Alexion Pharmaceuticals, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Alexion Pharmaceuticals Incorporated First Quarter 2020 Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then 1 on your telephone. If you require any further assistance, please press star then 0. At this time, I would like to hand the conference over to Mr. Chris Stevo, Head of Investment Relations.

Thank you, operator. Good morning. Thank you for joining us on today's call to discuss Alexion's performance for the first quarter of 2020. Today's call will be led by Ludwig Hansen, our CEO. Ludwig will be joined by Aradna Sarin, our chief financial officer, John Orloff, our global head of R&D, and Brian Goff, our chief commercial and global operations officer. I will note that we are practicing physical distancing, and each will be doing the call from home. You can access the webcast slides that will be presented on this call by going to the events section of our investor relations page on our website. Before we begin, I would like to point out that we will be making forward-looking statements, and these statements involve certain risks and uncertainties that could cause our actual results to differ materially. Please take a look at the risk factors discussed in our SEC filings for additional detail. These forward-looking statements apply only as of today, and we undertake no duty to update any of the statements after the call, except as required by law. I'd also like to remind you that we will be using non-GAAP financial measures, which we believe provide useful information for the understanding of our ongoing business performance. Reconciliation of our financial results and financial guidance are included in our press release. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, our GAAP results. Thank you. Ludwig?

Thank you, Chris, and good morning, everyone. Before we review our first quarter performance, I'd like to take a brief moment to discuss COVID-19 and elections response to this global health crisis. Above all, we remain committed to our mission of serving patients affected by rare and devastating diseases. We are focused on serving the patients who rely on us for the delivery of secure, uninterrupted supply of their medicines. We have taken proactive measures designed to mitigate risks in supply and continue to actively monitor the evolving situation worldwide. We're doing our part to protect ourselves and those around us by being smart in our interactions to minimize risk of spreading the virus and placing additional burden on our healthcare systems. Patients, families, and healthcare providers are at the front of our mind as we work to support them through new, innovative, and virtual means. In addition to patients, we also remain committed to protecting the safety and wellbeing of our global employees. As of early March, we have largely shifted to remote operating model for all non-essential employees. Essential on-site staff, including those in R&D and manufacturing, continue to report to work sites where we are taking all appropriate precautions. The transition to this new remote reality has been largely seamless. I'd like to thank our global employees for their continued hard work towards our mission. Turning to our response to this global health crisis, based on preclinical data supporting the role of complement in COVID-19 and preliminary clinical evidence from approximately 100 patients, Alexion has just initiated a Phase III clinical trial investigating the use of ultramers in adults with COVID-19 who are hospitalized with severe pneumonia or acute respiratory distress syndrome. In recognition of the urgent needs of some patients, and in order to streamline the emergency access process, we have opened expanded access programs in the U.S. and France for the use of Solaris in severe cases of COVID-19 pneumonia. In addition, we are committed to supporting our communities and healthcare systems through this pandemic. The Alexion Charitable Foundation has made a number of charitable donations to organizations, including the WHO and AmeriCares. Given the impact COVID-19 has had on medical care worldwide, we do expect an impact on our business in 2020. As the normal access to care is challenged during this time, we expect a temporary slowing of patient starts and clinical trial enrollments. While we saw strong top-line growth in the first quarter, we expect growth in the remainder of the year to be tempered by the pandemic, which will be reflected in today's guidance. Despite this, we still see a potential path to achieving the midpoint of our non-GAAP EPS guidance issued earlier this year. Radna, John, and Brian will provide additional detail on COVID-19 impact. Turning to slide five, as we have discussed in the past, we have a vision to create long-term value for all of our stakeholders. and we remain committed to the goals we have identified to achieve this. We have an ambition for double-digit top-line growth, establishing Ultramir as the market leader in P&H and atypical HUS. That ensures a durable base business upon which we expect we can build further. Continued success in our neurology franchise, as well as the newly announced opportunity we have with Indexon. Provides new growth drivers as we continue to build our portfolio. We are on our way to delivering upon the four times expansion of our U.S. neurology business as our Solaris neurology launch trend continues. We look forward to the potential broadening of our addressable patient population with the introduction of Ultimeer in GMG and NMOSD. We have built a strong portfolio and remain committed to achieving 10 new launches by 2023. In parallel, we continue to make significant progress in diversifying our portfolio through internal R&D and further business development, where we believe we can generate the greatest return on our investments. While the current environment is dynamic and rapidly evolving, we remain focused on execution towards these ambitions. Turning to slide six, we have made meaningful progress towards our strategic goals in the first few months of 2020. Ultramir has been further established as a market leader in PNH across our three key geographies with over 67% conversion in each. I'm proud to share that our ALS trial is underway, with the first patient having been dosed in March. With regards to our diversification objective, we have made clear progress by entering into an agreement to acquire Pertola and are excited by the opportunity MDEXA brings. I'm very proud of our strong execution thus far in 2020. With that, I will now turn the call over to Obama.

Thank you, Ludwig. Starting with slide eight, we reported first quarter total revenues of approximately 1.4 billion, an increase of 27% year over year. We are incredibly pleased with the momentum we saw over the quarter, which was driven by a strength in our neurology franchise continued growth in the core businesses, and volume growth for our metabolic business. Our non-GAAP operating margin was 62%, an increase of 424 basis points versus prior year, driven by the strong performance we saw on the top line. Non-GAAP EPS was $3.22, representing 35% growth year-over-year also driven primarily by strong top-line growth. Moving to slide 9, first quarter total net product sales were primarily driven by patient volume growth across all of our key markets. Turning to slide 10, salarious revenues in the first quarter were approximately $1 billion, with year-over-year growth of 6%. Solaris revenue growth was driven primarily by NMOSD and GMG revenues, partially offset by Altamira's conversion dynamics in P&H and Atypical HUS. Altamira's revenues in the first quarter were $223 million, including contribution from the U.S. launch in Atypical HUS. Total C5 revenues increased 26% year-over-year. Metabolic revenues for the first quarter were $199 million, representing 29% growth year over year. Turning to the P&L on slide 11, during the quarter, non-GAAP R&D expense was $186 million, or 13% of revenues. Non-GAAP SG&A expense was $259 million, or 18% of revenues. The non-GAAP effective tax rate in the quarter was approximately 16%. We reported first quarter non-GAAP EPS of $3.22, growing 35% year over year. GAAP earnings per share were $2.50. We ended the first quarter with approximately $2.5 billion in cash and marketable securities. This is not adjusted for the Portola transaction, which is expected to close later this year. Now moving to slide 12, I'd like to provide an update to our 2020 full-year guidance. Again, please note that this does not yet include the impact of the Portola acquisition as the deal has not yet closed. As Ludwig alluded to in his opening remarks, while the current pandemic creates a highly volatile and rapidly changing environment, we recognize the need to provide additional color on our business and potential impact on our financials. While we are providing updated guidance today, I will note that we are learning more and more each day, and this guidance reflects our best understanding of the COVID-19 environment at this point in time. Starting with the top line, we're guiding to revenues of $5,230,000,000 to $5,330,000,000 for the full year, where the midpoint reflects a 6% growth over 2019. In terms of product revenues, Updated guidance for Solaris and Ultramaris is 4,495,000,000 to 4,570,000,000. While guidance for our metabolic business is now 735,000,000 to 760,000,000. This top line guidance assumes a gradual reopening of medical access around the globe starting in July. It includes the momentum demonstrated by our first few performance an acceleration in conversion to Alzheimer's driven by the lower burden on patients and healthcare systems alike of every eight-week dosing and continued strong compliance rates across indications. These are offset by an expected temporary slowing of new patient cases, delays in treatment starts, and the potential for change in payer mix if an increased proportion of patients move to Medicaid in light of rising unemployment rates. Non-GAAP operating margin is expected to be between 55% and 56% of revenues. Non-GAAP R&D expense is expected to be between 16% and 17% and reflects both the incremental expense related to our COVID-19 trial and timing impact of COVID-19 on some R&D programs. This now excludes milestones relating to the discontinued acrobatic program. Non-GAAP SG&A spend is expected to be 18.5% to 19.5% of revenues and includes COVID-19-related expenses, including those related to expanded access programs and digital commercial investments. GAAP EPS is expected to be between $8.14 and $8.47. Non-GAAP EPS is expected to be between $10.45 and $10.75. This reflects our proactive expense management and financial discipline. The upper end of this range remains in line with the midpoint of our prior 2020 guidance. We look to provide further updates in future quarters as the COVID-19 situation evolves. Finally, on slide 13, I will highlight our ongoing capital allocation strategy. We've had a strong start to 2020 with both the closure of a clinical stage deal with Achilleon and entering into an agreement to acquire Corsola. We are excited by the opportunities for potential value creation afforded to us by these transactions. We also repurchased 1.3 million shares for $107 million in the first quarter of 2020. We remain focused on strategic deployment of capital and continue to look for assets that support our diversification strategy in the near and long term, as we believe this will provide the best return on our investment for both shareholders and patients. We will continuously evaluate the strategy as the market and potential business development opportunities that evolve. I'll now turn the call over to John to provide an update on our R&D activities.

Thank you, Aradhana. On slide 15, you can see our current development portfolio, which continues to evolve. We now have 19 planned clinical stage development programs for 2020. Later this quarter, we expect to report PK data from our Phase III once-weekly on-body subcutaneous Altimeris program, which remains on track for a potential launch in 2021. We've made the decision to conduct the planned C5 inhibitor renal basket study with Altimeris rather than ALXN1810. And while on the subject of Altimeris, I'll also note that we have decided to no longer pursue PPMS as an indication. This decision is based on findings from retrospective clinical and biomarker analyses, which did not support moving forward with this program. With regards to some of the new assets in the portfolio, we expect interim data from the Phase II studies of ALXN2040, Danicopan, in C3G in the coming quarter. We are excited about the proposed acquisition of Portola announced earlier this week. and look forward to providing additional detail on the trials to expand NDEXA's indication, including the phase two urgent surgery program after the transaction closes. Turning to slide 16, we highlight the current programs we see on track to launch by 2023 and the potential opportunity each presents. As we've heard across the industry, COVID-19 has created headwinds for R&D programs, including some delays in trial enrollment and paused healthy volunteer studies. Despite these headwinds, we have protected and prioritized these programs to help ensure we achieve our ambition for 10 potential launches by 2023. Starting on the left, we are expanding our C5 portfolio well beyond the PNH and atypical HUS businesses with Altamira's neurology and nephrology programs, which collectively present an opportunity to expand our treated patient population by tens of thousands of patients. Building on this, we see opportunity to diversify our business beyond C5 with four additional late-stage novel assets. Enrollment is complete in our Phase III superiority trial for ALXN1840 in Wilson's disease, and we remain on track to have Phase III data in the first half of next year. Dosing is underway in the Phase II dose selection portion of our pivotal Phase II-III program with CAEL-101 and AL amyloidosis. Patients are currently treated with chemotherapeutic agents not approved for amyloidosis, and median overall survival is only 18 months post-diagnosis. Clinical data supporting our rationale for the collaboration showed a 63% overall organ response rate in addition to efficacy on cardiac and renal endpoints. Our Phase 2-3 program will look at an overall survival primary endpoint with patient function, quality of life, and cardiac imaging serving as secondary endpoints. Last year, we announced a license agreement with Eidos to develop and commercialize AG10 for ATTR cardiomyopathy in Japan. We believe AG10 has potential to stabilize TTR and halt disease progression. Ending regulatory discussions, we plan to extend the AG10 development program into Japan later this year. Finally, we remain on track with the ongoing indications for 2040, PNH with extravascular hemolysis and C3G, which will be covered in more detail in just a minute. We are excited about the opportunity for these 10 potential launches to significantly expand the number of treated patients and will provide updates as we progress through the year. Next, I wanted to spend a few minutes on slide 17, as I'm excited to discuss the potential role of C5 inhibition in treating COVID-19-related severe pneumonia and the design of our recently initiated phase three trial. Please see the left side of the chart. We know that C5 is elevated in acute COVID-19 infection, and this elevation ultimately drives downstream release of pro-inflammatory and pro-thrombotic cytokines and chemokines that lead to severe pneumonia blood clots, and multi-organ dysfunction in many advanced COVID patients. On the right side, you can see the design of our trial, which will enroll approximately 270 COVID-19 patients suffering from severe pneumonia or acute respiratory distress syndrome, ARDS, randomized two-to-one versus best supportive care, including allowing the background use of other drugs. The primary endpoint is overall survival at day 29. Turning to slide 18, I'd like to provide an update on our Factor D portfolio. Our teams have been busy over the past quarter continuing to move forward with the existing programs for 2040. The Phase III program for PNH with EVH is on track to begin in the second half of 2020, and we expect interim data for C3G in mid-2020. With 2050, there is potential for the first oral monotherapy for PNH. The Phase II PNH program is underway. We also see tremendous opportunity in a broad range of additional indications. The first of these will be a Phase II renal basket program, given the strong rationale for complement inhibition in these indications. We look to initiate this Phase II program in the first half of next year, and we'll share additional indications for our Factor D platform later this year. Finally, turning to slide 19, I'd also like to highlight our internally designed bispecific C5 inhibitor, ALXN1720, which we see as a best-in-class option to continue expanding our C5 franchise. At only 25 kilodaltons, 1720 is a unique mini-body tailor-made for convenient subcutaneous administration. We see opportunity in a number of new and larger population rare diseases. We are pleased with the results we have seen in the Phase I program thus far, which support weekly dosing, and are currently in the process of selecting specific indications that we will move forward with. In conclusion, our development portfolio has grown significantly in the last two and a half years, and I'm incredibly proud of all the hard work undertaken by the entire R&D organization, and especially in light of the challenges posed by COVID-19. With that, I'll turn the call over to Brian to provide commercial highlights on the quarter. Brian?

Thank you, John. Turning first to slide 21, we had a very strong first quarter with demonstrated progress in our goal of best-in-class conversion to Altamira's for PNH and atypical HUS, as well as continued growth in our neurology franchise. As of last week, we've achieved greater than 67% conversion of PNH patients to Altamira's across the U.S., Germany, and Japan, further solidifying Altamiris' position as the PNH market leader in our three largest volume markets. This strong performance is due in large part to the compelling value proposition of Altamiris, both for patients and for payers, which is increasingly appreciated in light of the ongoing COVID-19 pandemic, with patients only requiring infusions every eight weeks. We'll also further enhance patient experiences with our higher concentration, 100 milligram per milliliter formulation, which reduces the infusion time by more than 50% to 45 minutes. We also remain pleased with our early launch in atypical HUS in the US, where conversion remains on track for the same 70% conversion ambition within two years that we set for PNH. And we received the good news last week that the Committee for Medicinal Products for Human Use has adopted a positive opinion for Altamiris in atypical HUS. So we now expect a final decision from the European Commission in June. Our neurology business continues its growth trajectory with further progress towards our stated ambition of quadrupling our US treated patient population. You can see we exited the first quarter with 2,152 patients on treatment with Solaris for GMG and NMOSD in the U.S. While we continue our efforts to grow prescriber breadth through continued education on the role of complement in our neurology indications near term, we're especially focused on driving depth with our current prescribers to continue to expand use in the current COVID environment. With Altamiris expected to launch in our neurological indication starting in late 2022 or early 2023, we aim to be on market within every eight-week infusion. Additionally, our once-weekly on-body subcutaneous formulation will, when it's approved, provide another important treatment option for patients who prefer self- or home-based administration. Turning to slide 22, you'll see we've taken a number of steps as an organization to ensure we continue to serve the needs of patients in today's COVID-19 environment. In fact, it's worth noting that many of these efforts were already initiated in our evolving operating model, and the current environment has helped us to accelerate our progress. With respect to infusion site of care access for our C5 patients, we're actively working to mitigate potential disruptions in infusion visits. We're working to expand access to home infusion and have made significant progress in rolling out this important option to patients. Our US-based one source case management team is actively engaged in assisting patients with logistics related to their preferred site of care. New digital outreach methods have enabled our field teams to seamlessly adjust to the current remote environment and continue making connections with clinical decision makers, and our teams are actively adopting best practices for virtual engagement. Slide 23 highlights Alexion's commercial portfolio both today and in the future with an emphasis on our growing critical care business. Almost all atypical HUS patient starts and a growing number of NMOSD patient starts occur in the hospital setting. We see this as a distinct advantage moving forward as we continue to plan for diversification of our business, including site of care diversification for our patients. With the news earlier this week of our proposed acquisition of Portola, we anticipate that our existing presence in critical care will allow us to support significantly increased utilization and accelerate adoption of Andexa. It's important to note that atypical HUS, NMOSD, and Andexa are only part of this growing portion of the business. Our Altamira's portfolio has the potential to include a number of more acute indications, including HSCT TMA, as well as complement-mediated TMA. Moving to slide 24, the proposed acquisition of Portola provides us with a unique opportunity to leverage our existing capabilities to deliver potential long-term growth. Andexa is a transformative medicine for these patients who would otherwise face devastating consequences, including a significant risk of mortality. Our core capabilities in enabling access provide us with the tools and know-how to unlock growth through access, pull-through, and institutional endorsement. In closing, I'd like to take a brief moment to thank our global commercial and operations organizations for their hard work and dedication, especially during this global crisis, which has allowed us to continue to bring hope to the rare disease patients we serve. I'll now turn the call back to Ludwig for closing comments. Ludwig?

Thank you, Brian. I'm very proud of what the team delivered in the first quarter of 2020. I echo Brian and want to thank all employees around the globe for their hard work. Similarly, we also want to thank our employees' families for their flexibility and support. We recognize the COVID-19 pandemic will have near-term and lasting impacts on the way we operate. However, I'm confident that despite these challenges, we will continue to deliver on our long-term strategy for value creation. Importantly, we maintain our unwavering focus on patients and our commitment to advance our mission to deliver life-changing therapies to people living with rare diseases. With that, we will now open up the call to questions. Operator?

Ladies and gentlemen, as a reminder, to ask a question, please press star then 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press the pound key. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Corey Kesselma from J.P. Morgan. Your line is open.

Hey, good morning, guys. Thank you for taking my questions. I wanted to start, can you provide some more granularity on what's driving the updated revenue guide in the context of patient conversion versus new patient starts. And in terms of the impact on new patient starts, are there indications that you think are better insulated in this environment? Are you seeing impact across the board?

Brian, you want to take that? Yeah, good morning, Corey. Thanks a lot for the question. And not at all surprising that that's the very first question. I think that's on all of our minds is, you know, where do we go from here and what are the dynamics here? I'd summarize it this way, that in the first quarter, as you saw, we saw relatively small impact on first quarter sales, and that's thanks to continued strong demand momentum, number one, and number two, the strength of the products, which we know resonate really well with both physicians as well as patients. Just to take a step back, and I mentioned this in the prepared comments, that we took proactive action stopping all of our field force activities, the in-person activities in early March, and I'm very proud we did that. It was with the mindset of the safety of our employees as well as the healthcare professionals. And so we simultaneously started shifting to virtual digital interaction with customers, number one. Secondly, as I also mentioned, we've pivoted and we have – quite a nice breadth of prescribers across the different indications. But in a virtual world, the emphasis over-indexes into depth. So we're really trying to focus on those who already have experience and deepen our penetration with those customers. I'll just note, and this is a really important step, that supply has been maintained. And our OneSource patient support program, they've done a great job just making sure that they're helping patients navigate the system. To your question about what are we seeing at the patient level, it's clear that new patient case volume is affected, and that's both from the patient's perspective as well as some of the sites of care have been, depending on whether or not they're a real hotspot in COVID, have been more limited in terms of ability to handle patient volume. So we've seen some impacts there. The other dynamic is time to initiation of therapy can also be affected, and we're in the early stages of being able to even properly assess what that looks like, but that's all been baked into our guidance and our outlook as best we can see. And then another big dimension that we monitor in our diseases because they're chronic is compliance and persistency. There's a few puts and takes, and it varies across different diseases as to which of those we think might be more impacted than others. For example, in GMG, it tends to be less acutely symptomatic if the patient were to slow therapy relative to something like PNH, where in PNH, we know that in the case of Solaris, at the end of the two-week interval, you know, the patient is at risk of feeling symptoms. So that's a clear advantage of the conversion to Altamiris, going to every eight-week infusion. And we're going to learn more each week, and we'll just continue to provide updates as we get more clarity. Hope that helps.

Thank you. As a reminder, ladies and gentlemen, we ask that you please limit yourself to one question so that we can get as many questions answered as possible. Our next question or comment comes from the line of Jeffrey Porges from SVB Lyric. Your line is up.

Thank you very much. So, again, a question on commercial. Could you, Brian, give us a little bit more color on the proportion of revenue in the U.S. and the proportion that's commercial and just talk about whether you're seeing any uptick in the demand for charitable care given the economic circumstances? Thanks.

Yeah, maybe, I don't know if, or Rhonda, do you want to comment on the mix? And then I'll just say that for Charitable care, I get no visibility to that. That's as meeting the commercial teams, that is outside of any of my decision-making or even visibility in that regard.

Yeah, so I'd say, as you know, about 55% of our business is in the U.S., and about 20% of that is sort of Medicare Part B. And we mentioned in our guidance that it does include you know, some assumptions around some of the shifts that may happen more to Medicaid from commercial payers given the rising unemployment rate. So we've taken some of that into account. When you look at our operating expenses, clearly there are some things that we're benefiting from. So, for example, lowered amount of, you know, travel and entertainment and Congresses, and we've on purpose delayed some of the non-staff expenses. Obviously, there's some R&D delays as well. But on the other side, we're making a number of investments. As Brian mentioned, on the digital side, we've also had an increase in sort of expanded access program, compassionate use programs, as well as the COVID study, the COVID ARDS study that John mentioned is also additional expense for this year. So, Those are some of the puts and takes on the expense side, and we're trying to do and manage those expenses the best we can without compromising sort of our corporate objectives around the 10 launches and the new world growth ambition.

So, Jeff, I'm going to put the two questions together. I think it's fair to say there are three key factors that are driving our new sales guidance. The first one, as Brian was saying, was the new patient starts that we believe is slowing down and a lower compliance, so that's one. Number two is we do see an accelerated ultramarine conversion, and you know that is a pricing headwind for us, although that is our strategy and we want this to happen, but it's a pricing headwind. And number three in the U.S., we anticipate that the pay mix will change and the Medicaid portion will increase because of higher employment rates. So these are the three factors that are driving our new sales guidance. So we'll take the next question.

Thank you. Our next question comes from the line of Chris Raymond from Piper Sandler. Your line is open.

Thanks. Just maybe going to the R&D plans, I was just looking through your queue, and it looks like... the plan for restarting your FCRN trials, I know you're talking about COVID impacts on trial suspensions, et cetera, but the FCRN trials looks like they're not starting until 2021. Can you maybe talk about what the gating factor is there? Is there something outside of COVID that's driving that pushback?

Thank you, Chris. This is John. First of all, I just want to reiterate our commitment to delivering on those 10 launches by 2023, and those programs are on track. We did say that there is an impact on some of the trials that are enrolling, to some extent we're predicting some delays in the ongoing study. The studies that have completed enrollment, like 1840 and SubQ, are on track to deliver on those milestones, as stated. With regard to FCRN, it's a combination of the impact of COVID-19 As you know, we started a healthy volunteer study with a sub-Q formulation in December. That program had to be paused in the first quarter because of the outbreak of COVID-19. And along with that, we have made a decision to transition from the IV formulation for hemolytic anemia to sub-Q because of the competitive landscape. The combination of those two things basically delay the reinitiation of both programs to the early part of 2021.

Thank you. Next question, please.

Thank you. Our next question comes from the line of Paul Matters from Stiefel. Your line is open.

Hey, great. Thank you so much for taking my question. Just one on AHOOS for Brian. Brian, historically, AHOOS has had kind of a more unique persistence dynamic and this kind of balance between chronic versus intermittent therapy. Are you seeing any change with that in the pandemic? And then in terms of new starts, the new starts stem from real medical emergencies and crises. Are you seeing fewer patients actually show up to the hospital with AHUS to get Saliris, or is that relatively stable? Thanks so much.

Yeah. Hey, Paul. Good morning. First, I'll just say with atypical HUS and the Altaneuris vaccine, Launch Pathway, which started at the end of last year, and just as a quick reminder, that was an early approval, so we were thrilled to get going on that launch following the success we've had with Altamira's PNH. I will qualify by saying that all of the indicators, and I know this will be a theme for discussion, is what are we seeing and hearing in the COVID world? It has error bars around it because we're all, as a world, we're learning together what this means But so far, qualitatively, I'm quite pleased with how we're doing in the U.S. with our Altamira satypical HUS launch. In fact, it is essentially on track with our 70% facilitated patient conversion ambition within two years, same ambition that we set for PNH. And you know that we actually moved the goalposts earlier for PNH, and we feel really good right now based on our progress there. at 67% in the U.S., Germany, and Japan. But with atypical HUS, it's proceeded well. I've not heard disproportionate qualitative comments around patients stopping therapy earlier or a profound impact on new patient starts. That's obviously one of the key areas that we'll continue to monitor. And the reason I hedge by giving specifics is because everyone knows HUS It really depends on geography and where patients are in the U.S. and whether or not it's a COVID hotspot. And even where it's a hotspot, those start to cool off and then other areas pick up. But all in all, thank goodness we have Altamiris. Thank goodness that physicians, patients, and payers all recognize the benefits and we're well on track with our launch.

Take the next question, please. Thank you. Our next question or comment comes from the line of Jeff Meacham from Bank of America. Your line is open.

Hey, guys. Thanks so much for the question. Brian, just to follow up on the COVID impact question, I was just curious if you see much in the way of stable patients taking a holiday or maybe extending the time between infusions. You mentioned some variance among indications, but just curious if there are lessons to be learned of what's worked and what's not worked across different geographies, and then Real quick, John, just with the ongoing phase three of ultramaricin COVID-19 patients, that's in process, but wondering if you could share any anecdotes from your own experience in patients. Thanks.

Yeah, good morning, Jeff. I'll start. So good question. And from patient holidays, again, we're kind of early days in the whole COVID dynamic. So that, from a temporal basis, will take some time to really monitor. It is one of the key things that we'll be looking at with persistency, and overall compliance. But I think for us, and all the elements that were baked into the guidance Lidwig and Aradna have highlighted, the key that we have already seen some impacts early on, maybe not surprising to anybody, is new patient case identification, number one. And then the second one is when a case is identified, the timeline that it takes from that case to initiation of therapy is what's on the more fragile edge of rare disease treatments from a compliance and persistency perspective as i mentioned or as you described it jeff drug holidays for patients we've not yet seen any kind of profound impact but again it is one of the places that we'll be monitoring and frankly doing our best through things like the one source patient support system to help patients get the right education, navigate through their therapy. If they had, for example, a disruption in site of care, you know, we don't guide where patients go, but the OneSource team does a fabulous job of helping the patients navigate through those kinds of dynamics.

And, Jeff, this is John with regard to your question on the Phase III study. First of all, I want to thank the R&D team and the broader cross-functional team for jumping on this really quickly. really finalizing a protocol and getting the study underway in two months' time. And this began with our evaluation of the scientific rationale and the preclinical evidence that there is a role for terminal complement in the mediating inflammation and perhaps thrombotic coagulopathy that exists in some of these patients and the potential to intervene with a C5 inhibitor. We have a capacity use program. that Ludwig mentioned, 100 patients treated, and through that experience have anecdotal evidence that is encouraging, although it's not controlled in any way, which underscores a need for us to proceed with a randomized controlled trial. And so that's underway imminently, and we're looking forward to getting results from that study.

Take the next question, please. Our next question or comment comes from the line of Mohit Bansal from Citigroup. Your line is open.

Great. Good morning, and thanks for taking my question. Hope everyone is staying safe out there. Regarding your new growth ambitions, just curious on how do you factor in the upcoming emergence of FCR and antibodies? What kind of risk do you see to your solar business due to that? And is it possible that franchise gets confined or a very sick patient population due to FCRN, especially subcures? Thank you.

Well, then go ahead. Oh, go ahead, Ludwig.

Sorry. No, no. You go first.

Yeah, maybe I'll start on that one because it really points towards you mentioned FCRN. And with neurology, obviously, we see that as a key growth opportunity. Looking back two and a half years now that we're in the launch, we did not exist in neurology two and a half years ago. We've already communicated multiple times, actually, that that has, in two and a half years, become the largest patient volume aspect of our business in the U.S. We supplemented the work that we've been doing with GMG last year with our NMOSD launch, and I think everyone knows that we put forward a pretty bold ambition at the start of this year saying we see an ambition pathway to getting to four times the patient volume that we have in the U.S. or that we ended in the U.S. in 2019 when we get to 2025. And that will be, I mean, just think of if we achieve 4X, how significant that will be for our business but certainly for patients. Now, with respect to... new potential competitive insurance, this is a pretty large patient volume arena in GMG, 60,000 to 80,000 patients in the U.S. And with Solaris, we operate on the severe side of that spectrum, 6,000 to 8,000 patients roughly. So that is, you could call it a niche, but it's not a small niche, actually, and it's one that is unique competitively, we believe. And then with Altamiris, thanks to the work that John and the R&D team are doing with the ongoing trial in GMG, we've opened up the aperture such that there's not a restriction as we had in the Solaris Regain trial for patients to have failed on immunosuppressive therapy. So we see that opportunity opening up from perhaps 6,000 to 8,000 patients to roughly 20,000 patients But again, that's all on the more moderate to severe side of the spectrum. The new entrants that we see potentially coming in will disrupt first-line therapies, immunosuppressive therapies, corticosteroids, things that frankly have been around so long and are unlabeled, they need to be disrupted. And then the question will be what happens when those fail, and that's where having a suite of Solaris and Altamiris we believe will be critically important with our neurology growth.

I don't have anything else to add to that, so we'll take the next question.

Our next question, a comment comes from the line of Phil Nadeau from Cowan & Company. Your line is open.

All right, thanks for taking my question, and congrats on the progress. Just one follow-up on COVID, then a pipeline question. On COVID, a number of other companies have noted a pull-forward of orders into Q1, particularly in ex-U.S. territories ahead of COVID. You didn't call anything out in your numbers. Did you see any pull forward of orders, particularly in Europe, where it looks like you had a bump in revenue? And then second, just on yesterday's acquisition in Indexa, there was a big change in utilization in Indexa in Q4. Based on our math, the revenue per stock hospital went from like $60,000 to $45,000, and that caused a lot of controversy among Portola shareholders. Do you have any understanding of what happened in Q4, and how would you plan to reinvigorate utilization once index is in your hands?

Thanks. Yeah, Rodney, do you want to start on the first one?

Yeah. So maybe on the first one, we didn't call out specifically, but we have seen some amount of inventory pull through. In the first quarter, it wasn't obviously a huge number, but we have seen some stocking in the first quarter, as you mentioned. In terms of the Portola acquisition, we mentioned yesterday, I think there's a lot of factors which maybe we think we can do a lot better on, and Brian's going to talk about them in a second. but a big factor of that needs to be is around access, and that's where we think we can play a really critical role. Brian, I don't know if you want to expand on sort of our commercial strategy and why this is such an excellent fit for us.

Yeah, I mean, thanks for the question, Phil. You know, I guess we could articulate what we had heard from Portola as they characterized the dynamics in the fourth quarter, and... A lot of that had to do with the fact that there was Gen 1 product still in the channel, and there was a return of that product, and then there was some continued demand dynamics as well that they spoke to. The levers that we believe will be critically important have to do with a combination of access, and for those who had dialed in for yesterday's discussion, You know, access is a critical element for any launch, particularly when you're talking about penetration of institutional settings. It's multidimensional. So one is you've got to make sure you've got product on hand for an acute condition like this immediately available. Two is that these are funded through DRG hospital payment dynamics, and there there are mechanisms like NTAP and awareness of NTAP as well as the implementation of that that coverage to help out with the gap in DRG payment. There's also the importance of society guidelines, which now there's 19 medical societies around the world that have supported the use of indexa. That's critically important. And then very recently, in March, there's new, very important health economics and outcomes data that's been published that shows a 57% reduction in 30-day all-cause mortality. So we will look to really make use of that as an access lever. But the other dynamics are you've got to have a key opinion leader as a champion who really endorses the product and the institution, and that becomes important when the moment of formulary protocol decisions are made. And then, of course, there's just underlying demand generation. So those three combined levers is where our focus will be.

So we take two more questions.

Our next question comes from the line of Robin Karnakis from SunTrust. Your line is open.

Hi, guys. Thanks for my question. I just want to touch on, you know, the high-dose patients that were on high-dose Solaris, more frequent Solaris. We've been hearing for a while now a lot of KOLs haven't switched those patients because they believe there wasn't specific data from the Ultimares trials, and they're high-revenue generating patients. Given COVID, are you seeing any – in general, prior to COVID, what percentage of those do you think had switched roughly? And has that changed? Have you seen an acceleration of switch to ultramarine in those patient populations, given the frequency they'd have to go in to see their doctor? Thanks.

Yeah, good morning, Robin. It's Brian again. Interesting question. And so we may not have the granularity that you're looking for for very specific patients and what dose that they were on. But I will say, and it is interesting with COVID, that there are many things that are real challenges, not just for our business, but for the whole industry. But for our product portfolio, it has been interesting that we've seen an acceleration, actually, in some of the hotspot areas of Altamiris conversions. And the reason for that may not be surprising to most, that you're moving from, Celeris every two-week infusion to Altamiris every eight weeks. And that is obviously great for the patients as a burden of drug delivery for them, but it's been really helpful for institutions that have infusion centers. And so it has been interesting that we started to see the green shoots of that kind of acceleration occur even in some of the more challenged parts of the country.

And, Robin, this is John. If I could just add... While the phase three program didn't specifically study patients who had to up titrate on Solaris into the program, we did have a very large, the largest that's ever been conducted, naive study with nearly 250 patients. And so if you estimate that 10% or maybe a little more than that of those would have required a higher dose of Solaris, we know that all of them were adequately controlled with complete sustained C5 suppression throughout the study. in the Altamiris-treated arm with no excursions above the threshold. So we're pretty confident that we've nailed the dose in the dosing regimen and that we have those patients covered. But, again, they would have been part of the study in the naive study covered with Altamiris.

Yes, we take our last question.

Our final question comes from the line of Matthew Harrison from Morgan Stanley. Your line is open.

Great. Good morning. Thanks for taking the question. I was hoping, and I know you've touched on some of the commercial dynamics, but could you just maybe provide in a little more detail what the impact is of slowing new patient starts versus, I guess, let's call it less persistence or people skipping or extending new doses, and then the impact of, you know, I guess a mixed shift to either more Medicare or, you know, less commercial patients? Thanks.

Yeah, Rodney, do you want me to start?

Yeah, go ahead.

Sure. So good morning, Matthew. There are a couple of dynamics that you've already – actually three that you highlighted. And so for compliance and persistency, we haven't quantified, but I will qualify, and this is perhaps easy math to do. When you talk about impacts on compliance, we're – we're really looking at the entire base of our patients. So if there were an impact, that is one that on a relative basis would play out more significantly for the business. And that's why that's a keen focus for us. I mean, it's a focus for us for the business, but it really is because these are rare diseases that need patients to stay on therapy. So we're doing all that we can appropriately to make sure that we're supporting them in that journey. For new patient starts, That's the growth side of the equation, and it's one that has a lag effect, obviously, when we would start to see that impact our business. So we have seen some impact on new patient starts, as I mentioned, as well as time to initiation on therapy. Aradna has spoken about how that's all been worked into our best awareness right now and guidance. There are error bars around that, of course, and we'll continue to monitor that. But I would say from the new patient start side, that is one that could be more of a 2Q, 3Q dynamic relative to compliance. Rodney, anything you wanted to add?

No, that's great.

Excellent. So just a couple of closing remarks. I think you all saw that we started the year with a very strong momentum, 27% sales growth. And I really want to thank all the election employees for their hard work. I'm very proud of all of you. COVID-19 is slowing us down. There's no question about that. But we still expect to grow for the year to go, and we plan to go back to steady state after that. As we discussed, our long-term ambition of double-digit revenue growth then launches by 2023, quadrupling our U.S. neurology footprint Those ambitions have not changed. So we believe we have a very strong, durable, sustainable business with a very strong strategy and very strong execution. So I want to thank all of you for dialing in. Have a great day, everybody, and stay safe.

So thanks, everybody. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.