Alexion Pharmaceuticals, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Alexion Pharmaceuticals' third quarter 2020 results conference call. At this time, all participant lines are in listen-only mode, so if you require operator assistance, please press star, then zero. 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 one. Please be advised that today's conference may be recorded. I'd now like to hand the conference over to your host today, Mr. Chris Devo, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning. Thank you for joining us on today's call to discuss Alexion's performance for the third quarter 2020. As has been our practice recently, we are practicing physical distancing and are each doing the call from home. Today's call will be led by... Ludwig will be joined by Rodney Serin, our Chief Financial Officer, John Orloff, our Global Head of R&D, and Brian Goff, our Chief Commercial and Global Operations Officer. We will begin the call with a brief presentation and will reserve the rest of the time for your questions. You can access the webcast slides that will be presented on this call and other earnings materials 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'll be using non-GAAP financial measures, which we believe provide useful information for the understanding of our ongoing business performance. Reconciliations 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 a substitute for, our GAAP results. Thank you. And with that, it's my pleasure to give you our CEO. Ludwig?

Thank you, Chris, and good morning, everyone. I'm pleased to share our third quarter performance today. COVID-19 continues to test the global community, healthcare systems, and families worldwide. Our ability to successfully navigate through this challenging time is a testament to the strength of our business and the resilience of our global organization. Alexion's patient-centric culture and focused rare disease infrastructure continues to shine in this new environment. I would like to thank our employees worldwide for their hard work and commitment to our mission of transforming the lives of people with rare diseases and devastating conditions. Despite the challenges posed by COVID-19, the election team has continued to deliver. Third quarter financial results were strong, with 26% revenue growth and 16% non-GAAP EPS growth year-over-year. As a result, we're increasing our full-year financial guidance to reflect the momentum of the business. We continue to progress our revised capital allocation strategy and are well on track to achieve our 2020 commitment to return capital to shareholders of $500 million. to $550 million in share repurchases this year. Our commercial execution remains resilient across the portfolio. With Ultramarys, we have now achieved our ambition of greater than 70% conversion across each of our top markets in P&H. We remain on track to achieve the same ambition in atypical HUS. Our first quarter with Indexa was strong. with integration efforts underway and approximately $39 million in sales within the quarter. We look forward to continuing to drive this momentum as the integration progresses. Finally, progress continues in our R&D portfolio. During the quarter, we received approval for the Ultramers 100 mg per ml high-concentration formulation in the U.S., and Ultramir's approval for atypical HUS in Japan. We continue to advance our pipeline, including near-completion of enrollment in our Phase III Ultramir's GMG trial and our partner Kalem's initiation of the Phase III Kalem 101 programs in AL amyloidosis. As we have shared before, we have a multi-year strategy for value creation against which we continue to execute. It is our ambition to continue to lead and expand in our C5 business. Ultramarist is now established as the market leader for P&H across our top markets, with atypical HUS on track to achieve a similar outcome within two years of launch. The expansion of our C5 business began with Neurology, which is now the largest franchise in the U.S. in terms of both revenues and patient volumes. We continue to build upon this success with additional Ultramers development programs and a third generation C5 inhibitor, 1720. Finally, diversify. As we shared earlier this month, we have significant opportunity in our Factor D and FCRN platforms and high value potential in our innovative assets such as Kalem 101 and 1840. Our acquisition of Portolia earlier this year has brought us Indexa, which allows us to expand upon our critical care presence to address this unmet need in the Factor 10a markets. Collectively, these three components will drive a sustainable and growing C5 business, while also driving new growth opportunities beyond. We have made great progress on our journey thus far, and have a strong foundation upon which to drive future growth. Finally, turning to slide eight, I'd like to reiterate some of the key messages from our investor day earlier this month. Over the last three years, we have transformed this company, establishing a strong foundation for sustainable long-term growth and delivering significant value for patients and shareholders. Driven by a long-term value creation strategy, we see sustainable growth ahead and a clear path to revenues of $9 to $10 billion by 2025 and continues best-in-class operating margins. Beyond this, we see even greater value within our current pipeline of more than $10 billion in peak sales potential. As a biotech company, Alexion is uniquely positioned within the industry with a unique set of rare disease-tailored capabilities. Over the next several years, we have a number of pivotal data readouts and an ambition for more than five novel IND filings by 2025. Anchored by three novel platforms and a number of promising individual assets, we have built a diversified development portfolio with the potential for seven blockbuster franchises to drive continued growth well into the future. Our commitment and ongoing success as a company comes down to the hard work done by our employees, and we'd like to thank our teams all over the world for their continued dedication. With that, I will now turn the call over to Radna to discuss our financial results.

Thank you, Ludwig. Starting with slide 10, we reported third quarter total revenues of approximately $1.6 billion, an increase of 26% year over year. We are pleased with the momentum we saw over the quarter, which was driven by strength in our neurology franchise, continued growth in the PNH, atypical HUS, and metabolic businesses, and our first quarter of indexer revenues. Operating margin strength continued in Q3 with non-GAAP operating margin of 56%. Non-GAAP EPS was $3.24, representing 16% growth year-over-year, driven primarily by strong top-line growth. Moving to slide 11, third-quarter total net product sales were primarily driven by volume growth across each of our medicines and key markets. Turning to slide 12, Solaris revenues in the third quarter were approximately $1 billion and $42 million. Year-over-year Solaris revenue was up 5% as growth in Solaris neurology indications was partially offset by conversions to Alzheimer's and PNH and atypical HUS. Alzheimer's revenue in the third quarter was $289 million, including contribution from the ongoing launches in atypical HUS. Recall we made the strategic decision to lower the annual cost per patient of Alzheimer's as compared to Solaris. Alzheimer's for atypical HUS represents a 30% lower annual cost per patient compared to Solaris during maintenance treatment which will carry through to future Altamira's indications that we are pursuing. Total C5 franchise revenues were $1.3 billion, an increase of 23% year-over-year. Metabolic revenues for the third quarter were $218 million, representing 19% growth versus prior year driven by volume. On the right side of the slide, we highlight INDECTA third quarter sales of 38.9 million, representing Alexion's first consolidation of these sales after the closing of the Portola acquisition. Performance in the quarter was driven by return of hospital demand and further benefited by some normalization of stocking activities. Turning to the P&L on slide 14, During the quarter, non-GAAP R&D expense was $269 million, or 17% of revenues. Non-GAAP SG&A expense was $301 million, or 19% of revenues. The non-GAAP effective tax rate in the quarter was approximately 16%. Non-GAAP third quarter EPS was $3.24, growing 16% year over year. Gap earnings per share was $2.62. We ended the third quarter with approximately 2.3 billion in cash and marketable securities and repurchased approximately 0.6 million shares at a cost of 74 million during the third quarter of 2020. As of the end of the quarter, we have repurchased 434 million in shares in 2020 leaving us well within sight of our target of $500 to $550 million for the year. Free cash flow in the third quarter was approximately $812 million, bringing us to $2.1 billion year-to-date. Now, moving to slide 15, I'd like to provide an update to our 2020 full-year guidance. As we shared at our Investor Day earlier this month, we are increasing our guidance And this update reflects revenues between $5.9 billion to $5.95 billion for the full year, which is $350 million above our prior guidance and reflects 19% growth year-over-year at the midpoint. In terms of product revenue, updated guidance for Solaris and Ultimaris is $5 billion to $5.35 billion. Guidance for our metabolic business is now $835 million to $845 million, and we expect indexed revenues to be $65 to $70 million in the second half of 2020. This revised guidance reflects the continued strength we have seen in the business and our fourth quarter outlook, including compliance rates continue to be strong across indications and slightly above expectations, Continued strong conversion to Altimeris and the corresponding price headwinds that conversion implies, and increased demand for Indexa. In addition to the above, to help you understand the quarter-on-quarter sales that are implied by our full-year guidance, I would also note the following. Our new patient initiation queue build has slowed compared to pre-pandemic levels. We have not yet seen a material impact to U.S. pair mix to date, but we continue to monitor. Fourth quarter guidance reflects approximately $70 million less of forecasted tender market and certain international revenue versus third quarter 2020. Finally, we continue to deliver best-in-class operating margins driven by top-line strengths. Non-GAAP operating margin is expected to be between 54.5% and 55.5% of revenue. Non-GAAP R&D expense is expected to be between 16% and 17% of revenue as we continue to invest in our growing development portfolio. Non-GAAP SG&A spend is expected to be 19.5% to 20.5% of revenues. GAAP EPS is expected to be between $1.78 and $2.13. Non-GAAP EPS is expected to be between $11.70 and $12. As previously discussed, we continue to monitor the impact of the following as the COVID-19 situation evolves globally, including access to medical care around the world, compliance rates across our indications, Q of new patient starts, and U.S. payer mix given fluctuating unemployment rates. On slide 16, we have a view of our quarterly revenues, including the implied revenue for fourth quarter based on the midpoint of our updated 2020 guidance. Fourth quarter guidance reflects approximately $70 million less of forecasted tender market and certain international revenue, versus third quarter of 2020. We expect year-over-year growth for the fourth quarter to be 4%, while full-year growth is expected to be 19%. With that, I will now turn the call over to John to provide an update on our R&D activities.

Thank you, Aradhana. Starting on slide 18, you can see our robust clinical stage pipeline. As we shared on our investor day earlier in October, we have made tremendous progress thus far in 2020 on our breadth of development. The 20-plus clinical programs we have planned today support our ambition for seven potential blockbuster franchises, expanding our existing presence in hematology, nephrology, metabolics, neurology, and acute care, and also aim to support our entrance into new areas such as cardiology and ophthalmology. We continue to advance our C5 platform with an emphasis on reaching even more rare disease patients This includes numerous ongoing late stage programs with Altamiris and two newly announced indications we plan to pursue with ALXN1720, our third generation C5 inhibitor. We will be taking 1720 forward initially to expand our presence in neuromuscular diseases with both GMG and dermatomyositis and expect to share top line data from the recently reinitiated phase one healthy volunteer study in the first half of next year. We also continue to make great strides in diversifying our portfolio and expanding our pipeline outside of C5 therapies. Earlier this month, we provided an update on our innovative Factor D platform, including plans to advance ALXN 2040 into geographic atrophy. We are excited about this program given the proof of concept that has already been established with complement inhibition, as well as a number of properties which we believe make this asset well-suited for ophthalmology. We also see the potential for an oral dosing regimen to have huge advantages over intravitreal injections, both in terms of patient preference and in the ability to treat both eyes simultaneously with a systemic approach. We look forward to initiating this phase two program in the second half of next year. Now turning to slide 19, we remain committed to our ambition for 10 launches by 2023. You can see here the current programs that we view as likely to launch within that window with the potential opportunity each presents. The once weekly Altamira subcutaneous program for PNH and atypical HUS remains on track for filing in the third quarter of next year. We are also expanding our Altamira's portfolio with additional neurology and nephrology programs. I am pleased to share that our Altamira's GMG trial has achieved greater than 90% enrollment, and we have closed the screening process for patients globally. The NMOSD-Altamiris trial continues to progress and has achieved greater than 50% enrollment, and our ALS program also continues to enroll. Both the HSCT-TMA and complement-mediated TMA trials remain on track to initiate later this year and in the first half of next year, respectively. The Phase III program in Japan for Guillain-Barré syndrome with Saliris remains on track to initiate in the first half of 2021. Building on this foundation, we see opportunity to diversify beyond C5 with four additional late stage novel assets currently in scope. We have initiated and look forward to progressing the enrollment of the phase three portion of the pivotal program of CAEL 101, given the high unmet need of these patients with AL amyloidosis. We also remain on track to initiate a phase three program with AG10 or ALXN 2060 in ATTR cardiomyopathy by the end of this year in Japan, rounding out our current cardiology programs. We continue to plan for Phase III data in the first half of next year for our Phase III superiority trial of ALXM1840 and Wilson disease. 1840 has the potential to be a transformative new standard of care in Wilson disease with its rapid onset of action, profound copper clearance properties, and convenient once-daily oral dosing. As shared during our investor day, We are excited by the potential to redefine the treatment goals for Wilson disease by shifting from a focus on blood copper levels to a total body de-coppering approach. We continue to make progress here and look forward to sharing more in the future. Finally, the ALXM 2040 PNH add-on therapy program remains on track to begin phase three development by the end of this year. We are confident that our robust pipeline and innovative R&D capabilities will support our ambition to significantly expand the number of patients we serve. Turning now to slide 20 to discuss progress made thus far in 2020 and key upcoming R&D milestones. Altimeris continued to expand its reach in Q3 with approval for atypical HUS in Japan. We also received approval in the U.S. and a positive CHMP opinion in Europe for the Altimeris 100 mg per ml high concentration formulation. Before the end of 2020, We expect an additional four clinical programs to initiate and two INDs to be filed, with ALXN 1820 expected soon. Finally, we are looking forward to multiple potential value-creating inflection points over the next 12 months. Building on our leadership and complement and diversifying beyond C5, 2021 will be an exciting year for Alexion. We expect top-line data readouts in a number of key programs, including the 1840 Wilson Disease Study in the first half, and Altamiris GMG study in the second half. With that, I'll now turn the call over to Brian to provide commercial highlights from the quarter. Brian?

Thank you, John. Turning first to slide 22. Within the third quarter, PNH in Germany reached over 70 percent conversion of Celiris patients to Altamiris, rounding out our top three markets to have achieved this Altamiris launch ambition, collectively making up roughly two-thirds of our global revenues All three countries have established a new best-in-class standard by achieving this conversion in less than 18 months, well ahead of our initial two-year ambition. This speaks to the value Altamira's brings to patients and our team's excellent expertise and execution capabilities. Our Altamira's journey continues as we remain on track to achieve a similar ambition of 70% conversion within two years for atypical HUS. As John mentioned earlier, we received regulatory approval for atypical HUS in Japan in September, and the local team is quickly progressing with launch activities. We continue to innovate for patients to attempt to improve their holistic treatment experience. We're making progress with the launch of the 100 milligram per milliliter higher concentration of Altamiris in the U.S., reducing the average annual infusion time by approximately 60% for patients. And we look forward to expanding the Altamiris franchise with a potential once-weekly subcutaneous formulation with the goal to provide an alternative choice to patients who prefer to self-administer. Turning to neurology on slide 23, within the third quarter, our US team added 111 new patients for a total of 2,452 US GMG and NMOSD patients on Solaris. Since setting the ambition earlier this year to quadruple the number of US neurology patients by 2025, we've continued to drive growth despite the challenges posed by COVID-19. Solaris' strong value proposition in both GMG and NMOSD as well as the resilience of the commercial team makes this possible. While new patient additions have slowed from pre-COVID levels, we do continue to see balanced growth across both indications, and our teams are focused on continuing to pivot to new ways of working in light of the pandemic. Specifically, we continue to improve our virtual effectiveness to support communications efforts with stakeholders across the healthcare ecosystem. And given the strong value proposition of Solaris, we continue to focus on driving depth of adoption with physicians who are experienced with the benefits of Solaris for both GMG and NMOSD patients. We're also implementing artificial intelligence-aided targeting to identify high-potential new prescribers more efficiently with the ambition to drive prescribing breadth. Finally, our OneSource organization in the US provides trusted and consistent support services for patients. In rare diseases, it often takes some time for a patient to initiate treatment once they're identified, and OneSource helps support patients throughout that journey. In addition to navigating reimbursement, OneSource helps facilitate sharing infusion site information with HCPs and patients. And increasingly, many of our neurology patients have taken advantage of at-home infusion availability. Our ambition for neurology is one of our key value creation drivers, and we remain confident in its long-term growth trajectory. We continue to be pleased with the progress we're making with NMOSD despite new insurance. Solaris offers an incredible efficacy and safety profile for patients who risk facing devastating consequences from each and every relapse. We also continue to see Altamiris in GMG as a potential key contributor to our long-term growth. Once available, we see a path forward for expanding the addressable population we serve with Altamiris with the Phase III trial enrolling patients regardless of their prior treatment regimen. Given the great progress John's team has made with enrollment, we anticipate a potential U.S. launch for Altamiris and GMG in the second half of 2022. And we expect to ultimately expand our unique target market to approximately 20,000 patients with the opportunity to move earlier in the patient journey. We see this goal as achievable even as new products come to market. Given the large number of GMG patients in the U.S. and the remaining unmet needs many of these patients face, we believe new entrants have the possibility to expand the overall treated patient population and to facilitate disruption of earlier line, often cyclical treatment regimens. So while we're seeing a slowdown in new patient ads over the past two quarters, we're confident in the path forward as we continue to navigate COVID-19, evolve and innovate a growing new set of capabilities, and build on our foundation in neurology over the years to come. Turning to slide 24, this was the first quarter we had Indexa fully in-house, and integration efforts are well underway. As you heard from Ludwig and Aradna, we saw strong performance from Andexa in the U.S., even when excluding the impact from some one-timers. For the first time this year, we saw demand return consistent with pre-COVID levels as access to medical care has reopened more broadly and people have started to return to more active lifestyles. Outside of the U.S., we also achieved a significant milestone by securing reimbursement in the U.K. for GI-related bleed. we're continuing our pursuit of UK reimbursement expansion to intracranial hemorrhages as well as reimbursement in Germany. While we're very pleased with our index of progress in just a few short months and the stabilization seen in sales for the quarter, we still have a ways to go in order to maximize the opportunity in line with our ambitions. As we've discussed previously, we plan to refocus the allocation of commercial resources to shift to a multifaceted hospital system approach. We've started this process and will continue to make inroads on hiring and onboarding over the coming months. To execute on this approach in hospitals, we plan to optimize both new and existing top-tier accounts. First, we'll work to achieve formulary status within DEXA and its inclusion in bleeding protocols. And we'll also educate to facilitate having Andexa built into the EMR systems and to complete a drug use review. This way, when a physician intends to use Andexa, the necessary steps are already in place from an economic standpoint to access the drug seamlessly. Secondly, we'll partner with institutions to raise awareness and build advocacy for Andexa. We'll work to identify clinical champions that understand the strong clinical value proposition of Andexa and appreciate its health economic value, all with the goal to ensure stakeholders throughout the hospital are aware of and willing to use Andexa when a factor Xa patient is suffering from a major bleed. Finally, we'll continue the efforts initiated by Portola to ensure demand is created and HCPs choose to use Andexa at the time of need. We'll focus on education in both network and affiliated centers to ensure broad pull-through. Expanded cross-functional teams are already deployed against many of these target accounts, and more will follow as we make progress in fully deploying our new mix of field-facing teams and enhanced capabilities. And to drive even longer-term growth with Indexa, we believe that geographic and label expansion are both key to success. Plans are underway to seek access and reimbursement in new markets, and our clinical team is working on development plans to pursue a broader label. As you heard on our investor day, we see Indexa as one of the key drivers of Alexion's midterm growth potentials. And each of these pieces are essential to deliver the full value of Indexa. While this will take some time to fully execute, I'm incredibly pleased with the progress the teams have made in just the first quarter alone, and I look forward to sharing more updates with you on future calls. So with that, I'd now like to hand it over to Ludwig for closing comments. Ludwig?

Thank you, Brian. In the third quarter, we continue to build on the momentum of the last few years remain focused on executing against our value creation strategy and believe in our trajectory towards future growth. As we have shared, with our focused rare disease expertise, we have the team and the resources to deliver on the promise of our broad and diverse pipeline and to be the leader in rare disease. We see continued double-digit revenue growth in our portfolio, and we believe we have a clear path to $9 to $10 billion in revenue by 2025. There is vast potential in our pipeline, which is anchored by three novel platforms and several novel assets, of which we believe will allow us to significantly grow the number of patients of rare diseases we serve. We anticipate multiple pivotal readouts for some of these key programs over the next 12 plus months. I'm very proud of the progress the entire election team has made over the last several years, and I'm confident that our continued momentum will drive long-term value. With that, we will now open the call to questions. Operator?

Ladies and gentlemen, if you'd like to ask a question at this time, please press the star, then the number one key on your touch-tone telephone. To withdraw your question, press the pound key. Our first question comes from Josh Shimmer with Evercore ISI. Your line is now open.

The question's great, Corder. A couple of COVID-related questions, if I may. For the Phase 3 study of Ultimaris, can you provide an enrollment status update, and are there going to be any interim looks in that trial? And as we think about The answer to that question and timing for the data, how are you thinking about a potential effect of these new waves that are extending throughout the globe as it may impact Q4 and into 2021? And then also relatedly, is there any reason to think that the third quarter was benefiting from some pent-up demand from some of the lockdowns that slowed adoption in the second quarter and first quarter?

Thank you. Hi, Josh. It's John here. I can take the first question on the clinical program. As you know, there's growing evidence for the involvement of complement in severe program pneumonia, both on the inflammatory side as well as the cryo-opathy these patients experience. Because of the pandemic, you know, the slowdown over the summer, the enrollment fell behind a little bit. It's picking up now because we have growing activity with second wave surges in the US as well as France and the UK. So we've seen an uptick in enrollment. We're over 30% enrolled now. We do plan to have an interim analysis after a certain number of patients have completed, likely in the first part of 2021.

Thanks, John. I'll take the second question. We are obviously seeing some impact from COVID. I wouldn't necessarily say that the third quarter was driven by pent-up demand, though we did see some orders, as we mentioned, particularly in tender markets and certain international markets that were forecasted in fourth quarter come in the third quarter. If you look at our guidance for the fourth quarter, for the full year, we are definitely taking into account not only sort of the selling days and the Altamira's price headwind, but additional COVID waves are a field force in many countries and in the U.S. also remains sort of working remotely, and we have seen the slowdown in, for example, the neurology patient that we mentioned. So we are taking that into account.

Yeah, I'll just jump in too, Josh. This is Brian. And as it relates to this kind of bolus effect or surge that could happen when COVID slows down, As Arad has said, I don't think we're seeing that, certainly not in the U.S., because there's been so much regional variation that's just continued throughout. And one supportive point that's interesting in the third quarter is that medical claims actually in the U.S. for GMG patients have been down about 20% overall. So even the impact that we've seen is not just Solaris patients alone. It's really for the overall utilization. However, On the converse, interestingly, we had a kind of experiment, I guess you could call it, in Germany where, as you know, third quarter for Europe was in a different state in key geographies relative to the U.S. So in the third quarter, Germany actually in neurology, though we didn't give the specific numbers, had very nice pop growth in both NMOSD as well as GMG. And so we look at that as that could be one example of the fact that first evidence that patients may queue up during the COVID shutdowns, and then what you have is when things cool off, you can have a higher volume during the decline period. So that's one example in Germany. We haven't yet seen that in the U.S., but, of course, we'll be monitoring. I think the more important part of the whole equation is that as I had mentioned in my comments, we're focused intensively on capabilities that we believe we're going to need with or without COVID, you know, for the future state. And that's virtual promotional effectiveness, really healthy mix of in-person as well as virtual. Secondly, we are pretty excited about the artificial intelligence guided healthcare practitioner targeting efficiency. And that's really intended to help us out with breadth of prescribing and We have the OneSource team, of course, with very strong patient support, particularly in the U.S. And then the thing I'm most proudest of is that in neurology, we've got a team now that is highly experienced in both GMG as well as NMOSD with three years and counting experience. And so those are the areas that we're going to lean on as we go forward. Okay, operator, we'll take the next question.

Our next question comes from Corey Kasimov with JP Morgan. Your line is now open.

Any questions? Two of them for you. I guess the first one is kind of to follow up on what Brian was just talking about in the commercial front as it relates to geographic mix, where U.S. solaris growth remained strong, but the third quarter nine-month sales were down year over year in Europe and Asia Pacific. So I'm wondering if you can kind of go into some more color on that dynamic. You were just talking about tailwinds in Germany, but kind of broadly speaking, What are we seeing there, and how should we be thinking about potential inflections going forward? And then the second question is, just wanted to ask about the rationale for taking ALXN 2040 into GA versus your next-gen asset, and maybe you can provide some clarity on timing for 2050 and the incremental benefit you could expect there over the first-gen molecule. Thanks a lot.

Yeah, Arad, do you want to start with the moving parts financially, and then I can speak to – some of the geographic differences?

Sure. So if we talk about the third quarter, you can see that we obviously had a very, very strong third quarter. And some of it was clearly because of different regions. As I mentioned, there was some pull through in the third quarter from some international markets and rest of world markets. We are seeing strong growth in Japan. Though going forward, again, our neurology business is growing strongly in Japan, though we may have more effect from, for example, competitor trials there and so forth. I would say other regions, the U.S. continues to be strong with the exception of neurology, which, as we mentioned, the new patient ads are slowing down and increasing. And in international, we won't see the $70 million sort of one-time, I would say, or what's forecast in the fourth quarter happening in the third quarter. We won't really see that repeat again in the fourth quarter. So those are some of the moving pieces we're forecasting.

Yeah, and Corey, I would just – this is Brian again. I would just reflect back on the comments I was giving to Josh that You guys know that U.S., Germany, Japan is about two-thirds of our revenue. So just to keep it simple, those three countries are really what we continue to monitor, particularly with the COVID impacts. And what was interesting in the third quarter is the U.S., as I mentioned, was, as everyone knows, was still in very much a hot zone in most of the regions throughout the U.S. Germany had a cooling-off period. Japan was probably – in the best position in the third quarter. And as Aradna said, we actually are really pleased with the way things have continued in Japan, though I think it's fair to say it's not opened up in the traditional sense as it was pre-COVID. And so what we continue to monitor is, again, making sure that we've got the capabilities in place to be successful with or without COVID. I will also just say, keep in mind, the fact that we've added 111 patients for GMG while that's an admitted slowdown, this is easily the most intense, you know, headwind period we could have imagined in terms of the COVID dynamics. So we are, I must say, pleased, certainly in the short term, with the fact that we've continued to grow, and we definitely have the same remaining persistent ambition with 4X neurology growth in the U.S. in the longer term. John, do you want to talk about it?

Sorry, one other thing I forgot to mention is regarding the Altamira's price headwind. That, you know, given we've now achieved, you know, 70% conversion in our major markets and we're, you know, on our way in terms of conversion for atypical HUS, there's the Altamira's price headwind as well. Sorry, John, you want to comment on 2040 for GA?

Yeah, sure. So, Corey, you're right. The pharmacokinetics and the pharmacodynamics of 2050 when delivered systemically are better than danicopin. However, in our preclinical experiments using a rabid model of geographic atrophy, we found that 2040 is actually has a high affinity for melanin in the back of the eye where it's concentrated and essentially allows for a prolonged distribution to the retina, which is very important in treating geographic atrophy since the disease starts with the choroid and the retinal pigment epithelium, which provides nutritional support to the photoreceptors. And so based on that model, we predict that 2040, despite its inferior systemic pharmacokinetics, can be delivered to the eye with a low dosing frequency such that it could support acute A dosing in humans. And so that's why we're taking 2040 based on that rabbit model. We don't have similar preclinical data for 2050. In contrast, 2050, as we've announced, is going into PNH as monotherapy. That study is ongoing right now, Phase 2, and we should have data in the middle of next year for that. The Phase 3 program for Danicopia in 2040 will be starting this quarter.

Operator, we'll take the next question.

Our next question comes from Jeffrey Porges with SDB Layering. Your line is now open.

A couple of questions on sub-Q Altamiris. I'm wondering, John, if you can just confirm that the point estimate is better than 0.9 and that the confidence intervals are not particularly wide. And secondly, as you think about sub-Q Altamiris, will that expand your penetration of any of your treatments in any of the major indications. And then lastly, do you intend to study sub-Q in MG and NMO? And could you just comment, sorry, on the patent life? Is there a patent extension opportunity with sub-Q? Sorry for all the questions on the program.

So, Jeff, with regard to the top-line data that we shared in the spring, yes, we have achieved very strict non-inferiority criteria In fact, the lower bounds are well above the margins, so there's no issue there. Very strong data, and we agreed to the criteria with the regulatory agencies, so we're on solid ground there. As you know, we're generating additional safety and drug-device combination data, which would position us for filing in the third quarter of next year. We do plan to attempt to extrapolate the data from this program, which is being conducted in patients with PNH. The regulatory agencies both in the U.S. and the EU have granted us the extrapolation to atypical HUS. We're in conversations now to see whether the same data set can support a sub-Q filing in myasthenia gravis and NMO.

Yeah, and Jeffrey, this is Brian again. Maybe I'll just add on your question about sub-Q and whether or not it expands the market. We certainly see that potential because there are a cohort of patients where sub-Q will be the way that they want to receive therapy, more home-based therapy. That said, we don't see this as another sort of massive conversion going from Altamiris every two months, which is incredibly meaningful for patients to have that kind of minimal invasion in their life while they're managing a rare disease. over to SubQ once weekly, but we do think it's a very important addition of optionality for patients to have.

Operator, we'll take the next question.

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

Just two questions. I know you talked from a previous question around the development of Altamiris in COVID-19, but we've kind of heard some chatter around off-label use happening now with Soliris in hospitalized COVID-19 patients. I wonder if you could maybe talk sort of qualitatively about any sort of measurable level of use of Soliris off-label in these patients that you might be seeing, you know, regardless of geography. And then I think, Brian, I think I heard you talk about balanced growth across both neurology indications for Solaris. But then I think I heard you say the 111 U.S. neurology ads were GMG. Could you just sort of clarify that? What's the mix between NMO and GMG? Thanks.

So, Chris, this is John. I'll take the first question. Yes, we do have experience with Solaris and COVID-19. Earlier in the pandemic, we had compassionate use and expanded access program in France, and it was used in Italy as well. There was a case series published by Professor Diurno with five patients that showed benefit of a Solaris in those patients. But again, it's uncontrolled data. There were also some experience in France as well as in the UK with C5 inhibition suggesting that there's a potential benefit But we won't know until we actually have carefully controlled data. Our COVID-19 305 study, as I said, is enrolling, and we should have interim data in the first part of 2021. There is strong scientific rationale for blocking terminal complement supported by recent publications where the dual mechanisms of inflammation and MAC deposition along with the activation of the coagulation cascade, which is clearly interlinked with complement positions of C5 inhibition for success. There have been other anti-inflammatories that have been not successful, as you've seen some of the data. We believe we're upstream of that cytokine storm, and that many of the downstream mediators can be blocked by blocking C5.

And, Chris, just picking up on the second part of your question, and it may have been misinterpreted, when I referred to the adding 111 patients in the U.S. for neurology, that's a combination of GMG and NMOSD. The point I was trying to make is that we have balanced growth with both of those indications, and we didn't split out exactly how that breaks down. But there are obviously very different disease states. In the case of GMG, There is more promotional sensitivity as far as we can tell, and it might be because GMG tends to be, I'll put quotes around it, a little more forgiving for patients than the intensity of a relapse associated with NMOSD. So what we see is in the U.S., as I've mentioned, the claims for GMG have been down, you know, not including Solaris, just overall about 20%. NMOSD, when a patient relapses, they need treatment, and we do see that continued progress that we're making. And the other point I'll just make is it's important for this quarter to note that we've had no observable competitive impact with NMOSD to date. Okay, we'll take the next question.

Our next question comes from the line of Phil Nadeau with Cowan & Company. Your line is now open.

Good morning. Congratulations on the quarter. Two related questions for me. First, as we do think about another COVID wave, what is the most recent data that you have on the proportion of your patients across indications that are getting at-home infusions? Has that, in fact, increased over the last six or nine months? And then second, Brian, just to follow up on a point you just made, in your comments about Germany, it sounded like there was some warehousing of patients during COVID that and there was a bolus once COVID subsided a bit. In the answer to the last question, though, it sounded like you also suggested maybe some GMG patients just simply go away if they don't go on therapy immediately because there's promotional sensitivity and it's a more forgiving disease. So I guess I'm trying to square those two comments. What do you think will happen in the U.S. once COVID subsides? Will we see a bolus where it has patients, particularly in neurology, or is there likely to be some proportion of patients who aren't starting now, who for whatever reason will never ever go on to C5 therapy?

Thanks. Yeah, good morning, Phil. Good questions. On the first one with home infusion, it's a relatively small part of overall utilization. That said, we do see some growth. And part of that is the growth that you would expect naturally motivated by COVID burden of access to hospitals and fusion center dynamics. and we're doing what we can appropriately to make sure that, you know, that we make that available to patients as much as possible. Secondly, on Germany and the dynamics around GMG neurology, I would not characterize it as patients, quote, go away with GMG. I think what you're seeing is a refasing of treatment, because a lot of patients in this era are likely managed on GMG, You know, the typical high-dose corticosteroids where doctors can kind of do that remotely without a lot of intensive therapeutic education, talking a patient through complement therapy and the like. But the GMG, of course, doesn't go away. So I think what we saw in Germany is that you saw a case of patients being managed during the intensity of COVID-19. And then when COVID relaxed, patients came in, the doctors had those appropriate educational discussions around complement, and we saw really nice progress with patients being converted to Solaris therapy. So it's very tough to say from where we sit right now about the puts and takes on the timing on when that happens. But I think overall, we take that as a very encouraging sign about the strength, first of all, of complement as a key part of the underlying pathophysiology. And secondly, just the resilience of the unmet need that's out there and the fact that when you have different geographies that move into different phases of COVID, that we expect that there will be continued growth with Solaris. And eventually, when we get to that point with Altamiris as well, as I had mentioned. Okay, we'll take our next question.

Our next question comes from the line of Mohit Bansal with Citigroup. Your line is now open.

Great, thanks for taking my question. A couple of questions, if I may, please. So one on index, it seems like the guidance is still fairly conservative considering the 3Q sales of $39 million. Could you talk a little bit about that? And the other one is actually on sub-Q altomerase. Since you mentioned MG patients are relatively sensitive to promotion, is there a possibility sub-Q altomerase could expand or maybe have more utilization in MG patients, given that their relative age compared to other diseases, as well as disease state, and also competing against future competition that could be subdued in FCRN space as well. Would love to get your thoughts here. Thank you.

Yeah, good morning, Mohit. I'll start with Indexa, just in the order that you asked. And first, I would just remind everyone that This is our first full quarter of having Andexa because the deal closed the beginning of July. So we are really pleased with the progress we're making on integrating the Portola team. We're thrilled to have these colleagues on board. We've got a lot of really healthy mix now of people who, came from our organization already who have critical care, acute care experience. And now we've got all the expertise that came with the Portola team. So what we're focused on near term is rebalancing efforts. And I've talked a number of times about the best way to think of the opportunity with indexing is it's a three part story. So first is ensuring that we've got really good awareness and really good advocacy with clinical champions. That's critically important in the complex institutions that we're focused on to make sure that you've got bleed protocols in place, formulary acceptance, and ultimately demand generation, which is the second pillar. But the third is about access, and that's a two-part story. It's physical access, making sure the product is on site, as well as economic access, and that continues to get strengthened as time goes on. So when we look at quarter to quarter, I would not over-extrapolate what we have in this quarter, or frankly, even the next quarter. These repowered, rebalanced mobilizations that we're doing will take time to pull through. And that really is the story within Indexa. It's a long-term value creation story that we're so excited about. And by the way, the second one, which was similar to the question that Jeffrey Porges asked on Altamira SubQ, As I mentioned, we do believe emphatically that's an important offering to build out more of a portfolio of choices that are Altamira-based for patients. So I do think there's a potential to grow the market. I also think that there may be patients that say that for their home-based treatment that that's the best option, subcutaneous, and perhaps not once every two months, which for the majority of patients we believe will be the key profile that they'll want.

And to that end, in addition to developing Altamiris and Myasthenia gravis that I just mentioned a moment ago, we are pursuing our third-generation C5 inhibitor, 1720, which is finishing its Phase I study shortly. We'll be moving into Myasthenia gravis with 1720, and that's a small-volume subcutaneous administration that's ideally suited for autoinjector. In addition to that, we have our own FCRN program, which has been rebooted, going back into healthy volunteers to generate data in the first part of 2021 with the plans to move into myasthenia gravis in the second half of next year. So we do believe that having a sub-Q offering is a good option for patients with MG in addition to those that they already have.

Okay, operator, we'll take our last question.

Our last question comes from the line of Jeff Meacham with Bank of America. Your line is now open.

Good morning, guys. Thanks for the question, and congrats on a good quarter. I just have two, and they're probably for Brian. So in P&H, the 30% of patients that haven't switched to Ultimaris, does that inform your view of the switching dynamic, let's say in a few years when multiple competitors are theoretically on the market, just trying to get a sense for the stickiness of that population? And then in the three major commercial countries you've highlighted, so Germany, U.S., Japan, should COVID persist longer in the 2021? Are there some new strategies that you've implemented today to help with new patient ads? It does seem like maintaining stable patients is more straightforward, but new ads is a little bit more of a dynamic process. Thank you.

Yeah, good morning, Jeff. And thanks for the kudos on the quarter. We are very pleased with the progress we've made in a very challenging period So on the question about the 30% that, well, roughly 30%, let's say, that have not converted to Altamiris, for PNH especially, that's more a story about there's a long tail of PNH prescribing. So a lot of the conversions that we've achieved at this stage are doctors who may have more than one PNH patient. Then you've got a long tail, but it just takes time. to get everything in sync with the education of the doctors so they're aware of Altamiris. The doctor then educating the patient about all the benefits of the efficacy that they've had with Solaris plus every two months opportunity, which is less burdensome for them. And we figure that that's going to take us some continued months, we have plenty of time to help the patient navigate through that journey, but I wouldn't necessarily over extrapolate that into all the other future indications that we're pursuing with Altamiris. By the time we get there, we believe the awareness of Altamiris, all the benefits that the community will be aware of will be well established. And with respect to COVID oriented new strategies to be successful in that continued era, Yeah, definitely. And as I had mentioned, we're mobilizing a lot more virtual promotional effectiveness, technology-based training of our teams. I think even without our efforts, customers on the receiving end are becoming more oriented to that form of engagement. And then just as one of many examples that I've cited openly, the artificial intelligence claims-based HCP targeting that we're doing is much more efficient than deploying our teams and having them try to go out and find clinicians who might be high potential to treat rare disease patients. So that's just one of many examples that we're putting in place. Thanks, Brian, and thanks to all presenters.

We're at the top of the hour. So we had another strong quarter. I really want to thank all my election colleagues, again, for their hard work. And needless to say that this team has been delivering quarter after quarter, and we plan to continue to do so. So thanks to all of you for dialing in, and enjoy the rest of your day. Thanks, everybody.

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.