Q3 2023 BioCryst Pharmaceuticals Inc Earnings Call
Speaker 1: Good morning, and welcome to the BioCRIS Pharmaceuticals Third Quarter 2023 Earnings Conference Call.
Good morning, and welcome to the Biocryst Pharmaceuticals third quarter 2023 earnings Conference call.
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Speaker 1: I would like now to turn the conference over to John Blues at Bioquist. Please, go ahead.
I would like now to turn the conference silver to John Bluth at Biocryst. Please go ahead.
Speaker 2: Thank you, Maria. Good morning and welcome to BioCRIS third quarter 2023 corporate updates and financial results conference call. Today's press release and accompanying slides are available on our website.
Thank you Maria good morning, and welcome to Biocryst third quarter 2023, corporate updates 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, Chief data and insights officer Jamie.
Speaker 2: Participating with me today, or CEO John Stonehouse, CFO Anthony Doyle, Chief Commercial Officer Charlie Geier, and Chief Data and Insights Officer, Jinky Ryszelli.
We're selling.
Speaker 2: Following our remarks, we'll answer your questions. As a reminder, tomorrow at 1 PM Eastern Time, we'll be hosting an R&D day where we plan to describe our drug discovery process and introduce additional therapies from our pipeline. So today, we'll focus on Orlidaeo, and tomorrow we'll take a deep dive and answer your question on our pipeline program.
Following our remarks, we will answer your questions.
As a reminder, tomorrow at one P. M. Eastern time, we will be hosting an R&D day, where we plan to describe our drug discovery process and introduce additional therapies from our pipeline. So today, we'll focus on Orla Dale and Tomorrow, we will take a deep dive in answer to your question on our pipeline programs.
Speaker 2: Before we begin, please note that today's conference call will contain certain foreign looking statements, including those statements regarding future results, unaudited and forward-looking financial information, as well as the company's future performance and or achievement.
Before we begin please note that today's conference call will contain certain forward looking statements, including those statements regarding future results are unaudited and forward looking financial information as well as the Companys 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 future results or performance.
Speaker 2: 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 future results or performance expressed or implied in this presentation. You should not play Sunday reliance on these forward-looking statements. Traditional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Security's and Exchange Commission, which can be accessed on our website.
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, which can be accessed on our website. In addition, today's conference call includes non-GAAP pro forma financial measures for a reconciliation of these non-GAAP measures against the most direct.
Speaker 2: In addition, today's conference call includes non-GAAP , pro-former financial measures for reconciliation of these non-GAAP measures against the most directly comparable GAAP financial measure. Please refer to the earnings press release both in the press release section of our investor relations website at biocryst.com.
The comparable GAAP financial measure please refer to the earnings press release posted in the press release section of our Investor Relations website at Biocryst Dot Com now I would like to turn the call over to Jon Stonehouse.
Speaker 3: now i'd like to turn the call over to John stonthouse thanks John third quarter orladyo revenue of eighty five point seven million dollars was another strong quarter of performance and give us a high degree of confidence we will achieve our goal of no less than three hundred twenty million dollars for the year and remain on track for the one billion dollars at peak
Thanks, John.
Third quarter Orla Deyoe revenue of $85 $7 million was another strong quarter of performance and gives us a high degree of confidence we will achieve our goal of no less than $320 million for the year and remain on track for the $1 billion at peak.
Speaker 3: This growing revenue along with discipline around our capital allocation put us in a very strong financial position heading into the end of the year.
This growing revenue along with it along with discipline around our capital allocation put us in a very strong financial position heading into the end of the year.
Speaker 3: Since we have more time today to discuss Orlidaeal, we'll go deeper into what we see in the market and how we see the market changing over time. As John mentioned, you will also hear from another member of the team today. Jinky has been with Biochris for over eight years.
Since we have more time today to discuss Orla Dale will go deeper into what we see in the market and how we see the market changing over time.
As John mentioned, you will also hear from another member of the team today.
<unk> has been with Biocryst for over eight years Jinkies title is chief data and insights officer, but to simply explain your role geeky gathers data and insights across the company and in the marketplace to help us understand the truth of what's really going on not to look for data supporting what we hope to be true.
Speaker 3: Jinkx's title is Chief Data and Insights Officer, but to simply explain her role...
Speaker 3: Jiki Gathers Data and Insights Across the Company and in the marketplace to help us understand the truth of what's really going on, not to look for data supporting what we hope to be true. This is a very...
This is a very important distinction.
Speaker 3: She will share the data and insights she and her team have gathered around the AJE market in Orladdale both today and what we see that will impact the future.
She will share the data and insights she and her team have gathered around the AG market in northern Dale both today and what we see that will impact the future.
Speaker 3: We hope this will help you understand what we see and why we remain confident in our current growth trajectory and the path to peak revenue of $1 billion. Now I'll turn it over to Charlie to talk about the quarters performance.
We hope this will help you understand what we see and why we remain confident in our current growth trajectory and the path to peak revenue of $1 billion.
Now ill turn it over to Charlie to talk about the quarter's performance.
Speaker 4: Thanks, John . Patient growth in the third quarter continued at the consistent pace we have described before. The net growth in US patients benefiting from Orlidae in Q3 was nearly identical to what we saw in each of the first two quarters this year. And our global growth continued to gain strength.
Thanks, John.
<unk> growth in the third quarter continued at a consistent pace. We have described before the net growth in the U S patients benefiting from <unk> in Q3 was nearly identical to what we saw in each of the first two quarters this year and our global growth continued to gain strength.
Speaker 4: As John noted up front, we are excited to describe our expanding pipeline and its future promise tomorrow. Today, we are excited to describe the future we see for Oralidale.
As John noted upfront, we are excited to describe our expanding pipeline and its future promise tomorrow. Today. We are excited to describe the future we see for Orla Dale.
Speaker 4: With Q3 revenues of $85.7 million and the consistent patient dynamics we were seeing, we repeat our guidance of no less than $320 million this year and are as confident as ever that Oralidaeo is on a path to a billion dollars in peak global revenue.
With Q3 revenues of $85 7 million and the consistent patient dynamics, we are seeing we repeat our guidance of no less than $320 million. This year and are as confident as ever that Orlando is on a path to $1 billion in peak global revenue.
Speaker 4: I'm going to describe the pattern of growth that we have seen and show you how we believe this pattern will translate to that peak. Jinky will describe in more depth how we validate these forecasts.
I'm going to describe the pattern of growth that we have seen and show you. How we believe this pattern will translate to that peak jinky will describe in more depth, how we validate these forecasts.
Speaker 4: As a side note, I first worked with Jinky at another company starting in 2007. She's the main reason I joined Biocrest right behind her in 2015. I joined not only because I enjoy working with her and her team, but because they do objectives in sightful, patient-focused work that I believe tells the truth about the future for Orodeo as closely as could ever be predicted.
As a side note I first worked with Genco had another company starting in 2007 and she is the main reason I joined Biocryst right behind her in 2015, I joined not only because I enjoy working with her and her team, but because they do objective insightful patient focused work that I believe tells the truth about the future for Orlando as Clos.
<unk> is could ever be predicted.
Let's look at the data we included two slides in our earnings deck that described for a day of growth. The first slide four shows the monthly pattern of U S patient prescriptions and patient discontinuation graft on the same y axis.
Speaker 4: You can see that months bump up and down over the last eight quarters, but the range is tight. New starts to date have been well above discontinuation.
You can see that month's bump up and down over the last eight quarters, but the range is tight new starts to date have been well above discontinuation.
Speaker 4: We have good months, great months, just okay months, leading to trend lines of start forms and discontinuations over the past two years that are essentially flat.
We have good months, great months, just okay months, leading to trend lines of start forms and discontinuation over the past two years that are essentially flat.
Speaker 4: That means the growth of NET patients on therapy remains very linear.
That means the growth of net patients on therapy remains very linear.
Speaker 4: Net patients are on the secondary Y-axis. We have not shown the numbers on the chart, but we crossed 1000 US patients on early day on early May and are well above that point now.
Net patients are on the secondary y axis.
I have not shown the numbers on the chart, but we crossed 1000 U S patients on rodeo in early May and are well above that point now.
Speaker 4: This US patient growth combined with reimbursement dynamics, shipping days and other factors create variable revenue patterns. You can see on the right slide of slide four.
This U S patient growth combined with reimbursement dynamics shipping days and other factors create variable revenue patterns you can see on the right slide.
Slide four.
Speaker 4: Q1 tends to be down because of reauthorization. Q2 jumps up after reauthorization is complete, and Q3 and Q4 tend to go up more gradually. However, the long-term revenue trend follows the patient growth trend.
Q1 tends to be down because of reauthorization Q2 jumps up after reauthorization is complete in Q3 and Q4 tend to go up more gradually.
However, the long term revenue trend follows the patient growth trend.
So where's Orlando heading.
Speaker 4: Slide five shows you what we expect based on what we see today. I'll walk you through some simple numbers that are representative of our data and our view. I've simplified and approximated the numbers, but precision is not important because the long-term view does not change. We expect to end 2023 with roughly 1,050 patients who have reached a state of either paid therapy or long-term free product or PAP.
Slide five shows you what we expect based on what we see today.
I'll walk you through some simple numbers that are representative of our data and our view.
A simplified and approximated the numbers, but precision is not important because the long term view does not change.
We expect to end 2023 with roughly a 1050 patients who have reached a state of either paid therapy or long term free product or Pap.
Speaker 4: We also have a population of newly prescribed patients on short-term quick start free product at any given time. And when you include them, the proportion of patients on paid product is just under 70%.
We also have a population of newly prescribed patients on short term quick start free product at any given time and when you include them. The proportion of patients on paid product is just under 70%.
Speaker 4: I'm going to exclude the quick start patients because the coverage for them is still pending. That leaves us with a paid patient ratio of about 73% which is what I'll use for this analysis.
I'm going to exclude the quick start patients because the coverage for them is still pending.
That leaves us with a paid patient ratio of about 73%, which is what I'll use for this analysis.
Speaker 4: The 150 year-end patient base multiplied through a compliance rate of just over 90% and a gross to net reduction of 15 to 20% off last whack list price on paid patients gets to an annualized rate of about $310 million per year.
The 1050 year end patient base multiplied through a compliance rate of just over 90% and a gross to net reduction of 15% to 20% off last wack list price on paid patients.
It gets to an annualized rate of about $310 million per year.
Speaker 4: Our patient growth history plus forecasting methods that Jinky will describe give us confidence we will average around 200 net patient additions per year through 2028. We have averaged a bit above that rate for the past two years, and I've shown you the consistency.
Our patient growth history, plus forecasting methods that Yankee will described gives us confidence we will average around 200 net paid net net patient additions per year through 2028.
We average we have averaged a bit above that rate for the past two years and I have shown you the consistency.
Speaker 4: Growth could be more some years, less others, but we expect to add 1,000 net patients by the end of 2028, which adds up to an additional $295 million in annualized revenue.
Gross could be more some years less others, but we expect to add 1000 net patients by the end of 2028, which adds up to an additional $295 million in annualized revenue.
Speaker 4: By the end of 2028, we are looking at a minimum of just over $600 million annualized U.S. revenue without any other changes.
By the end of 2028, we're looking at a minimum of just over $600 million annualized U S revenue without any other changes.
Speaker 4: But we also expect the 73 percent paid ratio to grow to 85 percent based on the work we are doing and the trends we are seeing.
But we also expect the 73% paid ratio to grow to 85% based on the work we are doing and the trends we are seeing.
Speaker 4: Most of that percentage improvement plus the revenue growth impact will not happen in 2024.
Most of that percentage improvement plus the revenue growth impact will not happen in 2024.
Speaker 4: the percentage growth will accrue over the next three to four years.
The percentage growth will accrue over the next three to four years.
Speaker 4: With over 2,000 patients, that improvement would be worth at least $100 million per year by 2029.
With over 2000 patients that improvement would be worth at least $100 million per year by 2029.
Speaker 4: making steady state U.S. revenue around $700 million per year.
Making steady state U S revenue around $700 million per year.
Speaker 4: Now assume a very modest average annual price increase through early 2029, and you can see how U.S. revenues are likely to reach $800 million or more in 2029.
Now assume a very modest average annual price increase through early 2029, and you can see how U S revenues are likely to reach $800 million or more in 2029.
Speaker 4: The early trends we see outside the U.S. give us confidence that Orladeo will reach around $200 million in the rest of the world, completing the path to a billion dollars in global revenue around the turn of the decade.
The early trends, we see outside the U S gives us confidence that <unk> will reach around $200 million and the rest of the world completing the path to $1 billion in global revenue around the turn of the decade.
Speaker 4: The results that we have seen and the path we are on are not surprising to us.
The results that we've seen in the past we are on are not surprising to us <unk>.
Speaker 4: Orladeo is a highly differentiated product that HAE patients wanted back in 2020, and they continue to want today.
<unk> is a highly differentiated product that hae's patients' wanted back in 2020.
And they continue to want today.
Speaker 4: Jinky will tell you more about how we use robust insights on patients and healthcare providers to predict where Orladeo is heading. Jinky, welcome to today's earnings call.
<unk> will tell you more about how we use robust insights on patients and health care providers to predict where oil a day I was heading.
Welcome to today's earnings call.
Speaker 5: Thanks, Charlie. We truly believe that robust and thoughtful methods are critical in providing an understanding of not only the drivers of demand for Orladeo, but a complete, unbiased reflection of the overall HAE market. Charlie's mentioned in past calls are quarterly market research studies showing consistent, strong demand for Orladeo. These quarterly studies survey a robust and generalizable sample of HAE prescribers and HAE patients.
Thanks, Charlie we.
We truly believe that robust and thoughtful metal are critical in providing an understanding of not only the drivers of demand for <unk> in a completely unbiased reflection of the overall <unk> market.
Kelly you had mentioned in past calls our quarterly market research study.
Strong demand for our other Dan.
These quarterly steady start they are robust in general like for example, our <unk> prescribers in <unk> patients.
Speaker 5: A key question we ask consistently in these studies is potential prescribing over the next 12 months. We feel this question is a good metric to keep us informed on demand and shifts in that demand.
A key question, we asked consistently is potential prescribing over the next 12 months.
We feel this question is a good metric to keep us informed on demand and shift in that demand.
Speaker 5: Latest studies show that HAE physicians anticipate prescribing Orladeo to about 25% of their patients in the next 12 months.
Latest studies show that At&t's position anticipate prescribing early there to about 25% of their patients in the next 12 months.
Speaker 5: These data on future prescribing of Orladeo have been consistent study over study, reinforcing our assumptions that demand remains strong.
These data and future prescribing umbrella Dale had been consistent steady overstudy reinforcing our assumption that demand remains strong.
Speaker 5: We do recognize that the HAE market is competitive and is likely to get more competitive. Our market research shows that products with a strong value proposition are sticky, meaning prescribers and patients are loyal.
We do recognize that the 18 HLA market is competitive it's likely to get more competitive.
Our market research shows that products with its strong value proposition I think.
Meaning prescribers and patients are loyal.
Speaker 5: Across our volumes of research over the years, HAE patients have consistently expressed how grateful they are for every new therapy available to them, which is totally understandable given HAE is a rare disease with historically limited options.
Across our volumes of research over the years <unk> patient have consistently expressed how grateful they are for every new therapy available to them.
Which is totally understandable given <unk> is a rare disease with historically limited option.
Speaker 5: These patients have also indicated a
These patients have also indicated a high level of satisfaction with their treatment.
Speaker 5: when our quantitative data pre-launch showed this level of satisfaction.
When our quantitative data prelaunch share this level of satisfaction.
Speaker 5: I admit, I did have a moment of panic.
I admit I did had amendment of panic.
Speaker 5: In past markets I've studied, when customers are highly satisfied, the implication is that there are no remaining unmet needs.
In past markets I've studied when customers are highly satisfied the implication is that there are no remaining unmet needs.
Speaker 5: But digging further into the research, when these highly satisfied HAE patients were offered the promise of an oral therapy, over 50% were willing to switch from their existing prophylactic therapy to Orladeo.
And digging stacks identity research and he's highly satisfied ETE patients, we're offering the promise of an oral therapy over 50% we are willing to switch from their existing prophylactic therapy too early Dan.
Speaker 5: Patients' willingness to switch to Orladeo signal that there are still unmet needs.
Patients' willingness to switch to Orlando signal that there are still unmet needs.
Speaker 5: Namely, controlling their attacks, as no treatment is perfect, and treatment burdens associated with their current injectables.
Namely controlling their attacks as no treatment is perfect.
And treatment burdens associated with their current injectable.
Speaker 5: The core insight here is that these patients are expert copers and will therefore always indicate high levels of satisfaction.
The core insight here is that these patients are expert coopers and will therefore always indicate high levels of satisfaction.
Speaker 5: Simply stated, these HAE patients are seeking a freedom and an improved quality of life.
Simply stated DKK patients are seeking a freedom and an improved quality of life.
Speaker 5: As we continue to mine our actual Orladeo data and study our sources of business, we do see this intent stated in research proving out in our population.
As we continue to mine, our actual Orlando data and steady our sources of business. We do see this intense stated in research proving out in our population.
Speaker 5: Top three reasons our actual patients have stated as reasons to switch to Orladeo include wanting to reduce number of attacks, wanting to reduce severity of attacks, and wanting to reduce the burden of current treatment.
Top three reasons, our actual patient since David has reasons to switch to oral again include wanting to reduce number of attacks.
Wanting to reduce severity of attacks.
And wanting to reduce the burden of current treatment.
Yeah motivation for switching is wanting more.
Speaker 5: The reason for staying on therapy based on research with current patients is essentially the same. Thus, frequent and severe attacks in addition to the convenience of an oral which reduces the treatment burden.
The reason for staying on therapy based on research with current patients is essentially the same.
Frequent and severe attacks.
In addition to the convenience of Anoro, which reduces the treatment burden.
Speaker 5: Assumptions for our forecast rely heavily on insights from market studies or conjoint work and ultimately simulation models.
Assumptions for our forecast rely heavily on insights for markets that use our content, where it can ultimately simulation models.
Speaker 5: Collectively, these approaches help us quantify demand and uptake not only for Orladeo, but also impact of the competition. Unlike traditional mass markets, rare disease markets rarely have prescription data to build forecasts upon. Hence, we supplement and collect as much data as possible through primary methods to fill these gaps.
Secondly, the purchase help us quantify demand and uptake not only for the dam, but also impact of the competition.
Unlike traditional mass market rare disease markets rally have prescription data to that forecast at time, hence.
Hence, we supplement and collect as much data as possible to primary methods.
Speaker 5: In our most recently completed conjoint study, our sample included 175 HAE treaters and 100 HAE patients.
And our most recently completed conjoined steady our sample included 175, HIAA treaters and 180 patients.
Speaker 5: We ask stakeholders to allocate brand preference in terms of current use and their potential future use, including the competition and their choice.
We ask stakeholders to allocate brand preference in terms of current.
And the potential future use including the competition and our choice.
Speaker 5: We then analyze these preference data and incorporate them into market models driven by Monte Carlo simulation.
We then analyze these preference data and incorporate them into market models, driven by Monte Carlo simulation.
Speaker 5: Our simulation models then provide the most probable estimates of patient numbers, market shares, and ramps to peak for Ovideo.
Our stimulation models and provide the most probable estimates of patient numbers market shares and ramp to peak for over Dale.
Speaker 5: Monte Carlo simulations allow us to run hundreds of iterations in the simulator, and the models continue to reinforce confidence in reaching 2,000 patients at peak in the U.S.
Monte Carlo simulations allowed us to run hundreds of iterations in the simulator and the models continue to reinforce confidence in reaching 2000 patients at peak in the U S. Even with competition entering the market.
Speaker 5: even with competition entering the market.
Speaker 5: In the near term, the model confirmed by actuals. Heshun Strong or LaDale uptake, put its source of business from profy naive and profy switches.
In the near term the mono confirm by actuals.
Has shown strong holiday uptake with its <unk> business to <unk> naive and <unk> switches.
Speaker 5: In the outer years to peak, assuming the conservative scenario that all investigational products reach the market, our research consistently shows that new injectable products will take share mainly from current injectables by claiming the convenience of less frequent injections.
In the outer years to peak, assuming a conservative scenario that all investigational products reach the market. Our research consistently shows that new injectable products will take share mainly from current injectables at claiming that convenience of less frequent injections.
Speaker 5: Despite that, our model sees TecXyro remaining as the leading injectable product because less frequent injections are an incremental benefit that will not be sufficient to drive many patients to switch.
Despite that our model <unk> remaining at the leading injectable products.
As less frequent injections are an incremental benefit that will not be sufficient to drive many patients to switch.
Speaker 5: switching from an injectable to oral however, offers a much more dramatic benefit to many patients.
Switching from an injectable to oral however.
<unk> is a much more dramatic benefit many patients.
Speaker 5: Our model anticipates that Orlodeo will most likely be insulated from these new injectable entrance.
Our model anticipates that Orla Dale.
Most likely be insulated from these new injectable entrants.
Speaker 5: Likewise, our research and model anticipates minimal switching away from Orlidaeal to any new oral, because any new product is unlikely to offer a meaningful benefit over what they already experienced with Orlidaeal.
Likewise, our research and model anticipate minimal switching away from Orlando to any new oral because any new product is unlikely to offer a meaningful benefit over what they already experience with oil down.
Speaker 5: Similar to how Taxira remains as a sticky market-leading injectable in the outer years, our research and data show that Orladeo will be equally sticky as the market-leading oral. We strongly believe in continuous optimization of our forecasting methods.
Similar to how tax IRA remains sticky.
As the sticky market, leading injectable in the outer years, our research and data show that Orla Dale will be equally.
As the market leading oral.
We strongly believe in continuous optimization of our forecasting methods.
Speaker 5: Post-launch, our models have evolved with additional levels of sophistication, including actual Orladeo data, like patient ads, discontinuations, overall patients on therapy, and other market dynamics that could affect near-term revenue performance. We have found historically that our models correlate strongly with actuals and have predicted Orladeo patient numbers and corresponding revenues reliably. Forecasting year one of launch is all
Post launch our models have evolved with additional levels of sophistication, including actual orla data data in patient adds discontinuation overall patient on therapy and other market dynamics that could affect near term revenue performance.
We have found historically that our models correlate strongly with actuals and had predicted early day of patient numbers and corresponding revenues reliably.
Forecasting year, one of launch is always difficult.
Speaker 5: that your prior to launch of Orlodeo are models showed US revenues approaching a hundred million and our actual year one revenues came in at a 122 million.
At a year prior to launch of <unk>, Our model showed U S revenues approaching $100 million and our actual year, one revenues came in at $122 million.
Speaker 5: Beyond forecasting, our team also studies these data in depth to help better understand the needs of our patients, our physicians, and point to opportunities for optimization of our patient services in real time.
Beyond forecasting our team also studied these data and depth to help better understand the needs of our patients our physicians.
And point to opportunities for optimization of our patient services in real time.
Speaker 5: The availability data on a granular level coupled with robust market insights, our teams can proactively partner with the commercial teams with a full story of Orlidaeum. Our commercial teams are always ready to action on the truth from these data, ready with strategies and solutions to address any of the findings.
With the availability of these data in a granular level, coupled with robust market insights.
Our team can proactively partner with the commercial team with the full story of the dam.
Our commercial teams are always ready to action on the truth from these data ready been strategies and solutions to address any of the findings.
Speaker 5: Quantitative evidence direct from our customers from the basis of all our assumptions.
Quantitative evidence to back from our customers from the basis of all our assumptions.
Speaker 5: Full market context, including the competition, are always incorporated into our thinking. Having a strong commercial team ready the actions on the data and insights also key.
For market contacts, including the competition are always incorporated into our thinking having.
Having a strong commercial team ready to action and the data and insights also key.
Speaker 5: Because we anchor in all these variables collectively, we have a strong level of confidence in our views of future or the day of performance and our past to a billion.
Because we anchor and all of these variables collectively we have a strong level of confidence in our views us as future oil that are performing and our path to 1 billion.
Speaker 4: Anthony, I'll turn it over to you. Thanks, Janky. With future Yorna there, we're coming in at $85.7 million. We are well positioned to achieve our 2023 guidance of no less than 320 million.
Anthony I'll turn it over to you. Thanks.
Thank you.
With Q3, all of their revenue coming in at $85 $7 million, we are well positioned to achieve our 2023 guidance of no less than $320 million.
Speaker 6: Longer term, Charlie and Jing get aligned the growth factors that we expect in the coming years, giving us great confidence in getting to 1 billion MP revenue.
Longer term, Charlie and Jinky outlined the growth factors that we expect in the coming years, giving us great confidence in getting to $1 billion in peak revenue.
Speaker 6: You can find their detailed third quarter financials and today earnings press release, and I'd like to call your attention to a few items. Total revenue for the quarter was $86.7 million. $85.7 million of which came from Orlidaio, putting Orlidaio trailing 12-month revenue at approximately $306 million. All the $85.7 million of global Orlidaio revenue, $75.3 came from US sales with the remaining $10.4 million coming from XUS.
Combined our detailed third quarter financials, and today and in today's earnings press release, and I'd like to call your attention to a few items.
Total revenue for the quarter was $86 7 million $85 7 million of which came from Orlando, putting early day of trailing 12 month revenue of approximately $306 million.
The $85 $7 million of global Orla dire revenue 75, three came from U S sales with the remaining $10 4 million coming from ex U S.
Speaker 6: Operating expenses not including non-cash.com compensation for the quarter were approximately $85.9 million dollars.
Operating expenses, not including noncash stock compensation for the quarter were approximately $85 9 million.
Speaker 6: We are revising our full year guidance for AWPX to 365 to 375 million based on current trending. Anna's we continue to be disciplined in our approach to capital allocation.
We are revising our full year guidance for opex to $365 million to $375 million.
Based on current trending and as we continue to be disciplined in our approach to capital allocation.
Cash at the end of the third quarter was 39, $399 $2 million and net cash utilization for the quarter was approximately $16 million.
One of the areas that investors and analysts have been asking for additional information relates to debt and royalties. So let me go into.
A little bit more detail on them.
Speaker 6: Looking high level at our balance sheet, total long-term debt is listed at approximately 833 million. However, only around 300 million of that is traditional debt, and the remainder relates to future royalty obligations.
Looking high level at our balance sheet total long term debt is listed at approximately $833 million. However, only around $300 million of that is traditional debt and the remainder relates to future royalty obligations.
Speaker 6: Earlier this year, we refinanced our term loan with Pharmacone. This 300 million is traditional death with traditional characteristics. The five-year term, interest-only payments during the loan period, like financial covenants and a bullet payment due in 2028. Separately, between 2020 and 2021, we secured an aggregate of 425 million for royalty financing from royalty pharma and from owners.
Earlier this year, we refinanced our term loan with pharma com.
300 million as traditional debt with traditional characteristics a five year term interest only payments during the loan period light financial covenants on a bullet payment due in 2020 as <unk>.
Separately between 2020 in 2021, we secured an aggregate of $425 million for royalty financing from royalty pharma and from owners.
Speaker 6: For this instrument, we forecast future revenue and based on that future royalties payable, which we then use to calculate an effective interest rate. On a quarterly basis, we accrue interest expenses related to this effective interest rate on the P&L. While between periods, the balance sheet movement is the delta between the interest expense accrued and the actual royalties paid.
For this instrument, we forecast future revenue and based on that future royalties payable, which we then used to calculate an effective interest rate.
On a quarterly basis, we accrue interest expenses related to this effective interest rate on the P&L while between periods. The balance sheet movement is the delta between the interest expense accrued and the actual royalties paid.
Speaker 6: The amount currently on the balance sheet for this is $533 million, meaning we have accrued more interest expense than we've actually paid in royalties. At a future point, these balances should decrease as revenues increase, and as royalties payables should at that point be higher than interest expense.
The amount currently on the balance sheet for this is $533 million, meaning we have accrued more interest expense and we've actually paid in royalties at.
At a future point these balances should decrease as revenues increase and as royalties payable should at that point be higher than interest expense.
Speaker 6: Gap reporting, this is considered to be a debt instrument. However, this is not traditional debt. These payments are based entirely on securing orlid air revenue. I.e. no revenue, no royalties. Additionally, there's no recourse. The balances are not callable, and there is no bullet payment. Hopefully this additional detail...
GAAP reporting this is considered to be a debt instrument. However, this is not traditional death.
These payments are based entirely on securely securing orla day, our revenue I E. No revenue no royalties. Additionally, theres no recourse.
Ounces are not callable and there is no bullet payment.
Hopefully this additional detail helps.
Speaker 1: Look forward to sharing more exciting information on our pipeline with you at the R&D day tomorrow, and I hope you can join us then. Operator, with now we'll talk in the call of the Q&A. Thank you. We will now begin the question and answer.
We look forward to sharing more exciting information on our pipeline with you at the R&D day Tomorrow and I Hope you can join us that operator wed now like to open the call up for Q&A.
Thank you we will now begin the question and answer session.
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Speaker 1: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time we will put them on the table to assemble our roster.
You bet anytime your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble alrosa.
The first question is from <unk> Ahmad of.
Bank of America. Please go ahead.
Speaker 7: Hi, good morning. Thanks so much for taking my questions. I had a couple. Thanks so much for providing that really detailed analysis of how you see the market evolving. I think it's some of my discussions with investors. I often get asked about the benefits of Oralideo versus the ramp rate for the loan to itself. So while you're feeling a high sense of confidence that by the end of the decade, you'd be looking at a billion dollars,
Hi, good morning. Thanks, so much for taking my questions I have a couple things.
Thanks, so much for providing that really detailed analysis of how you see the market evolving I think in some of my discussions with investors I often get asked about the benefits of <unk> versus that the ramp rate for the launch itself.
So while it.
Doing a high sense of confidence that by the end of the decade, if youre looking at $1 billion.
Speaker 7: What do you think would need to happen to speed up that launch in order for the steepness of uptake to increase relative to where you are now? And then I have a follow up. Thanks. Early you want to take that?
What do you think would need to happen to speed up that launch in order for the steepness of uptake to increase relative to where you were now and then I have a follow up thanks.
Or do you want to take that sure.
Zane.
Speaker 4: So first of all, we're really happy with the ramp rate and the consistent ramp rate and where it's headed. So we're always looking for ways to make it go a little bit faster. And we've talked about patient activation before. That's definitely one. We don't see any one thing that can be done that's going to meaningfully bend it up.
So first of all we're really happy with the ramp rate and the.
Consistent ramp rate and where it's headed so we're always looking for ways to make it go a little bit faster.
We've talked about patient activation before Thats definitely one we don't we don't see any one thing that can be done that's going to meaningfully bend it up.
Speaker 3: But we just, you know, we plan to keep executing really consistently and we're gonna get there. And I think when you look at the ramp rate of 200 patients adds per year, that is very realistic and very achievable over the next five years. So we're happy to keep it just at the ramp itself. Yeah, one other thing I'd add to Zine and Jinky stress this a lot in her remarks is remember that there's a lot of competition and patients are very satisfied with their therapy. You know, when we talk to patients, they'll tell us, oh my god, this saved my life, this changed my life, you know, and they're on injectable therapy. So that stickiness.
But we just we plan to keep executing really consistently and we're going to get there and I think when you look at the the ramp rate of 200 patients.
Adds per year that is very realistic and very achievable over the next five years. So we're happy to keep it just at the ramp itself.
One other thing I would add <unk> and Jinky stress. This a lot in her remarks is.
Remember that there is a lot of competition and patients are very satisfied with their therapy. When we talk to patients they'll tell us Oh My God. This saved my life. This change my life.
On the injectable therapies. So that stickiness is just takes time to break and get people to understand that they could do better with an oral but then on the flip side, that's going to work to our advantage when other competitors come out so.
Speaker 3: is just takes time to break and get people to understand that they could do better with an oral. But then on the flip side, that's going to work to our advantage when other competitors come out. I think the ramp rate is considering the competition and a rare disease is phenomenal.
I think the ramp rate is it considering the competition in a rare disease is phenomenal.
Speaker 7: Okay, thanks for that, John . And then as a follow up, when you talk about the 2000 patients of your target, what type of a discontinuation rate is assumed in that? Are those 2000 patients taking the drug continually or 2000 patients that will touch the drug?
Okay. Thanks for that John and then as a follow up when you talk about the 2000 patients as your target what type of a discontinuation rate is assumed in that.
Are those 2000 patients taking the drug continually or 2000 patients that will touch the driver.
Speaker 4: and Charlie talk about the pattern as well. Yeah, yeah, no absolutely. So to see the first of the pattern that we've described before is, and it's still the same. And the slide I showed today, I think demonstrates that. So when a patient starts on Orlidaeo.
And Charlie can talk about the pattern as well, yes, yes, no absolutely. So first of all the pattern that we've described before has been.
It's still the same in the slide I showed today.
Demonstrates that when a patient starts on <unk>, 60% of those patients make it through the first year and then we see very little discontinuation after that Theres always a little bit but those are the sticky patients really once they make it to a year and so once we get to the 2000 and we see a base of about 2000.
Speaker 4: 60% of those patients make it through the first year. And then we see very little discontinuation after that. There's always a little bit, but those are the sticky patients, really once they make it to a year. And so once we get to the 2000, we see a base of about 2000 patients being sticky and staying on Oralidaeo. And then as we've talked about before, we have patent protection out to 2039. So it's a long ramp.
Patients being sticky and Ed staying on oil at Arrow and then as we've talked about before we have we have patent protection out to 2039, so it's a long ramp.
Speaker 4: potentially at peak sales of a billion dollars with those two thousand patients.
Potentially at at peak sales of a $1 billion.
Were those 2000 patients.
Speaker 8: And that's just the US, the same dynamics we'll apply in other markets. Yeah, so you should think that the tooth when we get to the 2000, we mean they've been on for at least a year or much longer and you're gonna lose a percentage or two each year, but you're gonna get that back and we're gonna replace it. Yep. Okay, perfect, thank you. Welcome.
And that's just the U S. But the same dynamics will apply in other markets.
So you should think that the two when we get to the 2000, we mean they've been on for at least a year of much longer and youre going to lose a percentage or two each year, but youre going to get that back and.
We're going to replace it yet.
Okay perfect. Thank you.
Welcome.
The next question is from Stacy Q of <unk>.
TD Cowen. Please go ahead.
Speaker 9: Thanks for taking our questions, congratulations in the progress and we really appreciate the detailed analysis of Orlodeo. So first, we have a question. Thank you.
Thanks for taking our questions. Congratulations on the progress we really appreciate the detail analysis boil it down.
First we have a question could you further elaborate on your expectations for consistent linear growth.
Speaker 9: consistent linear growth specifically, how are you thinking about 2024? What are your thoughts on 410 million roughly for consensus? That's the first question and then one more on this year. So give me the update thoughts.
Specifically, how youre thinking about 2024, what are your thoughts on $410 million roughly for consensus.
That's the first question and then one more on this year. So do you have any updated thoughts on your guidance of at least $320 million. If there is any potential for outperformance what factors do you expect could drive greater sales is it ex U S.
Speaker 9: your guidance about least 320 million. If there is any potential for out performance, what factors do you expect to could drive greater sales? Is it X-US?
Speaker 9: detailed thoughts around this year would be appreciated. Thank you.
Any any kind of detailed thoughts around that.
This year would be appreciated thank you.
Speaker 4: Yes, DAC, we don't comment on consensus and we haven't guided yet for next year. But I do think Charlie made some comments and is prepared remarks that should set expectations. So I'll let him talk about that. I think for next year and for the next five years, I said we expect to average about 200 patient abs and it could be.
Yes, Stacy we don't comment on consensus.
We haven't guided yet for next year, but I do think Charlie made some comments in his prepared remarks that should set expectation. So I'll, let him talk about.
Yes.
For next year.
And for the next five years.
We expect to average about 200 patient adds and it could be it a little more some years a little less it won't be exact that exactly that every year, but with consistent growth, it's going to be pretty close.
Speaker 4: you know a little more some years little lessons it won't be exact that exactly that every year but with consistent growth it's gonna be pretty
Speaker 3: and on the 320 million, we're very confident in the 320. We've been saying for multiple quarters now, put 320 in your model. And I think we'd say do the same right now. I think the challenge with next year is the path to paid that you were not completely sure of how the IRA is gonna impact the Medicare patients. There's
And on the $320 million.
<unk>.
We are very confident in the in the 320, we've been saying for multiple quarters now put $3 20 in your model and I think we'd say do that do the same right now I think the challenge with next year as the path to paid.
We're not completely sure of how the IRR is going to impact the Medicare patients.
Speaker 3: still infrastructure that Charlie is putting in place and executing on where he's making great progress on the front end of making sure quick start gets to paid on a higher frequency but we still have those long-term path folks.
Still infrastructure that Charlie is putting in place and executing on where he is making great progress on the front end of making sure quick start gets to paid on a higher frequency, but we still have those long term path folks that we've got to get switched over to page. So.
Speaker 4: that we've got to get switched over to paid. So, you know, in the, I think it was around a hundred million Charlie that you said over, you know, the next five years will benefit from switching it. You got a hundred million would come in 2029 after we.
And I think it was around $100 million Charlie that you said over the next five years will will.
From the switching if you had a $100 million would come in 2029. After we move the payout ratio to 85%. So you Shouldnt expect much progress on that next year is the point I'm trying to make.
Speaker 3: Who's the paid ratio to 85% So you shouldn't expect much progress on that next year's the point I'm trying to make
Okay, and then on ex U S. What are you thinking there you had given some guidance around that that breakdown, but it looks like.
Speaker 9: And then on XUS, what are you thinking there? You've given kind of some guidance around the breakdown, but it looks like there's some nice sales there. So any comments on that be a push.
Some nice sales there so any comments on that would be appreciated.
Speaker 4: Yeah, I mean, XUS is going really well. We continue to get, have market access wins.
Yes.
Ex U S is going really well we continue to get.
Market access wins.
Speaker 4: we continue to launch a new market, we continue to grow in the first wave of markets, where we're at, as we've commented before, the price is lower, so it's a volume game, it's longer term.
We continue to launch in new markets, we continue to grow in the first wave of markets, where we're at as we've commented before the the price is lower so it's a volume game, it's longer term, but everything that we see ex U S tells us it will contribute that that additional $200 million buy by about.
Speaker 4: but everything that we see ex-US tells us it will contribute that additional $200 million by about the turn of the decade.
The turn of the decade like.
Speaker 6: Like Charlie said about the link between that patient growth and then revenue similar in XUS, there will be some puts and takes, right? There will be some peaks and troughs, there will be quarters that are bigger quarters that are smaller depending on which territories we're selling into, but overall, the trend continues to be really strong.
Charlie said.
The link between that patient growth and then revenue similar in ex U S. There will be some puts and takes are at their recent peaks and troughs are each quarters that our bigger quarters that are smaller depending on which territories where.
Selling into but overall the trend continues to be really strong.
Thank you so much.
Welcome.
Speaker 10: The next question is from Mauro Ray Craft of Jeffries. Please go ahead. Hi, a bit...
The next question is from Maury Raycroft of Jefferies.
Please go ahead.
Hi, This is yao.
For Maury.
Congrats.
First full quarter.
Speaker 11: I guess our first question is on patient on free drug program.
I guess.
Our first question is on patients on free drug program.
Speaker 11: which went down from 34% in Q1 at peak to about...
Which went down from 34% in Q1 peak to about 30% by the end of Q2 can you maybe provide more color on what you saw in Q3, and where do you think that will be by year end.
Speaker 11: maybe provide more color on what you saw in Q3 and where do you think that will be by year in?
Speaker 4: Sure. Yeah, so good question. And yeah, we said we were at 30% at the end of Q2.
Sure Yes.
So good question and we said we were at 30% at the end of Q2.
Speaker 4: I noted on the prepared remarks today that
As I noted on the prepared remarks today that essentially that number is a little over 30% in Q3.
Speaker 4: Essentially that number is a little over 30% in Q3.
Speaker 4: What we saw in Q3 is a couple of factors that affected that and these kind of wobbles are gonna happen as we make that long-term progress towards 85% paid. But in Q3 we saw some Medicaid patients moving temporarily we think to free products.
What we saw in Q3 is a couple of factors.
That affected that in these kind of wobbles theyre going to happen as we make that long term progress towards towards 85% paid.
In Q3, we saw some some Medicaid patients moving temporarily we think to free product as some of the Covid relief funding ended.
Speaker 4: as some of the COVID relief funding ended. We also thought, you know, it's re-enrollment season for insurance companies. And so some patients actually moved as their switching plans moved temporarily to free product.
We also saw its re enrollment season for insurance companies and so some patients actually moved as Theyre switching plans moved temporarily to free product and then the other piece that is driving up.
Speaker 4: And then the other piece that is driving up just a little bit, the percentage of free product.
Just a little bit the percentage of free product is.
Speaker 4: is that as we're improving our processes to get people to paid, we're actually slowing down a bit to get better results. So when new patients come in, we're keeping them on the Quick Start program for a little bit longer to make sure that we've got a really comprehensive case for the insurers so that we actually improve the percentage of paid. And we're seeing that paying off.
Is that as we're improving our processes to get people to paid we're actually slowing down a bit to get better results. So when new patients come in we're keeping them on the quick start program for a little bit longer to make sure that we've got a really comprehensive case for the insurers so that we actually improve.
The percentage of paid and we're seeing that paying off.
Speaker 4: So amongst our commercial segment, which is about 60% of our patients, we now see that over 80% of them are on paid therapy. And so that's one of those trends that gives us confidence in the long term that we're going to get to 85%.
So amongst our commercial segment, which is about 60% of our patients. We now see that over 80% of them are on paid therapy and so that's one of those trends that gives us confidence in the long term that we're going to get to 85%.
Speaker 4: As far as where we're going to end the end of the year, I don't even want to make a prediction. I think it's, you know, this is all about that longer term progress. And as John noted, we don't expect a meaningful change in 2024, but the percentage changes will start to improve in 2025, 26 and 27. And that's when we'll start to notice.
As far as where we're going to end the end of the year I don't even want to make a prediction I think it's this is all about that longer term progress and as John noted, we don't expect a meaningful change in 2024, but the percentage changes will start to improve in 2025, 26, 27, and that's when we'll start.
To notice it.
Speaker 11: Got it, that makes sense. Thanks so much for the clarification. I guess a quick follow up on the third quarter sales. We are now seeing more patients coming from profy, naive patients or converted patients.
Got it that makes sense. Thanks, so much for the clarification I guess a quick follow up.
On the third quarter sales.
We are now seeing more patients coming from proceeds naive patients or converted patients in the U S.
Speaker 11: US and should we assume maybe more of a revenue growth X US are from
And should we assume maybe more of a revenue growth ex U S or from <unk> patients.
Speaker 4: So in the US, the trends are really the same. It's that roughly 50, 50 split between patients coming over from profy or profy naive, at least most recently, that they're not on profy. That has been, it's not exactly the same every quarter like anything else, but it's been really consistent over time. X.
So in the U S. The trends are really the same it's.
It's that roughly 50 50 split between patients coming over from Profi or.
Prophage naive at least most recently that they are not on <unk> that has been.
Not exactly the same every quarter like anything else, but it's been really consistent over time ex U S. Yes, we get a lot more patients who are proceed naive.
Speaker 4: Yes, we get a lot more patients who are profy naive because the profy market in general has trailed the US XUS, but that's starting to change. And so we get some switches from other profy XUS, but most of it is people coming on to profy for the first time, now that they can do it with a targeted oral therapy.
Does the protein market in general has trailed the us ex U S, but that's starting to change.
So we get some switches from other prophage ex U S. But most of it is people coming on to proceed for the first time now that they can do it with a targeted oral therapy.
Got it thanks, so much for taking my questions.
Sure.
Yes.
Speaker 12: The next question is from Brian Abraham of RBC Capital Markets. Please go ahead. Hi everyone. This is Nevinon for Brian .
The next question is from Brian Abrahams RBC capital markets. Please go ahead.
Hi, everyone. This is <unk> on for Brian. Thank you again for taking our questions and congrats on the quarter.
We really appreciate some of the color that you gave around.
Speaker 12: sales trajectories that you expect for the coming years. On that, I just wanted to ask in slide four some of the data that you had.
Some of the sales trajectory that you expect for the coming years on that I, just wanted to ask and.
In slide four some of the data that you had.
Speaker 12: regarding net patient growth and also some of the discontinuations. It seems that perhaps some of the discontinuations are leveling off or perhaps that.
Regarding net patient growth and also some of the discontinuation it seems that perhaps some of the discontinuation or leveling off or perhaps.
Speaker 12: You may be speaking to whether you are seeing improvements.
Maybe changing dynamics could you could you maybe speak to whether you are seeing improvements in the.
Speaker 12: the retention rates and whether that's affected by your kind of push to better educate patients and then have a question.
The retention rates.
And whether that's affected by.
You're kind of push to better educate patients.
And then I have a quick follow up as well.
No no.
Good good analysis of the data, yes, I think we have seen it improve certainly from what we experienced very early in the launch and it is exactly that it's it's setting expectations, we do that off all the way through.
Everything that we can do with healthcare providers to make sure they talk to their patients when our patient services teams talk to patients. They set expectations and we think that that has has really paid off the market is getting very familiar now with <unk> physicians and other health care providers know the drug they have <unk>.
Speaker 4: when our patient services teams talk to patients, they set expectations.
Speaker 4: And we think that that has really paid off. You know, the market is getting very familiar now with Orlidaeo. Physicians and other healthcare providers know the drugs they have confidence in it. Patients now know a lot more and they have confidence in it. And in a condition like HIE where stress can cause attacks, you know, having confidence in your therapy is important. So we think that's all part of the...
Incident patients now know a lot more than they have confidence in it and in a condition like HCA, where stress can cause attacks having confidence in your therapy is important. So we think that's that's all part of the.
Speaker 4: The pattern settling out, and we're very confident in this pattern going forward.
The pattern settling out and we're very confident in this pattern going forward.
Speaker 12: So, in kind of like a follow up to that, can you also speak a little bit to the trial progress for Orlodeo in pediatric patients with a sprinkle formulation? And is there perhaps anything you could tell us about what those retention metrics might look like within the pediatric patients so far? And if there's any differences in the GI talks,
So.
Like a follow up to that can you can you also speak a little bit to the trial progress.
For all of <unk> in pediatric patients with the sprinkle formulation and is there perhaps anything you could tell us about what those retention metrics might look like within the pediatric patients so far.
And if theres any.
Francis in the GI talks that you might be seeing it.
This population.
Speaker 4: So the trial enrollment is going well. I'll defer other questions to tomorrow. In our R&D day, we will be using that amongst our other programs. But what I'll say is the trial is going well and there's a huge need. There's a need for an oral therapy across the market. As you can imagine, in pediatrics, no parent or caregiver likes to inject their child. Child likes to be injected. And with HAE, fortunately, a lot of people
So the trial enrollment is going well I'll defer other questions to tomorrow in our R&D day, we will be seeing that amongst our other programs, but what I'll say is the trial is going well and there's a huge need.
There's a need for an oral therapy across the market.
You can imagine in pediatrics, no parent or caregiver likes to inject their child child likes to be injected and with.
With HLA Fortunately a lot of.