Amryt Pharma plc

Thank you, operator. On the call today to discuss AMRIT's Q2 results are Dr. Joe Wiley, CEO, and Rory Nealon, the company's CFO and COO. In addition, Dr. Mark Summary, AMRIT's Chief Medical Officer, and Sheila Frame, President Americas, will be available to answer questions during the Q&A session. Joe will provide an update on the business, and then Rory will go through the financials in detail. Before I hand it over to Joe for his formal remarks, let me remind you that this webcast and conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict and which may be outside of the company's control including among other things the development of its business the trends in its operating industry changing economic financial or other market conditions in light of these risks uncertainties and assumptions the events or circumstances referred to in the forward-looking statements may differ materially from those indicated in these statements words that express and reflect optimism satisfaction with current progress prospects or projections as well as words such as believes, intends, estimates, expects, plans, projects, anticipates, and other similar variations, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Any forward-looking statements made speak only as of the date of today's press release and conference call, Friday, August 6th, 2021, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this call. For more information, I would refer you to the forward-looking statement section of the full-year financial press release issued earlier today, as well as the company's filings with the SEC. At this time, I will turn the call over to Dr. Joe Wiley. Joe, please go ahead.

Thank you, Simon. I am on slide four of the presentation. Today, we have issued record quarterly results and again have raised our full year 2021 revenue guidance. Today's results demonstrate the continued performance and growth of our commercial business. We delivered 35.9% organic revenue growth year over year in Q2, with strong underlying performance in both our MetroLeptin and Limitified franchises. I would add that this performance was driven by increasing the number of patients with access to our therapies globally. We generated $17.4 million of EBITDA in the quarter. This represents our sixth consecutive quarter of positive EBITDA generation. Total cash as of June 30th, 2021 was $142.9 million. increased from $118.6 million at the end of the first quarter. We are pleased to report that we have now closed the Chiasma acquisition, and I would note that of those who voted, over 99% of shareholders from both companies supported the transaction. We will now begin the process of integrating and growing our combined businesses. Following the deal close, Amherst now has three approved commercial products and a robust clinical pipeline. During the quarter, we also made significant progress on the regulatory pathway for our lead pipeline asset, AudioGel S10, in both the US and Europe. We believe we are on a path to potentially achieve approval and commercial launch of AudioGel S10 by the end of this calendar year in the US and Q1 2022 in Europe. Overall, this was a truly exceptional quarter for Emirates and we look forward to continuing to grow the business in the second half of 2021 and beyond. Moving on to slide five. I will now provide more details on our business performance. Second quarter total revenues grew by 35.9% year over year to $62.8 million. This included the impact of a significant LATAM order for Metro-Leptin booked in the quarter of $12.1 million. Regarding the revenue guidance, given the strong performance of the commercial business year to date, we are now expecting 2021 revenues to be in the range of between $210 million to $215 million. which represent year-over-year growth of 15% to 18%. This is an increase from our previous guidance of $205 million to $210 million issued when we reported our Q1 results. This clearly demonstrates the Board's confidence in the outlook for our business. At this time, we are not yet including any revenue contribution from ICAPSA in this forecast, but we are excited by the potential for this product and we will update the market in due course. Moving now to our commercial products, I'm now on slide six. Starting with MetroLeptin, global sales in the second quarter were $43.1 million, compared with $27.9 million in Q2 last year, representing growth of 54.3%. The US accounted for 41.2% of global MetroLeptin revenues and the EMEA accounted for 25.6% in Q2. We have previously shared our lifecycle plan in the U.S. to seek a label expansion for metraleptin to include the treatment of partial lipodystrophy in addition to the currently approved label for the treatment of general lipodystrophy. We received feedback from the FDA on the path forward for this initiative, which will require a Phase III study, and we are on track to initiate this study by the end of 2021. As we have discussed, we estimate the market opportunity in the U.S. with the current GL label to be approximately $140 million. And if we are successful in adding PL, we believe that it would approximately double the size of the addressable U.S. markers to $280 million. Let's move to limit five in slide seven. Second quarter sales were $19.5 million, a 7.7% increase year-over-year. The U.S. accounted for 43.7% of global limitified revenues, and EMEA accounted for 38.5% in Q2. EMEA limitified revenues increased by 18.1% in Q2 2021 versus Q2 2020. Year-to-date growth in the EMEA was 29%, driven by double-digit growth across all the major European markets. We are conducting a pediatric study for Lumitipied in HOFH, and we expect to have data in early 2022. Assuming positive data, we will seek approval of Lumitipied to treat children with HOFH in both the US and Europe. We'll switch gears now and talk for a couple of minutes about the highlights of the Chiasma acquisition. I am now on slide eight. We went over the transaction in detail when it was announced on May 5th, but I think it's worthwhile to revisit exactly why we're so excited about it. In addition, the addition of Mycapsa means the combined company now has three products on the market with strong IP protection. Mycapsa is currently approved for appropriate patients with acromegaly in a global market estimated at approximately $800 million. there is also the potential to expand into patients with carcinoid symptoms stemming from neuroendocrine tumors, or NET, where the opportunity is estimated at approximately $1.9 billion globally. Importantly, the acquisition of Chiasma will leverage our successful track record of business integration and commercialization. MyCAPTA has recently been launched in the U.S. and given the significant degree of customer call point overlap we believe that combined business will potentially accelerate the adoption of mycapsa with endocrinologists. By combining and scaling sales forces, we believe that this will both drive mycapsa adoption as well as potentially enabling further metraleptin revenue growth. We will also leverage our regulatory affairs experience and global commercial infrastructure to seek approval and launch of mycapsa internationally. Now that the acquisition has officially closed, our immediate priority is to start to integrate the two companies. We should be able to provide more details on how the integration is progressing during the virtual capital markets event that we plan to hold in mid-September. We will also discuss our plans for MICAPSA in more detail at this event. The combined portfolio of Amrit's products and pipeline post-closing of the Chiasma acquisition is summarized here on slide nine. For the first two commercial AMRIT products, Lumetipide and Metroleptin, you can see the approved indications in the upper section of the chart. Macapsa inaquamegaly is now our third marketed product in the US and has been submitted to the EMA in Q2 this year. For neuroendocrine tumors, AMRIT is planning for a modified 505 regulatory pathway in the US and it is our intention to start a Phase III study in NET in the first half of 2022, post-FDA discussions. I will discuss Oliogel S10 in the next slide, but I would also draw your attention to our exciting gene therapy asset, AP103, which is expected to enter the clinic next year. The important thing to note here is not just the breadth of our portfolio, but also that these products will generate meaningful news flow this year into 2022 and beyond. Now to our lead pipeline asset, Oleogel S10. I'm now on slide 10. Oleogel S10 is a potential novel treatment for the cutaneous manifestations of severe EB, a rare and distressing genetic skin disorder affecting young children and adults. There is currently no approved treatment for this condition And if approved, Oleogel S10 would be the first to market for those patients suffering from this devastating condition. Early in June, the FDA confirmed that our NDA for Oleogel S10 was accepted for filing and also informed us that the application has been granted priority review. The target to do for date is November 30th, 2021. In addition, the agency confirmed that Oliogel S10 will not require an advisory committee meeting. As a reminder, Oliogel S10 previously received fast track designation and rare pediatric disease designation from the FDA. If approved under priority review, Amherst will be entitled to apply for a priority review voucher. Our marketing authorization application for Oleogel S10 for EB treatment to the European Medicines Agency was validated in March this year. The assessment by EMA is progressing on the timetable as previously identified, and we are in line with the standard timetable. We continue to anticipate a decision by Q1 2022. While the regulatory activities are ongoing, We are moving forward with our launch plans to address the market opportunity based on our rare disease philosophy and experience. EB represents a highly concentrated market with 100 key positions treating the majority of patients at 56 key centers across the US, EU five countries, and Japan. We expect that it will require relatively modest incremental investment in our existing customer-facing infrastructure in order to drive global access and demand. If approved, Oleogel S10 would be the first and only approved treatment for EB, which is an important advancement for these patients. We are encouraged by the FDA's decision to pursue a priority review, and if approved, we will endeavor to ensure the product reaches patients as quickly as possible. There is a well-established patient advocacy, scientific, and research community built up around EB, and we have already forged strong relationships here. In addition, we are currently scaling up our manufacturing and supply chain to ensure adequate drug supply to meet expected demand. Our existing manufacturing facility should be sufficient to build enough API for launch volumes through 2023. Following that, we intend to have a dual sourcing strategy that will be executed across the supply chain and manufacturing scale up in order to support commercial demand beyond this. Let me now turn the call over to our CFO and COO, Rory Neelan, who will provide more details on the Q2 financials. Rory.

Thanks, Joe. I plan to provide some commentary on the Q2 numbers as I normally do on these calls, but I'll also provide some color on the cap table post our acquisition of Chiasma at the end of my remarks. Let's start with our revenues. Joe has already covered the revenue performance by product and by geography. Just to remind you of the headline numbers, we've seen an overall increase of 35.9%. in our quarterly year-on-year revenues, and a 29.6% quarter-on-quarter growth rate, which in part is driven by that substantial 12.1 million Metroleptin order in LATDAM, which we alluded to as part of our Q1 results call. What is really pleasing is that we're seeing growth in both Metroleptin and Limitified revenues, both year-on-year and also quarter-on-quarter. Compared to this time last year, US sales are up 9%, with the most significant increase being in LATDAM, which is nearly four times higher than the same period last year. And within this growth, there has only been a price increase in the USA, which was approximately 4%. In other words, almost all our growth is coming from volume increases. Finally, before concluding on revenues, as noted in the press release and reiterating what Joe has said, we are revising our revenue guidance for the full year 2021 to 210 to 215 million, which is 15 to 18% up on the actual 2020 revenues of $182.6 million. This revised guidance, as Joe said, excludes the impact of my CAPSA revenues, which we'll talk more to in our September analyst briefing day, once we have a chance to get our feet under the table in Chiasma. If you look at the progression of our business over the last three years, you will note that we have delivered consistent growth year on year with annual revenues growing from $136 million in 2018, being the last full year when Agerian was a standalone company, to $154 million in 2019, with both 2018 and 2019 being pro forma combined numbers, as if Amrush and Agerian were merged from January 2018, increasing again to $182.6 million in 2020, and finally to guidance of $210 to $215 for 2021. We anticipate this growth rate will now change significantly in the coming years with the acquisition of Mycapsa for the treatment of acromegaly, and also the impending launch of Oleogel S10 in EB if the product is approved by the FDA and EMA. The next item I'd like to touch on is our gross margin performance, excluding the impact of the non-cash items, which is consistent at 75.8% for the quarter and 75.7% year-to-date. This compares, I'll remind you, to 73.5% for the year as a whole in 2020. Within these numbers, the mix varies by product and by geography. with the higher third-party royalties on Metroleptin making that product a lower margin product as compared to Limitapide. With the addition of Mycapsa, which has no third-party royalties, and hopefully, Filsivez or AudioGel S10, if it is approved, which has a 9% third-party royalty rate, we'd expect this combined group margin to edge upwards as revenues of these new products grow. Regarding the non-cash items and our cost of sales that we adjust out in calculating EBITDA, We no longer have any amortization of the fair value step-up from the Igerian acquisition. The remaining $250,000 has now been amortized and there is none remaining. We will, however, have to step up the acquisition inventory from the Chiasma acquisition, and this is something we'll talk more about on our next quarterly conference call. The other non-cash item is the amortization of intangible assets from the Igerian acquisition, which is approximately $10.7 million per quarter, and this will continue for the patent life of these assets. And as you'd expect, we will need to assess the value of any chiasm intangibles, which will result in similar amortization and which we will talk to once again in the next conference call. Moving on to our SG&A and our R&D spend. Our R&D spend is broadly consistent with our Q1 spend with a minor reduction from $8.9 million in Q1 to $8.5 million in Q2. Our spend during the first six months of the year is understandably heavily focused on our EB activities, being the Audiogel S10 product and also our AP103 gene therapy product. We've also been spending on our various post-approval commitment studies and also our paediatric study in Limitapide, which is on track to read out in 2022. The other significant study which is about to commence is our USPL study, which we expect will begin towards the end of the year. Ignoring the impact of spend on the chiasm acquisition, our SG&A spend has been consistent for the last four quarters. During the quarter, we spent $18.9 million excluding acquisition costs, which is marginally up on the $18.2 million we spent in Q1 and also marginally up on the average for quarters three and four last year of $18.3 million. We're particularly happy to have managed to contain this spend while our underlying revenues have been increasing. As we do go forward into H2, we're understandably starting to increase our preparation and pre-launch spend for AlioGel S10 in EB in the hope that the products will be approved by the FDA towards the end of this year and early next year by the EMA. Accordingly, we believe our total SG&A spend will increase as we move forward. The next key metric I'd like to focus on is EBITDA before I come back and touch on the constituent components. EBITDA is a key metric for us given it was a good proxy for our cash from operations in the year 2020. I will draw your attention to slide 11 where we adjust our Q2 operating results for non-cash items and get to adjusted EBITDA of $17.4 million for the quarter, or $27.2 million for the year to date. This compares to $6.9 million for the same quarter in 2020, or $11.5 million for the first half of last year, and is our sixth successive quarter of positive EBITDA. I will remind you that when we closed the Agerian acquisition September 19, we stated that our objective was to turn the business into an EBITDA positive business through a significant reduction in the pro forma combined operating cost base of both legacy Agerian and legacy Amrit. In particular, we transitioned a sizable number of non-customer facing roles and functions from Boston to Dublin, which resulted in significant economies of scale. We also leveraged off the significant previous experience that the management team at Amrit has from acquisitions, integrating processes, and extracting synergies. The outcome of that integration process was that we not only achieved but exceeded our objectives and expectations, and the business is now providing significant EBITDA. With the acquisition of Chiasma today, we now face a repeat exercise where we're integrating the Chiasma business with the Amrit business with a similar combination of roles and extraction of synergies. We're obviously going to leverage off Amrit's management's past experience, including the specific experience from the Agerian integration. Our intention is to promptly merge the combined teams with a view to converting Chiasma from a business which had an operating loss in Q1 this year of $18 million to a business that will be EBITDA positive for the calendar year as a whole in 2022. This is a topic which we'll come back to more at our analyst meeting in September. Before moving off EBITDA, you will note from the press release that we calculate EBITDA by adjusting for non-cash items such as intangible amortization, depreciation, share-based payment expenses, and the amortization of fair value step-up in inventory acquired in the Algerian acquisition. This fair value step-up has now been completely eliminated in Q2, as noted earlier. Going forward, we'll have similar adjustments which will be triggered by the Chiasma acquisition, including incremental intangible amortization and the amortization of the fair value step-up of Chiasma inventory acquired today. We'll provide more color on these as I noted earlier on our Q3 results conference call. Beneath the operating loss line and our operating results line and our income statement, you will note that the non-cash change in the fair value of the contingency consideration and the non-cash continued value rights expense are broadly consistent with quarter one this year. And finally, in that section of our income statement, you would note a 5.8 million charge for net finance expense for the quarter, of which $2.6 million is non-cash, and $3.3 million is the cash interest payable in the quarter on our convertible bonds and on our term debt. Before getting to our revised cap table, I'd just like to summarize our current net debt position. Excluding the convertible debenture, we have net cash of $52.6 million at the end of June, being cash of $142.9 million and term debt of $90.3 million. This $52.6 million compares to net cash at the end of March of $29.8 million, or a $22.8 million increase during the quarter. Obviously, this was largely driven by the significant EBITDA performance during the quarter and was also helped, in fact, by the fact that we are no longer paying those inherited DOJ fines of approximately $4 million per quarter, which we inherited when we acquired Agerian, and the last of which was paid in Q1 this year. In addition to our term debt, we do have a convertible loan with a principal value of $125 million, with a conversion price on this of $12.95 per ADS or $2.59 per ordinary share. Given the strong ongoing operational performance of the business and the recent Phase 3 data in EB, We believe it is likely that this will get converted to equity before it is otherwise due for payment in April 2025. As a result, we view this as more akin to equity than debt. Before moving off our net cash position, I will note that we would use approximately $25 million of our cash to clear remaining debt in the Chiasma organization and other similar costs. Chiasma will then have no debt and all deal related costs will have been paid. Before concluding, I thought I'd give some clarity on the cap table for the new Amrit post the acquisition of Kiasma. Amrit trades ordinary shares on the A market of the London Stock Exchange and ADSs on NASDAQ, with five ordinary shares representing one ADS. For simplicity, I'll confine myself to ADSs when talking about the cap table, given the vast majority of our shareholders and now share liquidity is on NASDAQ. As of today, post-close, Amrit has 63.2 million ADSs, or 63,217,036 ADSs, to be precise. And this 63.2 million consists of legacy Amrit ADSs coming into the deal of 35.9 million, ADSs issued today to Chiasma shareholders of 25.5 million, and 1.8 million ADSs, which were previously in the form of Amrit zero-cost warrants, which were also exercised yesterday. As of today, there are no warrants remaining in Amrit, with all zero-cost warrants now exercised. And likewise, no warrants are carried over from Chiasma. Amrit does have share options and RSUs in issue to directors and employees. Further details of the legacy Amrit options and RSUs are outlined in Note 4 of our financial statements today, which shows approximately 5.8 million ADS options and RSUs, with a weighted average strike price on the options of $10.33 per ADS. We're also inheriting an equity plan from Chiasma, which share options on a very small number of RSUs. In total, this could result in an additional 3.7 million AMRAD ADSs being issued, albeit the AMRAD ADS strike price for these options is from $3.41 to $72, with the majority of these options being out of the money. That is the end of my remarks. I'll now hand you back to Joe.