabri.
Like <unk> revenue per site deliveries recorded when it is shipped to the distributor not when it is shipped to the physician. Therefore revenue includes both product shipped to the physician and product in the channel.
We estimate approximately two to three weeks of inventory on hand at the distributor and expect these to be the inventory levels going forward based on anticipated future demand.
We are not guiding on gross to net other than to say, we anticipate it will be within the standard pharmaceutical ranges.
And as you've heard already we are in the early days of this cycle relaunch and do not expect that one month's results represent the full year's runway, we intend to share more about our learnings in the coming quarters.
Turning to the rest of the P&L R&D expenses were 110 million and G&A expenses were $102 million.
And we reported a net loss of $178 million.
As of March 31, 2023 pellets at $765 million in cash and cash equivalents, which includes the recent follow on offering completed in February .
We expect our current cash balance to fund our operations into the first quarter of 2025, including the ongoing <unk> and cyclone Relaunches and further development of our pipeline.
We remain confident in the palace is financial future as we continue to execute on our upcoming milestones I will now turn the call back over to Cedric for closing remarks Cedric.
Thank you Tim this is an incredibly important and exciting time for our company with.
I would say for me now available for patients we are blazing, a new trail NGA and our position in the <unk> market is expanding.
Additionally, we continue to advance a robust clinical pipeline encompassing multiple late stage rare disease programs as well as several programs heading into the clinic.
This broad portfolio. It gives us a position of strength as we strive to achieve our vision of being the global leader in complement.
Let's now open the call for questions operator.
Thank you.
At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, we ask that you. Please limit yourself to one question and one follow up.
Please standby, while we compile the roster.
Our first question will come from the line of.
Matthew Kumar of Goldman Sachs. Martin Your line is now open.
Hey, Thanks for taking our question so maybe to follow up about the comments Adam made around future quarters.
Like what do you think there's a way to think about this lumpiness in a very practical way like.
Do you think this is a way to think about it as kind of like growth and decline or kind of a flattening or Alex if you look at kind of where the lines will be in terms of lumpiness or is there lumpiness across the quarter or kind of lumped into the April kind of number do you have so far suggest some variance on Lumpiness and then I have a follow up afterwards for Tim.
Thank you Matthew and great to hear you.
Adam coming out this thanks.
Thanks, Matt and thanks for your question, obviously, we're up we're thrilled with the first quarter sales and the $18 4 million and then more importantly for me the 6000 commercial demand vials, that's a real strong indicator with the 3400 sample, but also went up about demand and we're continuing to see that momentum into <unk>.
So far everything is progressing really well.
I will say, obviously keep in mind that <unk> is relatively new with unchartered category. We've I think been on the market for two months and we're starting to learn about the various adoption trends in some of those may impact demand, we have a little bit more to land around reimbursement dosing frequency et cetera, so that that leads to a little bit at the bumping it until we get to our covenant.
J code in October .
Tim you might want to comment a little bit on Huawei.
One way of running that forward from a forecast perspective sure. So the way we think about it.
The quarter the first quarter numbers really are kind of a five week month. If you will so if you take that 6000, or so vial and divide that over five weeks, it's roughly 200 miles per week and we look at this as sort of an average weekly growth rate potentials in terms of in terms of forecasting. So you can do what you want with that obviously there is.
A portion of the buyout will be recognized as revenue.
Peter because those are those are included in our revenue number.
We'd like to.
Basically the distributors like to keep roughly two to three weeks on hand, so as you grow that sort of those vials that go out to.
In the retinal specialists on a weekly basis, you also have to grow that inventory.
Inventory is a little bit, but that's how we like to think about it but again each week is different and we've seen some lumpiness as Adam said, but.
We have seen continued strong demand.
Oh.
Okay, Great let me follow from that.
With near term so.
As you think about the <unk> number which is basically one month of sales how does the.
Ship or kind of refine your perspective about a path to breakeven for our pellets as a company overall.
Yes, sure. So we obviously forecast a number of different scenarios.
This is the best case scenario when we guide to our cash runway, we take a conservative view.
Again, it's early so we're going to continue to evaluate this but.
Again, like I said Thats, a conservative number that first quarter of 2025.
Let's see.
Okay, I guess, maybe one more to follow up on that is there any kind of external lever. You think you guys had that could kind of move things for their or could actually get you to have it a little more clarity on kind of the path to breakeven.
Yes, I think we've been really creative in terms of how we finance the company and how we've managed our I think we managed our expenses, especially in terms of the no.
When we finance and how do we kind of built out that commercial infrastructure relative to when our approval came so look I think we're pretty careful about this but I don't think we can guide specifically on.
How we're going to bridge that gap to profitability, but we're pretty confident that will be the right thing for shareholders. When we do that.
Okay, great. Thanks, very much everybody.
Thanks, Mike.
Thank you.
One moment for our next question.
Our next question comes from the line of John Miller of Evercore. Your line is open John .
Hi, guys. Thanks for taking my question and congrats on the great first quarter number.
I think you actually gave a lot of great color on the dynamics, there, but I'd love to.
Dive into that ARVO presentation actually.
I would love to get a sense for how you view the impact of functional.
Post hoc analyses.
On the commercial market from here.
And maybe if you could provide a little bit more color on where those functional analysis cutoffs came from where the 250 micron cutoff for Ferrovial postville come from et cetera, and did you run the <unk>.
Time to event analysis like Youre, comparing our competitor did.
Okay.
Thank you John I'll start off by giving the word to Caroline to talk about what we really saw and why that is important and then briefly on adobe to Adam to talk about the kind of the commercial impact of that.
Thank you Cedric.
We've always believed that there is a link between the functional data and slowing the growth of geographic atrophy, and sometimes post talk analysis unnecessary to confirm confirm that especially within the noise of the measurements that we get in patients with <unk>.
In our post talk analysis, we showed that there was a functional benefit with regards to visual acuity and quality of life measurements demonstrated inside both retreated with extra OBO lesions.
And this is really consistent with what I would expect as a clinician that we would be able to show this benefit in patients before the lesions affected the podium.
250, micron as well that is the size of the <unk> zone.
Why did we do the same analysis as Derek I think we're pleased that they were able to do the type of analysis that they did to show their benefits and we have our recent function analysis will also have micro permits you need data that was presented at ARVO last year that confirms our function of bank debt.
Hey, Joe It's Adam just following up obviously the commercial team is laser focused on executing against our label.
So all of our focus is there and targeting our 2006 hundred retinal doctors around the U S. While this is.
Great data.
I think that's a great usage from educating the medical community for our sales team is focused on executing our plan and talking about 24 months data and everything thats within our label.
Just as a quick follow up guys will you be including that.
<unk> analysis in your ex U S filings I know theres been a lot of attention on the from the EU, especially on functional benefits.
Absolutely we will so it is part of the bigger functional starting more functional data will come out as well as we continues to track of course and to get an extension study, but there is of course, an important piece as we had expected to follow the lesion size reduction and we're very excited to see it materialize.
Thanks, So much guys congrats again.
Thank you.
One moment for our next question.
Our next question comes from the line of Casey Ahmad of Bofa. Your line is open.
Hi, guys. Good afternoon, and congrats from me as well on a really good start to the launch.
I'm just wondering how much detail do you get about the granularity. So you shipped 6000 plus files.
Get in real time updates on how many of those files are actually belong here.
And is it your expectation that.
The initial.
<unk> of patients that are going to be put on the drug will be every month dose versus every other month and then I have a follow up thanks.
Thank you.
Yes, Hey, Jeanine, it's Adam.
See what we do see in this initial phases of the launches vials ordered by our retina practice and then linked to that is the revenue number that you've seen so initially all of our feedback is based on the interaction from either somewhat from the medical affairs team or the commercial team, having a discussion with the physician, but we don't see that level of granular.
Details of.
How these while they used what type of patients that use them. What I can tell you is that we.
Specced physicians to carry only one to two weeks of stock in that fridge.
I believe it's the vast majority of those demand vials as I call them, the 6000 commercial and the 3400 <unk>.
In the first months unlikely going into is relatively quickly.
The second part of your question was what type of patients and it's monthly or every other month likely to be dominant. So what we are hearing anecdotally is it the type of patients that physicians are using FIFO report as we expected within initial phases.
Prior to launch.
You tend to hear physicians say that they are treating a patient use blinded one eye and Gis progressing patient loss in the second.
<unk> and <unk> in the second high and buying back towards that was consistent with our market research and we are also hearing that every other month, it's a bit of a game changer in this disease and every other month is the dominant player at the moment, so hopefully that answers your question.
Okay. Yeah. That's helpful. Adam and then just with the recent news that is done.
Dallas would be managing the mix.
Complement launch if it does get approved what's your view of.
Seeing your competitor in this market. Thanks.
Yes.
Thank you Dustin local first of all Bulger Hep you have before both us and for others and.
We wish them, the very good and productive partnership together.
But from our angle it doesn't change anything we're very focused on the job at hand.
So I feel really available to every patient that needs in the U S for now into other countries in the future. So.
Importantly, we have the every other month dosing of course, which gives US. We believe is an important competitive advantage that we view are materializing in the months to come as well.
Okay. Thank you.
Thank you.
Our next question.
This question comes from the line of <unk> Rama with Jpmorgan. Your line is now open.
Hey, guys. Thanks, so much for taking the question and congrats on the initial launch here.
A quick question for onsite both re sampling.
When a physician asks for samples.
How many samples do you give per patient and I guess, what is assumed in terms of that patients transitioning to.
Commercial drug the timeframe.
Which to commercial truck thanks, so much.
Thank you and great hearing you.
Yeah, Hey, Adam it's Adam so thanks for your question. So obviously samples are a really important component of our launch.
And then theyre going to represent a meaningful proportion of overall vials now physicians tend to request samples and the reason why they do so it's that they want to understand the patient's clinical experience with the drug gain experience with the drug and also.
How to administer it as it's a new drug in this class.
A few things obviously only a physician who has a medical certification can file to receive samples and they have to form their request to do so.
Tend to know the leg.
Sampled by need based on how they want to use it and we expect it is an important piece of our business moving forward as we progress towards the permanent J code now I do think the majority of example lead to commercial vials that we hand Caroline from your perspective is there anything you would add.
Well I think samples are important for physicians, they they fill a gap and.
Also.
Gives us an experience with how to use the medication.
And my colleagues have been really pleased to have this option available they're excited to finally have this treatment for ta there.
<unk> label meet all of their needs.
They are really having a great interaction with the pellet.
The input so far.
Thank you thanks, so much.
Sure.
Thank you. Thank you.
One moment for our next question.
This question comes from the line of Colin Casey.
Baird. Your line is now open.
Great. Good afternoon, thanks for taking our questions and congrats on the quarter. So other 6000 demand vials as Adam called them in the 3400 samples how many different prescribers does that cover kind of what what's the breadth of prescribers youre seeing in this early stage.
Thank you, calling handing it over to Adam.
Hi, Collin it's Adam.
We're targeting 2600 retinal physicians and we've continued to do that.
The commercial and medical teams they've engaged already 2000 physicians at least one and.
And the Thrill for me is that actually every sales territory has actually order to commercial wireless <unk>. So we're getting usage across.
The whole of the country.
We're also seeing usage from.
Private equity backed practices, but the majority is coming from independent practices. So again, a good mix of the type of center Thats using now the challenge we have initially in the early stages of this launch is that we only see your vials going to centers. So we don't have a a physician.
Physician knowledge of who is using a pop from anecdotal but.
Conditions are wanting to speak to us.
We're already getting through our 2006 hundred target list. So I think that's a.
Widespread of physicians, who are using across the country.
That's helpful. Thank you and then just as a follow up can you remind us your strategy for distribution, how many distribution.
How many distributors you are working with and could we expect more to come on line in the future.
Yes, Thanks, Colin this attitude that we're not public on our distribution strategy, but.
We have all of the distributors that meet the needs of all of our 2006 hundred physicians and all of the coverage plans that they may have so we're very happy with.
Our distribution process at the moment, but we're not public on it.
Got it thanks, so much for taking our questions and congrats again.
Thank you Colleen.
Thank you.
One moment for our next question.
Yes.
This question comes from the line of your call.
Okay.
<unk> from Citigroup. Your line is now open.
Hi, Cedric and Tim Congrats on the very strong launch just a really basic question just so I'm clear. The WAC is $21 90 per vial and you've done 6000, maybe a little more vials. So thats getting me to $13 million. So I must be missing something can you just clarify how you're getting $18 four from the.
Over just over 6000 commercial please thanks.
Sure Hey, Yigal, it's Tim I'll take that so we recognize revenue when it when the vials shipped to then go to the distributor and then the distributor will from a doctor requests.
Distributable shipment to the Doctor and so the 6000 is that second step, but we recognize revenue, but the first step. So there are some at stake.
Let's say at the distributor level, we've already recognized as revenue.
Sorry about that.
And you got it got it and just as a reminder, we expect distributors to keep between two to three weeks of inventory on hand, and physicians about one to two weeks.
Okay. So theres another two to three weeks.
Just a distributor revenue that's not in the states about okay.
And then regarding the sampling can you give us a sense as to what percent of the 2000 physicians that you've engaged with so far have actually requested samples.
Yes.
We've seen samples being used across the vast.
Number if those 2000 physicians that we've seen across all of our regions and all of our geographies.
Okay, and then we've talked in the past about the dynamic with so called re calendar and some of the wet AMD patients to make room for safe Harbor capacity have you seen any evidence of that practice yet.
Yes, we've seen.
We heard that physicians looking at managing bus at wet AMD patients as well as Iga patients managing the calendars that Caroline anything you want to add from your experience well I think that this is it really nicely within the treatment paradigm that we already have with <unk> and.
So.
It's well into that doctors are physicians are really enjoying our educational materials are patient the brochures that they have and able to explain this to patients and patients are really enthusiastic about this treatment. They recognized that their vision was going down before and.
Do you want to save.
And reduce the burden of D. A.
But as retina as retina physicians in retinal surgeons, we know how to adapt it to two.
Treat our patients.
No doubt that my colleagues will be able to adapt to the increased injection terminal.
To do that.
Great. Thank you.
Thank you.
Yeah.
Thank you one moment for our next question.
Next question comes from the line of Stephen seed House with Raymond James Your line is now open.
Thank you good afternoon and congratulations.
I wanted to ask there have been various news reports of course discussing strategic takeover interest in Appel us Cedric.
Any comments you wanted to make on that subject and palaces strategic priorities. Thanks.
Thank you, Steve well, there's always those that condition of course, we are.
And the stage of commercialization that drove a lot of interest.
But we are squarely focused on making <unk> available to every patient that needs in the U S.
Roger that can I follow up and just ask.
One is the first update from deal coming in in <unk>.
What would that initial data sort of Intel if you can just.
Get us current on that thanks.
Okay.
We aren't going to be presenting a full update on gill at the <unk> conference at the end of July .
Im very excited about sharing what happens to the increasingly effects over time that we.
Mentioned already as a 24 month data. So this is going to be the 30 months of data on the subject of debt continues to be dose.
Thanks, so much.
Thank you.
Thank you.
One moment please.
Our next question comes from the line of Phil Nadeau with TD Cowen. Your line is now open.
Good afternoon, Matt is that our congratulations on the I just want to slip over a couple of questions from us first.
Adam I think you mentioned that you expect physicians to keep one to two weeks of inventory on hand, So a 1200 vials approximately per week you should have seen some reorders during March would.
Would you be willing to share the proportion of those 6000 that were reorders versus first time orders.
Hey, Phil Thanks for the question, Yes, we've seen reorders, but we're not going to go into the details of those reorders.
Got it and then second question there were recent reports.
Off the Midas it seems like something that's going to happen on a background rate how should investors.
Putting it put into context any future.
Future.
Database settings have picked up.
Remind us what are the side effects.
Thank you Phil I'll, let Kevin answer that question.
There was a single case of culture positive and optimize and that was deemed related to the interim vitriol injection procedure.
Is well within the reported rates based on the number of interventional injections performed thus far and as you had mentioned that with Mr. <unk> line is blinded and Paris and this is being corrected I would say that overall, we are encouraged by the safety profile, thus far looks like delivery and this has been consistent with the clinical trial.
Perfect. Thanks for taking my questions and congrats again.
Thank you Phil.
Thank you.
One moment please.
Our next question comes from the line of Justin Kim of Oppenheimer. Your line is now open.
Alright, thanks for taking the question and congrats on the quarter.
Maybe just following up on the observed initial adopters of therapy for each type of rate.
Is there a lag in reaching patients with GAA in a single eye and Theres nothing in the Contra lateral eye.
Is it is it is that driven by the fact that these patients might not be seen by a retinal specialist and.
Maybe just.
Being seen by an optometrist or an ophthalmologist.
Okay.
Thank you so much and great to hear you.
Adam I don't think like I said two months ago.
Yes, thanks, Justin good to talk to you.
So yeah based on our initial research we did prior to launch and the feedback we're hearing from physicians.
Prioritize patients that I described it either in the cool tended to be the first wave of treatment period, because they sat on the books of retina physicians.
So your assumption can be quite accurate logging. These physicians that have gen. One either might be extra phobia led not impacting patient might tend to have been set back to Daryl ophthalmologists store Theyre all Tom interest now moving forward, we believe that.
Might have seen that where we're doing some direct to consumer work with Henry Winkler.
We launched the <unk> campaign, that's really important.
Our marketing strategy, we think that a lot of people basically believed particularly the LD. The vision loss is just a natural part of their aging and what we want to do is we want to drive those patients to go and see that ROI Doctor So GAA white.
White campaign is going to be a really important tool for us to educate patients.
And move patients to go see their physicians and we're really thrilled that Henry <unk> decided to partner with us because of his really emotional story of looking after his father in law is as far as the father in law went through patients.
So that will help us in that addresses the piece of your question about patients not naturally sitting with the retina.
Okay great.
Maybe just a follow up.
Thinking about safety for empathy Ali.
Any updates on that.
Meningococcal infection profile.
Any update on there given sort of the profile to date.
Thank you so much so within battery I mean, unfortunately, we have crossed into.
North of 1000 patient years of dosing and we have yet.
Obviously in a single case of pneumococcal infection.
No matter, what he wants to add something to that but we're extremely happy with what we've seen so no. It's great. Thank you Justin for asking them.
Question I think it's up.
A massive massive fan of all things <unk> and I think we're making great progress there so as Patrick said.
We still know cases over 1000 patient years, and we still see a really really high compliance 98%. It shows me that the efficacy and safety of <unk> Valley continues to be a strong driver within the <unk> market.
I'm thrilled with what that team is doing in and continue to.
Great growth quarter on quarter.
Alright, great. Thanks, so much everyone.
Thank you.
Thank you.
One moment for our next question.
This question comes from the line of Derek Taylor with Wells Fargo. Your line is now open.
Hey, everyone. Congrats on the quarter well done just a couple of questions from us. So maybe just first off I was kind of wondering if you got any feedback from physicians kind of on how the patient journey and the logistics are working in the in the practices. So.
How has <unk> impact of their practices and are you finding areas to optimize for future in the launch and then the second question and maybe I missed this earlier, how long do you plan to actually run the sampling program.
Thank you so much for level, hence the physician feedback once to Caroline and then Adam will talk about something.
Well the physician feedback has been really positive it's amazing that appellant and my colleagues at the edge.
Company relatively new to the retina space has.
Contacted and I'm impressed so many of my colleagues.
I don't know anyone who doesn't know the members of the Telus team who've contacted them.
Medical and sales information, so I think that Thats, all helped bring that patient story.
And Tonight, and and patients are really pleased with their initial interaction with prophage.
Yes, I think you said it might see that Caroline Hey, darrick its Adam.
So yes, something we still believe it's going to be pretty important for us during the launch phase, particularly before we get a permanent J code in October .
And as I said previously just in case you didn't miss it.
Physicians want to gain a bit of experience they want to try the drug.
Make sure that when they go out patient and that they understand how everything goes et cetera. So it's going to be an important tool for us I do see some pulses aside of demand.
Got it and maybe just one follow up to my first question. So I guess.
Is there any kind of pushback or issues with like the time in the chair for these patients as you know again.
Immunization, the education around syp ovary, I, just kind of compare to wet AMD.
We've heard some feedback on that so just kind of curious what you're hearing as well.
Well this is really an opportunity to change the treatment paradigm I mean, I think back to what we initially had treatments for wet AMD. It was the same sort of thing we had to explain it to patients that were having an injection we had to educate patients and we are.
Able to completely change wet AMD from a blinding disease to something where you see patients earlier, we have all I cant providers and volatile to say.
So now that we have <unk> the first treatment for Ta, we're able to start the treatment paradigm from D. A.
And kind of roll it back so we can start to treat these patients earlier get all I care providers involved not just retina Doc atomic docs optometrists.
Jerry attrition.
These patients and I haven't really heard anything but of course anything new it takes a little bit of education for patients and the community Hey, Derik, It's Adam I'll just jump in on that too right. So obviously, we were doing disease state education.
From the end of last year. So we've done a really solid job with our field teams to educate physician incentives and also patients compliant Lee around geographic atrophy anecdotal feedback from all the physicians that we've been speaking to I've been using is that patient physician compensation goes incredibly well. These patients are educated.
They are very comfortable with it in the chair and physicians are doing a really solid job of describing SIFI oriented subs. So far those conversations have been going very very well.
Super helpful. Thanks, guys and congrats again.
Thank you.
One moment for our next question.
This question comes from the line of Ellie Merle with UBS. Your line is now open.
Hey, guys. Thanks, so much for taking my question and congrats on all the progress.
Maybe just a couple.
Europe , just first on the regulatory review.
Can you any color that you can provide on <unk>.
How that European reviews, going and any feedback that you've gotten and the latest there in terms of your confidence.
European approval and.
And then second just in terms of that commercialization strategy in Europe , I guess, how should we think about the commercial opportunity and strategy ex U S versus the U S and any key differences there and then just on the ex U S. Commercial preparations and built out can you comment on where you are on that front book in terms of like the sales force build out.
You know your commercial preparations, but that also.
From a spend perspective, where you are in terms of the extra asphalt out thanks.
Thank you so much that's great hearing you well look I mean.
Europe is the next frontier in the rest of the world as well I mean, we have a as you know our filing was accepted by the consortium between Australia, Switzerland kind of that in the UK as well.
European regulatory process is going as we had expected and going very well, we expect an approval early.
Early next year.
And I think it's important to point out that we established our commercialization force in Europe , many many years ago.
Adam has been with us I believe longer that for years now.
As soon as you get into we established our workforce in Zurich, Switzerland.
This is important because in Europe as many of you know.
The work involves many many layers. So there was a whole level of awareness that needs to be established not just with the retina doctors, but also with the regulators which of course EMEA has a separate tours, but you know the regulators the payers and quite frankly also the kind of the political landscape for people to understand what these diseases and how.
We are going to bring this to Mike and Adam will talk a little bit more about how we have forgotten about that payout it's Adam so yes.
Obviously 5 million patients worldwide and if Youre assumption is one to $1 2 million of those are in the U S. You can see there is a massive opportunity for us ex U S.
So it centric beautifully right we've been building out the commercial and medical test infrastructure our core.
The European office is based in Silicon in Switzerland, and that's where our strategy is driven from and we started to put feet on the ground from a medical affairs in country leadership perspective in the UK, France, Italy, Nordics and more importantly, our first potential launch outside of the U S Germany and.
We also have.
Footprint in Canada, and Australia, So we're getting ready for this launch we're also going to do it in a very of pallets weight right, we're going to be super thoughtful and when we onboard people well.
Rightful milestones as we go through the European regulatory process, we've been really lucky in attracting very talented people to join our team.
So we're ready to go as we as we work towards a.
A potential approval towards the end of the year.
Great. Thanks.
Thank you Eddie.
Thank you.
One moment for our next question.
Next question comes from the line of Annabel Sammy with Stifel. Your line is now open.
Hi, Thanks for taking my question and great quarter. Congratulations so I want to go back to the functional data that was presented at ARVO clearly it's the first evidence of function that you demonstrated in addition to the anatomical data. So I guess the first question is what.
What was the reception that you got from the physician population at ARVO and I guess.
Given that the.
Benefit was seen in patients who are earlier or have lesions that are further away from the center so technically extra foothill.
Does that square with.
Your current strategy of targeting patients do you think that theres going to be a shift maybe go earlier since youre seeing in the functional benefit there.
And then the follow up is I noticed that you had mentioned that youre going to be exploring.
The drug in patients that are at risk of developing Jay is this different from intermediate disease.
I thought that you had moved away from a little bit so just.
If you could help us understand that.
Any change in strategy based on the interesting information presented at ARVO.
Thank you and have a little bit.
I can comment on the reception, but I think it's important for people to remember that visual acuity is only the measurement of central decision right visual function is much much more than just your ability to read and selling shirts and I always give the example, imagine walking through New York looking through its trough.
You would have 2020 vision, it's not a chart, but obviously a function in your ability to upgrade would be severely in there so with that context in mind those visual acuity is determined by the presence of fluid receptors within this phobia. So when we look at visual acuity and you look at extra fulfilled patients that means that these patients are basically.
And the study still theoretically the ability to have central vision and then the question does that central vision get embarrassed overtime and can we slow that down so in that sense. It was a very important study, but again.
Within the limitations of how we measure a function just focused on that element.
It was acuity you may recall that last year in September we presented data on micro Perimetry that is something that looks more at the periphery. So then the question as it relates to intermediate versus the risk of cheer you bring up an excellent point, which is that one of the most appealing features of salesforce.
Or the increasing effect overtime, so the ability to slow down the progression of the disease increases.
Increases from approximately 20% or so in the first year to well north of 30%. When you go into year three so the longer you treat the better. It appears that this drug is able to slow down the progression of this year and hence the ability to treat as early as possible is important intermediate.
As in term that gets used.
Randomly not very precisely all the way for patients who have just cruising India to patients that may have kind of the early onset of geographic atrophy.
We did an intermediate MD and this is direct feedback from the regulators that USDA is neither an indication or endpoints I cannot overemphasize that so in that context, what we want to do is go to treat as early as possible before you actually have the presence of geographic metrics. So we can do that now with the OCC.
Imaging and that's where we want to go next two study will set forward in Kansas.
Okay.
Maybe if you can comment on the feedback that you got on this until that point. Thank you Cedric.
I would say the feedback was very positive and because it really is consistent with what we would expect as a clinician for example, like well, we see patients and they have through the phobia alright.
Alright any patient.
<unk> disease, the visual acuity measurements can have a lot of noise and be really variable and so we would expect to have more stable.
We produce visual results as Alicia gets further away from the <unk> and Thats why were able to demonstrate that.
The thing that's notable is we had.
Really big trial looking at Ta patients the second largest study.
And we enrolled really heterogeneous group of patients.
So that's why we're able to demonstrate this more easily with our extra ferrovial patients and reception was really positive.
Clinicians are really excited about this data.
Okay I guess.
Just follow up on that point.
Would that mean that you might want to target different population in the four categories that you had mentioned so maybe those that do have lesions that are further away from from from the center and just really be able to get the maximum benefit for those patients.
But again on a build is the benefit to the patients focuses only on visual acuity.
Then an extra frugal business, you're going to see better than you would've foveolate patients, but we know for effect that many patients who have formula involved with at the start of the study so called <unk> patients also will benefit from slowing depths photoreceptor cells. So.
That is something that we clearly established and studied.
1200 patients that we studied in Derby and Oaks.
Okay, great. Thank you.
Thank you.
Thank you.
Our next question.
This question comes from the line of Joseph Stringer of Needham <unk> Company. Your line is now open.
Hi, Thanks for taking my questions two quick ones from US just curious if you can walk us through the immediate impact on.
The amendment sales on the permanent J code becomes available at the start of <unk>. This year and then on gross to net thinking about guiding for it.
Thank you.
I guess, you sort of guide for normal range, but do you expect this to remain relatively constant as you progress through the launch.
Hey, Jeremy.
I had a hard time hearing your first question, but I think it was about permanent J code. So.
A few things about that is obviously a permanent J code gives physicians and guarantees that confidence of getting reimbursed in a timely manner. So I do think that that will have.
A nice impact for us as we get to that that stages about tiger at the moment. Obviously, we are working claim by claim and I'm working for reimbursement claims and one thing that I think it's probably good for US no and you guys to do essential since launch as of today as well are under.
Standing is that there have been more than 50 paid claims. So obviously the permanent J code has a real solid impact for us as we get there in October , but we're doing pretty well to make sure that we're working through.
Claim by claim now spend side to that is the majority of the challenges we've seen tend to be basically process related and we also anticipate that that will smooth.
As we get over time. This is the first time some of these pads is seeing these gi patients come through that system.
Manually done during the temporary J code period, so that will improve post the permanent J code. So considering I didn't hear your question I'm, hoping I honestly.
Yeah, I can answer the gross to net question.
So to answer your first part.
Oh, yes very helpful. Thank you.
So on gross to net we won't be guiding on gross to net and it will change a little bit over time.
We're willing to say is that it's within pharmaceutical margins, which you can argue typical pharmaceutical gross to net which is in the 10% to 20% range and I realize that that's very wide.
Our 10-Q, we do add additional disclosure that we haven't in the past, but it does blend.
And privately insightful and we give detail on charge backs discounts and fees government and other rebates and also returns.
On a year to date basis. So you can get a sense on a blended basis, what that looks like but we're not going to break it out by individual product.
Great. Thanks for taking my questions.
Thank you Tony.
Thank you one moment our next question.
This question comes from the line of Douglas Tsao with H C. Wainwright.
Your line is now open.
Hi, good afternoon, and thanks for taking the questions just Adam you've spoken a bit about seeing demand from sort of smaller individual practices versus the p/e backed one could you maybe provide a little more color in terms of what you think that means in ultimately how it will play off.
<unk> out across both of those different practices. Thank you.
And congrats on all the park.
Thank you so much Doug so, yes, so actually I see it as a really strong leading indicators for us that we're seeing usage across the board of retina practices.
Those who are private equity backed that have a different process potentially on how they order and use <unk>, but the majority is coming from independent retina practices all across the U S and as I said before a metric for me is as a commercial guy I am thrilled that each one of our <unk>.
<unk> had commercial sales. So for me. This is a sign of demand that we're not just getting the initial p/e back to usage. We are also working appropriately with those.
Retina centres and independent redness centers to work through.
To get patients on the drug side I can only see that progressing as we get broader within.
Target list and we continue to drive repeat prescription et cetera. So I think it's a really strong signs across the board. So it's a great metric for us.
Great and if I can just a quick follow up in terms of samples to doctors need to request samples for an individual patient or are doctors able to keep samples just around in their offices.
Yeah, Great question, So, yes, doctors need to request samples when they don't need to request them for individuals.
Patients so they can request samples and <unk>.
And then use them as they are appropriate you see fit.
Okay, great. Thank you so much.
Thank you.
I would now like to turn the call back to Cedric Francois for closing remarks.
Thank you so much and in closing thank you all for joining US today, we have around later today and tomorrow, if any additional questions feel free to reach out to Meredith.
It was a great start to the year for us and we look forward to sharing more in the months to come. Thank you.
Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
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