Q4 2024 Krystal Biotech Inc Earnings Call
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Speaker Change: Thank you for standing by and welcome to the Crystal Biotech Q4 2024 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there will be a question and answer session. As a reminder, today's conference is being recorded. I would now like to hand the conference over to your host, Stphane Paquette, Vice President of Corporate Development. You may begin.
Stphane Paquette: Good morning and thank you all for joining today's call. Earlier today we released our financial results for the fourth quarter and full year of 2024.
Stphane Paquette: Joining me today will be Krish Krishnan, Chairman and Chief Executive Officer.
Suma Krishnan: Suma Krishnan, President of Research and Development. Jennifer McDonough, Senior Vice President of Patient Access, Analytics and Operations.
Christine Wilson: Christine Wilson, Senior Vice President and Head of U.S. Sales and Marketing, and Kate Romano, Chief Accounting Officer.
Speaker Change: This conference call will, and our responses to questions may, contain forward-looking statements.
Speaker Change: You are cautioned not to rely on these forward-looking statements, which are based on current expectations using the information available as of the date of this call, and are subject to certain risks and uncertainties that may cause the company's actual results to differ materially from those projected.
Speaker Change: A description of these risks, uncertainties, and other factors can be found in our SEC filings.
With that, I will turn the call over to Krish.
Stephane, thank you. Good morning and welcome to the call.
2024 was a strong year for Crystal.
Speaker Change: Varjavac US launch continued to progress well and tracks in the top tier of rare disease launches.
Speaker Change: The strength of the launch speaks to the robust efficacy and safety profile of iZOVAC and our relentless focus on patient and physician experience.
Speaker Change: In addition, in 2024, we demonstrated that we can safely and repeatedly deliver genes to the lung with a nebulizer across our Cystic Fibrosis, Alpha-1 Antitrypsin, and NSELC programs.
Speaker Change: clearly validating the lung as a second target tissue for our platform.
Speaker Change: There were also strong early signs of efficacy in our readouts and we fully expect the data to mature later this year.
Speaker Change: Looking ahead at 2025, we have three primary things to accomplish.
First, a successful Vijavec launch in EU and Japan.
Speaker Change: Second, to translate the early signs of efficacy into strong results across our CF and A180 programs.
Speaker Change: If we do this right, we believe the company will be in a much stronger place with respect to revenue, net income, and market cap going into 2026.
Speaker Change: For the year, net income per share was $3.12 per share, up sequentially from $0.40 per share in 2023.
Speaker Change: This is our 6th straight quarter of positive EPS and 4th straight quarter of sequential earnings growth.
Speaker Change: In addition to operational success, we have also put ourselves in a strong financial position for future growth.
Speaker Change: In Aesthetics, June Aesthetics reported a strong KB301 Phase I data for the treatment of Declite, and we plan to start a Phase II study later this year.
Speaker Change: We're in the process of building out a season management team at Genesthetics with more to come on this later in 2025.
Speaker Change: $341 million in net revenue within 18 months of launch and sequential revenue growth for six.
Speaker Change: Straight Quarters is a tremendous achievement and a testament to the tireless contributions by our commercial and patient support teams on behalf of patients with DEB.
Speaker Change: Net YJVAC revenue for the Q came in at $91.1 million, bringing revenue for 2024 to $290.5 million.
Speaker Change: I'll now turn it over to Jen and Christine to share more details on the U.S. launch.
Speaker Change: Thank you, Krish. Looking back on 2024 and now the early days of 2025, I'm incredibly proud of what our team has been able to accomplish.
Speaker Change: With steady progress over the entire year and a strong access landscape carrying over from 2024 into 2025, a growing number of dead patients have or will soon benefit from fundamentally corrected by Juvec therapy.
Speaker Change: As of February, the number of patients with reimbursement approvals exceeds 510. This is in spite of losing a few weeks to holidays in the fourth quarter.
Speaker Change: With a good pickup of the pace of approvals to start 2025, as well as strong underlying demand trends, we remain confident in our ability to hit our ambitious pre-launch penetration targets.
Speaker Change: Reimbursement approval splits were again largely in line with recent quarters and roughly evenly split between commercial and government plans.
Speaker Change: With effectively full nationwide commercial and Medicaid coverage, the access landscape for VIJUVEC remains strong.
Speaker Change: Reauthorizations are getting processed smoothly, all have either been approved or are in process. In the community, we are still seeing a lag from prescription to approval, dictated primarily by the availability of genetic test results and prescriber familiarity with access pathways.
Speaker Change: As always, our Crystal Connect team is working closely with home healthcare providers to meet patient needs and preferences. It is this infrastructure and patient-centric approach that has allowed us to navigate scheduling constraints and holidays to ensure patients can get on and stay on treatment.
Speaker Change: Patient preference for at-home administration is again effectively unchanged with 97% of the weekly treatments occurring in the home setting. Patient compliance to weekly treatments while on drug was 85% as of the end of the fourth quarter. In the third quarter, it was at 87%.
Speaker Change: As we progress our U.S. launch, we are thrilled to see that patients are achieving durable wound closure and getting to live fuller, more active lives. This, of course, is the whole point of iJUVEC.
Speaker Change: As patients enjoy their first pause in therapy and then settle into a more regular maintenance regimen, we do expect to see compliance to continue to trend towards the rates that we guided at launch.
Speaker Change: We are learning from real-world experience that the treatment journey for each patient is unique and dynamic. A 21-year-old initiating therapy after decades of blistering and wounding may have a very different journey than a very active toddler.
Speaker Change: The time to wound closure and durability are dependent on a myriad of inputs, including nutritional status and iron levels, as well as the patient's age, their mobility and activity levels, and of course, the location and the age of the specific wound treated.
Speaker Change: Because each patient and each wound area is unique, the length and frequency of treatment pauses are personalized to the patient.
Speaker Change: Critically, patients and their prescribers understand the importance of treatment persistence and patients that have benefited from a pause due to full wound closure are now transitioning into an ongoing wound maintenance routine with by Juvec helped by our Crystal Connect team.
Speaker Change: As always, our team will be with them every step of the way to ensure they have a steady access and can continue to enjoy the benefits of regular Vigevec treatment.
Speaker Change: I will now hand it off to Christine to discuss recent sales and marketing activities, which are keeping us on our top tier launch trajectory, Christine.
Christine Wilson: Thank you, Jen. As we enter 2025, it is my pleasure to report that tactics that we developed in 2024 continue to pay dividends, driving significant growth in reimbursement approvals and strong patient demand across the country.
Christine Wilson: Prescribing Clinics, Claims Analytics, and Patient Engagement all point to strong and sustained underlying demand.
Christine Wilson: Education and patient activation remain core focus areas for our field team as we look to further penetrate into the identified patient pool.
Christine Wilson: In addition, and in honor of EB Awareness Week, we hosted a national broadcast led by Dr. John Browning.
Speaker Change: This event also included a patient ambassador on Vijivic sharing their first-hand experience.
Christine Wilson: This comprehensive showcase of trial data and real-world insights emphasized the clear and durable benefits of therapy, and critically, demonstrated the significant impact it can have for patients.
Christine Wilson: We also equipped our sales team with new promotional material that emphasizes the long-term safety and efficacy of iGVAC.
Christine Wilson: They also underscore that all DEB patients can benefit from therapy, with actual patient images demonstrating healing in both the RDEB and DDEB subtypes across both the adult and pediatric spectrum.
Most importantly, these efforts have yielded tangible results.
Christine Wilson: Not only did we achieve significant reimbursement approval growth over the past few months, we also continue to expand our prescriber base.
Christine Wilson: Over 65% of prescribers in the fourth quarter were new writers. With each new prescriber, awareness of Deb and by Juve grows, extending our reach in a new community.
Christine Wilson: With strong underlying demand, growing awareness, and a broadening prescriber base, we are excited to continue growing the number of patients on Vijayavik across the U.S.
Christine Wilson: Now I will hand it back to Krish to share an overview of our global expansion plans for 2025.
Thanks, Christine.
Speaker Change: We expect a positive CHMP opinion on our application later this month, and based on this timeline, we expect our first EU launch in Germany around mid-year, along with commencing an Access Prokos AP2 program in France.
The opportunity that exists in Europe is significant.
Speaker Change: With many already identified patients in urgent need of fundamentally corrective therapy.
Speaker Change: In Germany and France alone, there are over 1,000 identified deaf patients.
Speaker Change: As in the US, our initial focus will be to penetrate the identified patient pool.
Speaker Change: We're also on track for a regulatory decision in Japan later this year, enabling launch into another market with hundreds of already identified deaf patients.
Speaker Change: In support of this filing and our launch, we have established our head office team in Tokyo and have started hiring our field force.
Speaker Change: And thanks to the continued efforts of our development team, we're also working steadily towards treating lesions in the eye of deaf patients.
Suma Krishnan: Suma will now share more detail on both our ophthalmic BVAC program and our broader pipeline.
Thank you, Krish.
As Krish just noted,
We are committed to treating death comprehensively.
and are very excited to be progressing our second product.
KB803
Suma Krishnan: towards a potential approval to address the ocular complications associated with DEB.
Suma Krishnan: This study is providing valuable information on the burden of disease and is helping us refine endpoint selection for our Phase 3 study.
Suma Krishnan: The Natural History Study may also serve as a run-in to our Registrational Trial adding more baseline data to contextualize our Phase III results.
Suma Krishnan: The high rate of enrollment in the study, with approximately 50 patients enrolled, underscores the unmet need and demand for a corrective therapy for the eye, and given the run-in
Suma Krishnan: should provide as an opportunity to rapidly enroll our Phase 3 once initiated.
Suma Krishnan: We are finalizing the study design and statistical analysis plan with the agency and remain on track to initiate our Registrational Phase III.
Suma Krishnan: which we refer to as our IOLITE study in the first half of the year.
Suma Krishnan: Assuming rapid enrollment, given the run-in option, we continue to expect top-line data before year-end.
Suma Krishnan: that in our view validate the lung as a second target tissue for our HSV-1 based gene delivery platform.
Suma Krishnan: KB408 is a re-dosable inhale therapy for the treatment of AATD, a serious disease linked to the absence of functional AAT in the lung.
Suma Krishnan: KB408 is designed to deliver two copies of the Serpent One
Suma Krishnan: Transgene which encodes for normal human AAT protein to enable local AAT production in the lung itself.
Suma Krishnan: KB408 is currently being evaluated in our First-in-Human Phase 1 Serpentine 1 Study and Open Label Single-Dose Escalation Study in adult patients with AATD.
Suma Krishnan: Serpentine-1 is designed to include up to three dose escalation cohorts evaluating single administration of 10E9, 10E10, and 10E11 PFU of KB408 via inhalation.
Suma Krishnan: In December of last year, we announced an interim clinical data update, including safety data for seven patients enrolled.
that consented to bronchoscopy.
Suma Krishnan: KB408 was found to be well tolerated at both tested dose levels with only mild to moderate and transient adverse events observed.
No serious adverse events or dose-limiting toxicities were reported.
Suma Krishnan: In addition, clear evidence of successful gene delivery was observed in both patients
Suma Krishnan: that underwent bronchoscopies with the proportion of conducting airway epithelial cells positive for AAT increasing from 0% to 39% in one patient and from 3% to 35% in the other.
Suma Krishnan: Secretion and functionality of encoded AAT was also demonstrated in the patient with available lavage samples.
Suma Krishnan: With AAT levels in epithelial lining fluid reaching 729 nanomolar and the proportion of free neutrophil elastase dropping from 97.2% to 40.2% after a single KB408 dose.
Suma Krishnan: Following this data update, we simultaneously expanded the 2nd Serpentine I cohort and opened enrollment in the 3rd for more comprehensive molecular assessment at both dose levels.
Suma Krishnan: We are working closely with Alpha One Foundation and their Therapeutic Development Network on the Serpentine-1 study and expect to announce complete study results later this year.
Suma Krishnan: Our second rare respiratory disease program, KB407, is also progressing well. KB407 is a re-dosable inhale therapy designed to deliver two copies of full-length CFTR transgene for the mutation-agnostic treatment of cystic fibrosis.
Suma Krishnan: As summarized on the slide, we have built out a robust preclinical data package that demonstrates that KB407 efficiently transduces target airway epithelial cells, leading to the expression of full-length, properly localized, glycosylated, and functional CFTR.
Suma Krishnan: On the back of this data, a growing clinical data set, I'm pleased to report that we recently received full sanctioning of our KB407.
Suma Krishnan: Our ongoing first in-human Phase I study, both single and repeat in-health administration of KB407, was well-tolerated with only mild to moderate and transient adverse events.
Suma Krishnan: Again, there were no reports of serious adverse events or dose-limiting toxicities.
Suma Krishnan: With the first two cohorts successfully cleared and KB407 well tolerated, we have progressed to our third cohort and expect to report top-line results including molecular data around the middle of this year.
Suma Krishnan: These are just a few of the recent highlights from our clinical stage pipeline. We also recently reported early evidence of monotherapy activity with inhaled KB707 in heavily pretreated patients with advanced lung cancer.
Suma Krishnan: Some of the key development milestones for our team are laid out here.
Suma Krishnan: We are also expecting to provide molecular data updates for a rare respiratory disease program, KB408 and KB407, as well as first in human data or a second aesthetic product candidate, KB304, which encodes
both type 3 collagen and elastin.
Suma Krishnan: Our oncology programs will continue to progress with potential of interim updates later in the year.
Suma Krishnan: As our recent data announcements have demonstrated, the potential HSV-1-based gene delivery goes well beyond the skin.
Suma Krishnan: We are looking forward to making rapid progress of our pipeline in 2025 and further validating the breadth of the opportunities in front of us targeting the skin, lung, and eye.
Kate: With that, I would like to turn the call to Kate.
Thank you, Suma.
Kate: In the 4th quarter, Crystal saw continued Vijavec revenue growth with net product revenue of $91.1 million, representing an increase of approximately $49 million over the 4th quarter of 2023.
Kate: which was the first full quarter that Crystal had revenue after our approval in May of 2023.
Kate: Cost of goods sold for the quarter was $4.9 million, resulting in a gross margin of 95%.
Kate: In the fourth quarter of 2023, cost of goods sold was 2.9 million dollars, resulting in a 93% gross margin.
Kate: Research and development expenses for the quarter were $13.5 million, inclusive of stock-based compensation of $2.3 million, compared to $11.4 million for the prior year's fourth quarter, inclusive of $2.4 million of stock-based compensation.
Kate: Higher research and development expenses in the fourth quarter of 2024 were mainly due to increased clinical trial related costs.
Increased R&D manufacturing costs for our pipeline candidates.
and Increased License and Regulatory Fees.
Kate: compared to 24.8 million dollars for the prior year's fourth quarter which was inclusive of stock-based compensation of 7.5 million dollars.
Kate: Higher selling, general and administrative expenses in the fourth quarter of 2024 were primarily the result of increased personnel related costs.
Kate: Increased professional service fees and increased Vijavec sales and marketing costs as compared to the prior year's fourth quarter.
Kate: Net income for the quarter was $45.5 million, which represented $1.58 per basic and $1.52 per diluted share.
Kate: I'd also like to provide some perspective on our forecast for operating expenses in 2025.
This projection excludes stock-based compensation.
Kate: This expected increase in operating expenses compared to 2024 is driven primarily by increased SG&A costs for our planned commercial launches outside of the United States.
Kate: and $749.6 million in total cash plus short-term and long-term investments.
Kate: Noting quarterly growth in our overall cash and investments position, with an increase over our third quarter of 2024 cash and investments balance by about $55 million.
Krish Krishnan: And now I will turn the call back over to Krish.
Thanks, Kate.
Speaker Change: As you heard from Christine and Jen, patients are achieving profound benefits with Vizurek and getting to live fuller, more active lives.
Speaker Change: was steadily expanding our prescriber base and further penetration into the community setting.
Speaker Change: with one full calendar year of launch in the U.S. behind us.
and increasing presence in key European markets in Japan.
Our conviction.
Speaker Change: in the global peak sales estimate of over $1 billion for VijaVac has only strengthened.
As we look forward,
Speaker Change: I'd like to share a few key lessons we have learned since launch.
Speaker Change: So what are the lines on how we get to realize the opportunity in front of us?
The first lesson has to do with timing.
Speaker Change: As Jen mentioned earlier, patients and prescribers in the community often need more support to navigate the path to success.
Our turnaround time on average
is still
between
45 and 60 days with respect to these patients.
Speaker Change: The second lesson is the realization that we never really get a full quarter when we are talking about Viz-a-Viz.
Speaker Change: YGVAC is a weekly therapy administered at home by a HCP and life gets in the way for these patients in each quarter.
In the first quarter, many families will be changing insurance.
in the second.
We have to work through summer holidays.
Speaker Change: In the third, Labor Day and Back to School for Families. And in the fourth, we navigate around major U.S. holidays.
Speaker Change: In spite of that, I'm pleased and proud to report sequential net Viz-a-Vec revenue growth and continue to have strong conviction in our global Viz-a-Vec peak sales estimates.
Speaker Change: The third lesson has to do with high compliance, which has been well above what we estimated at the time of launch.
That's it.
Speaker Change: We are entering a phase where some patients are now able to take initial pauses, enjoy the benefits of durable wound closure, and come back on drug when there is a wound disruption.
This is a fantastic outcome for patients and their families.
Speaker Change: Our Crystal Connect team remains in close contact with all of our patients, and when new wounds emerge, re-initiation of treatment is seamless.
Speaker Change: Our relationship with our patients is for the long term, and we want them to feel the freedom of being able to live their lives as they choose.
Speaker Change: independently, actively, with the confidence of knowing that they can now control their wounds with YGV.
Speaker Change: Finally, we've done a terrific job of accruing for the price cap of Vizivac.
Speaker Change: We've had no volatility in net revenues in 2024, and we do not expect to have any going forward.
Finally, in closing, as you can see from the slide.
Speaker Change: We have several important clinical and regulatory milestones in 2025 to demonstrate the full breadth of our platform and we're excited for 2025 with what we can deliver to patients and shareholders.
Speaker Change: I'd like to thank my Crystal colleagues for their dedication and perseverance that underscore our excitement in the long-term outlook for Crystal and the patients we aim to serve.
Speaker Change: Thanks for listening and I'd like to open the call for Q&A.
Speaker Change: Certainly. At this time, we will be conducting a question and answer session. If you have any questions or comments, please press Star 1 on your phone at this time.
Speaker Change: Your first question for today is from Alex Stranahan with Bank of America.
Alex Stranahan: Hey guys, thanks for taking our questions and congrats on the continued progress.
Speaker Change: Just two from us. First on Vijuvec, wondering if you saw any year-end stocking in 4Q and maybe you could just remind us how accounting for patient annual cap fed into the 4Q results and sequentially into 1Q25 as this is reset.
Thanks, Alec. Thanks for your question.
Unknown Speaker. Thank you. Thank you.
Nothing substantially different in Q4 versus any other quarters.
So, there was no.
Speaker Change: Any change in stocking or inventory with respect to Q4 as compared to Q3 or Q2 or Q1?
Speaker Change: And in terms of price cap, I think I've gone through this many times at the end of every quarter. We look back, you know, starting at the beginning of twenty twenty four.
Speaker Change: that we do a really good job of making sure there's no volatility in revenue.
Of course, cap calculation is complicated.
Speaker Change: because it is at a payer level and has a lot to do with the mix within each payer, the number of patients and when they start during the year, but we've done a pretty good job of maintaining, taking volatility out of the equation.
Speaker Change: Okay, that makes sense. And maybe one quick one on the CF study. I guess, how is enrollment going? Is Cohort 3 maybe accruing faster or in line with Cohorts 1 and 2? And maybe walk us through how the CFF TDN sanctioning maybe helps with this.
Speaker Change: Thank you. No, it's definitely, it's definitely super helpful, but we just got started.
Speaker Change: So there's always a time lag when you just get started. It takes a few months to get a few.
Suma Krishnan: Patients on drugs, but enrollment in cohort three has already begun and I'll let Suma add some more color to the story.
Suma Krishnan: Unknown Speaker Absolutely. I mean, obviously, getting TDM sanctioning was very important because all of these academic major sites that can do bronch and have expertise in CF and have these patients.
Speaker Change: Now are very excited. In fact, many of them reached out to us directly to participate. We have 7 to 8 sites active.
Speaker Change: We are in the process of doing all of the administrative stuff, such as contracts, budgets.
As Chris mentioned, but we have.
Speaker Change: Two sites that are part of TDN that are up and running and we have already enrolled patients of this cohort.
That's more than pretty well.
Speaker Change: As a reminder, please limit yourself to two questions. Your next question for today is from Ritu Bharal with TD Cowan.
that 1000 between the two geographies.
Ritu Bharal: And then I have my second question. My follow up question is on pricing. How right now are you thinking about the initial sort of German free price range and the French at least expanded access price?
Thanks, Rita. At a high level,
Ritu Bharal: At a high level, both Germany and France are a bit more concentrated than the United States.
Ritu Bharal: That said, Germany is closer to the U.S. and France is much more concentrated among centers of excellence. And the spread of the 1000 is about 600 in Germany at a very high level 400 in France.
Ritu Bharal: In terms of pricing, in Germany, for the first six months, we get to launch with the US price as we put the dossier in place and start the negotiations.
Ritu Bharal: In France, we're under the AP2 program and it kind of forces us to start accruing from day one.
So, the expectation.
Ritu Bharal: I mean, so, and the AP2 program should start maybe slightly after the German launch, but not too far out.
Ritu Bharal: And in France, maybe in about 15, 18 months from approval, we expect to get a price in France. And that's how they're laid out.
Yes, you should, for sure.
Okay.
Ritu Bharal: Your next question is from Gavin Clark Gartner with Evercore ISI.
Gavin Clark: Good morning. Thanks for taking the questions. Just on the reimbursement approvals first, if I'm doing my math correctly, last quarter about 50% of new patients coming on were dominant patients and this quarter that seems to be about up to 75% dominant patients. Is that math correct? Do you think this trend will continue and how do you account for that in your compliance assumptions?
Um.
Speaker Change: Gavin, look, the percentage of dominant and recessive varies quarter by quarter. As we go into the community, I mean, your math is right that we did see more dominant in Q4 than we saw in Q3 as we go into the community, but.
Speaker Change: So I would not, I mean, in terms of compliance going forward, I do not expect the material change in the way.
Speaker Change: I do not expect a big change based on the percentage of dominant in the study, but.
Speaker Change: But it is, yeah, it is true. But that said, we don't like when we report Q1, our expectation is not that dominant will continue to go up. It could easily shift back to what it was in Q3 or Q2.
Very helpful. And then just one bigger picture question.
Speaker Change: So you have about 750 million cash in the balance sheet. ConsenSys has you doing around 250 million cash flow this year, ballpark 300 million next year, depending on how exactly, you know, XUS launch goes. So even if you did want to allocate a, you know, a good chunk of capital to additional R&D, you still have a lot of financial flexibility. So how are you thinking about buybacks, capital overall as you kind of progress to the next phase here? Thank you.
Speaker Change: Look, I mean, it's a valid point. It's definitely a discussion point within crystal. We're just figuring out the timing of such a buyback and the extent that is meaningful and measurable.
Speaker Change: We're.
Speaker Change: Thinking about it pretty seriously going forward.
Speaker Change: Got it thank you.
Speaker Change: Okay.
Speaker Change: Your next question for today is from Sami Corwin with William Blair.
Sami Corwin: Hey, good morning, Thanks for taking my question and congrats on the progress.
Sami Corwin: To provide a high level update on the regulatory process I think we initially expected to hear a decision from CH M. P. In late 2024. So I was curious if you had any insight into the reason behind the delay.
Sami Corwin: And then my second question is.
Sami Corwin: Giving you could face CEB commercial competition as early as Q2, just how you're kind of thinking about maintaining and expanding market share in the face of that competition. Thank you. Yeah I can address the first question. Obviously the delay was because we were trying to get the best label I mean, we have a very favorable label as you know.
Sami Corwin: The SBC, so obviously the home dosing and caregiver administrations all of those nuances needed to be ironed out sort of a training materials that needed to be prepared to support that on the label. So that was the reason for the delay and I think that two months helped us get all of the documentation containing with eagle in place to achieve.
Sami Corwin: Got to get a favorable label.
Andy: Hey, Andy.
Sami Corwin: Competition.
Sami Corwin: Look.
Sami Corwin: At a high level.
Sami Corwin: It's tough to beat the value proposition of <unk>.
Sami Corwin: Both in terms of and if you look at our 98% of our patients are opting for home dosing.
Sami Corwin: I'm not even going to the local physician office.
Sami Corwin: <unk> learned that the profile of <unk>.
Sami Corwin: Is well aligned with the expectations of the patients.
Sami Corwin: But that said.
Sami Corwin: We are putting in we are not.
Sami Corwin: Ignoring that the market could potentially become more competitive later in the year.
Speaker Change: And our medical affairs team.
Speaker Change: Is having the right kind of conversations with the physicians.
Speaker Change: Our patient services team, having the right kind of conversation with patients.
Speaker Change: And.
Speaker Change: We feel pretty good about our ability to hit the two year target and the overall peak sales.
Speaker Change: In spite of the competitive nature of the market.
Speaker Change: Got it thank you.
Speaker Change: Yes.
Speaker Change: Your next question for today is from Ryan for Seth with Guggenheim.
Speaker Change: Yes.
Ryan: Hi, This is ray from digits team for $4 seven how are you thinking about <unk> in terms of the bar for advancing the program and as that bar sort of consistent across genotypes.
Speaker Change: Look it's a.
Speaker Change: We're just starting to dose patients in the efficacy cohort.
Speaker Change: Realize that the long term.
Speaker Change: Direction Buckler style is to target the annul population, which is a complete unmet medical need.
Speaker Change: There have been comments made interests from other competing companies that in lung patients.
Speaker Change: Any kind of a PV improvement over 3%, 4%, 5% all the way up to 10.
Speaker Change: A very positive outcome for these patients, but pleased to realize we are dizzy dosing paradigm. So no matter, where we start with these patients.
Speaker Change: <unk> to build upon the SCB levels overtime, and so we feel really good about our focused strategy on going after the notification.
Speaker Change: And then as a secondary effort maybe.
Soma: Soma mentioned in their speeds become mutation agnostic.
Soma: I mean, theres no patients and Theres also a subset of population there they are they don't get that.
Soma: Correct.
Soma: These kind of the therapy. They are not conducive to both be populations that we're targeting and obviously as Chris mentioned, we are reusable. So we have that flexibility. We will look at improvements in FTE run this flexibility from a regulatory strategy for us to go just like we did in the I T.
Soma: You do a single label open label study with terms that are for natural history. So I think from a regulatory perspective.
Soma: We have any improvement.
Soma: Michelle functionality, we shut some expression.
Soma: So even slight improvement in that PD, one I think we have a very favorable regulatory environment and a pathway to move this program very rapidly into the into clinic and intern approval path.
Soma: Just like we did with AI.
Soma: Thanks for that.
Speaker Change: Your next question for today is from Josh Shimmer with Cantor.
Speaker Change: Great. Thanks for taking the questions. Two quick ones first can you help quantify the impact of the annual cap on <unk> in 2024, and how you think that might impact in 2025, and whether you are planning any changes to that cap and then second the 10-K.
Speaker Change: Has some new language around <unk> manufacturing process changes and some risks around that at least theoretical have there been any changes to the manufacturing process and if so can you explain that.
Speaker Change: Right.
Speaker Change: <unk>.
Speaker Change: So for the for the cap, we have been seeing about 8%.
Speaker Change: Commercial patients on the cap.
Speaker Change: Instantly from the beginning.
Speaker Change: For the manufacturing process, we get scaled up.
Speaker Change: So we have gone to the higher level of bioreactor level, and we have filed the PFS and we got approval for it. So again, so we have a scale up process that is approved by the FDA and the beauty about it is this process is can be adaptable across our pipeline. So if you see for the seven <unk>.
Speaker Change: Limitation is not going to be CNC anymore. We can scale up we can make the materials the processes.
Speaker Change: Pretty much cut and paste across all of our pipeline products. So CMT, we derisk CMT from <unk> other product that may need more commercial.
Speaker Change: Material. So I think that was a very positive for us.
Speaker Change: Getting that scalar approved by the FDA.
Speaker Change: Okay. Thank you.
Speaker Change: Your next question is from Nicole <unk> with Citi.
Speaker Change: Hi, This is Ryan on for Yigal. Thanks for taking my question I just wanted to ask on <unk> could you give us a little bit more color on what we should expect to see from the expanded cohort two in core three data.
Speaker Change: What are more comprehensive molecular assessment, so youre considering beyond E T D levels and what therapeutic effect do you hope to see you.
Speaker Change: <unk> clinically meaningful for these patients and I have a follow up.
Speaker Change: Yes, so on cohort two.
Speaker Change: Pretty much not much of a change than what we reported previously we're just adding more patients to confirm what we saw we were pretty pleased with what we saw and we just.
Speaker Change: Wanted to add one or two patients more to confirm.
Speaker Change: The levels in the lung.
Speaker Change: The increase in the levels in the systemic circulation and to quantify.
Speaker Change: In terms of at a molecular level.
Speaker Change: And cohort three is simply exactly cohort two but at a higher dose so do not expect anything dramatically different.
Speaker Change: Between the two.
Speaker Change: We've seen you are looking for dose response, I mean, we know cohort two we didn't even expect that the cohort dose level to see this level for AEP in the lung, but we're very.
Speaker Change: Pleased to see that I mean, obviously they can.
Speaker Change: A very safe and we feel it's a dose that so functional <unk> expression.
Speaker Change: Decent levels, but we do want to see what what we get at the third dose because again, it's C. When you wanted to see if thats, an increase and what does that correlate to levels in the serum too long answer if we see.
Speaker Change: A good correlation and increase then maybe that's the dose we will move forward.
Speaker Change: <unk> administration beyond.
Speaker Change: Okay, great. Thanks, and just as a quick follow up we understand that plasma E. TVE should be sort of a relevant benchmark. Its synthesis were to occur in the liver because of new transport into the circulatory system to get to the long, but since youre already synthesizing in the lung.
To start with can we maybe not put too much weight on plasma T D.
Speaker Change: No that is correct well visited therapeutic goals I guess, if you could give more color on that how how we should be thinking about that or yeah. I think what you're going to look at correlations pick of a dose response of commerce level have you seen in the lung and what levels are we seeing in the plasma. So we want to see that correlationship with increasing and growing.
Speaker Change: The next dose you want to see what that increases.
Speaker Change: Once you have that Correlationship then we can go to the FDA and let them know that biomarker approach. We can say, yes, we see this level of lung and the <unk>.
Speaker Change: Plasma levels to this level in the long based on the kind of dose that we are giving these patients. This is the ratio. So I think that will help us to go into from us from a regulatory pathway to sit down with the agency and discuss at the biomarker path, where we don't have to.
Speaker Change: Barack these patients, but can you just serum levels.
Speaker Change: That is meaningful for our lung administration for the for this patient population.
Speaker Change: Yes, do you want to repeat what you just said, we do not care fundamentally youre right, we do not care about levels in the lung.
Our levels in the systemic circulation I apologize, we look for levels in the lung.
Speaker Change: And maybe a correlation between the two so if you could avoid potentially branching for molecular approval.
Speaker Change: Yeah.
Speaker Change: Makes sense Super helpful. Thanks, so much.
Speaker Change: Once again, if you would like to ask a question. Please press star one.
Speaker Change: Your next question for today is from Andrea Newkirk with Goldman Sachs.
Andrea Newkirk: Good morning, Thanks for taking our question.
Speaker Change: For General Kristine I am just curious here based off of what you're seeing right now in terms of the rate of reimbursement approvals.
Speaker Change: What is needed to reaccelerate patients coming on to drug in order to reach your 60% penetration goal within two years of launch.
Speaker Change: Yeah, I can start that I mean, I think we definitely as I said in the speech and saw some slowdown over the holidays virtually with physician offices.
Speaker Change: Payers sort of delaying and youre not answering the phone line at this time, though so we feel like we did increased our trajectory already.
Speaker Change: Have a healthy pipeline right now the highest potential patients.
Speaker Change: We're right on path for that so we already started seeing that comps obviously the first few weeks of January the same thing was occurring with our re verification season, and payers are being sort of distracted at that point, though there were delays happening there as well.
Speaker Change: Okay.
Speaker Change: I'm just wondering when you think about that $1 billion plus peak sales opportunity globally. Just curious if you could provide a little bit more granularity on how the U S versus the EU opportunity breaks down across that the 1 billion plus.
Speaker Change: Or even ask Japan as well.
Speaker Change: Hi.
Speaker Change: Look.
Speaker Change: There are 3000 patients in the U S 3000 patients in Europe at a high level and about 3000 worldwide.
Speaker Change: The pricing in the U S versus the pricing in Europe mix.
Speaker Change: Accounts for the ratio the expectation on pricing in Europe.
Speaker Change: Anywhere.
Speaker Change: At the high end at $60, 70% discount would be 60% to 70% of the U S price to maybe.
Speaker Change: 50%, 60% of the U S price, but if.
Speaker Change: If you look at our drug.
Speaker Change: It is a blinded phase III study.
Speaker Change: The efficacy results were very powerful that convenience is amazing.
Speaker Change: It is.
Speaker Change: A loud disease right, meaning.
Speaker Change: Very visible.
Speaker Change: Now disease unmet medical need some tenants are getting squamous cell carcinoma in a handful.
Speaker Change: A certain percentage of these patients. So we have a compelling case to make in the dossier with respect to pricing in Europe.
Speaker Change: And so we feel good about going into the negotiations.
Speaker Change: So to answer your question at a high level.
Speaker Change: The way you split the 1 billion plus.
Speaker Change: Across the nation is purely a function of the ratio of the pricing between across this nation.
Speaker Change: And second assumption is 70% of the U S price.
Speaker Change: How they split because the prevalence is pretty identical across the three segments.
Speaker Change: Yeah.
Speaker Change: Thank you. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Speaker Change: Thank you all.