BioCryst Pharmaceuticals, Inc.

Good morning and welcome to the BioCHRIST fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. please note this event is being recorded. I would now like to turn the conference over to John Bluest at Biochrist. Please go ahead.

Thanks, Andrea. Good morning and welcome to Biochrist's fourth quarter and year-end 2022 Corporate Update and Financial Results Conference Call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO John Stonehouse, CFO Anthony Doyle, Chief Commercial Officer Charlie Geyer, and Chief R&D Officer Dr. Helen Thackeray. Following our remarks, we'll answer your questions. Before we begin, please note that today's conference call will contain forward-looking statements, including those statements regarding future results on audited and forward-looking financial information, as well as the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance, or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website. I'd now like to turn the call over to John Stonehouse.

Thanks, John. 2022 was another outstanding year for Ladeo as we doubled sales in our second full year of launch on top of the fantastic start we had in the first year. It shouldn't be surprising given the excellent safety, efficacy, and one's daily oral profile. we are consistently hearing from patients that Orladeo is changing their lives. As you will hear from Charlie, in the U.S., our prescriber base continues to grow both in breadth and depth. In addition, Orladeo is already commercially available to HAE patients in 15 countries around the world. The ability of Orladeo to deliver meaningful results for patients is driving the steady patient growth we are seeing quarter after quarter, and in 2023, we expect this strong, steady demand to continue, leading to the global sales of no less than $320 million. Our goal with this guidance is very simple, to be accurate. Accurate guidance has been our track record since launch because we're the only ones with access to the prescription data through our sole source specialty pharmacy. With our sales performance in 2021 and 2022 and our guidance in 2023, You now have three data points to get a sense of the slope of the Orladeo launch. We are on a trajectory to achieve peak global sales of $1 billion, and our IP for Orladeo extends out to 2039, so we expect to be at peak sales for many, many years. While our revenues continue to grow, we expect our operating expenses to be flat year over year, as we have made and will continue to make thoughtful capital allocation decisions on our pipeline investments. This reduction in net cash use has strengthened our financial position, moved us closer to profitability. You will hear more detail on this from Anthony shortly. And I'll turn the call over to Charlie to review Orladeo performance in more detail.

Thanks, John. The base of patients treated with Orladeo in the United States continue to grow as expected in the fourth quarter, as new patient starts and patient retention remain consistent with the trends we have seen over the last two years. The prescriber base expanded strongly again, and existing prescribers continue to add new prescriptions. New starts on Orlodeo were also distributed evenly, with just over 50% coming from the top tier of healthcare providers who treat half of all HAE patients. As we begin 2023, we have confidence that we will achieve no less than $320 million in global revenue this year. Our U.S. field team expansion is in place, and patient growth trends are on track. Our European growth is also gaining momentum, and we continue to lay the foundation for Orladeo expansion globally. And this weekend, we will present more long-term clinical and real-world evidence at the Quad AI meeting, adding to the growing body of evidence showing how Orladeo can improve the lives of patients living with HAE. We have noted before that typical US payer reauthorization dynamics for rare disease products like Orladeo will soften Q1 revenue growth as many patients shift temporarily to free product. What we were seeing so far this year tells us that Orladeo revenue is likely to be flat to slightly down compared to Q4, even as our patient base continues to grow. We ended 2022 with a total number of patients on Orladeo that we expected and the patient growth trends we see in the U.S. and around the world give us confidence, not only in our 2023 trajectory, but also that Orlodeo peak revenue will reach a billion dollars. Ellen, I'll turn the call over to you.

Thanks, Charlie. Today, I'd like to provide an additional update on the next step for BGX-S013, our potential once-daily factor B inhibitor for compliments created. We shared last month Initial data from our Phase I single ascending dose and multiple ascending dose trials in healthy volunteers showed rapid, sustained, and greater than 97% suppression of the alternative pathway of the complement system 24 hours following a single 110mg dose. And, UCF 10.013 has the state and generally well tolerated at all doses studied in state and clinic. These data provide early support for the development of UCF 10.013 The next key step in clinical development is dose-ranging work in patients with the goal of confirming optimal dosing in pivotal settings. Non-clinical programs help us to assess the safe dosing range we can evaluate in humans. We have seen emerging dose-related observations early in an ongoing chronic non-clinical study, which were not seen at the same time period in a separate, already completed study. We need to understand the full picture of these differences as we complete the currently ongoing study. In the meantime, as a result of these observations, the pace at which we can evaluate higher doses in humans to assess efficacy will be slower. and we expect a related delay in the timeline. So, in order to progress towards clinical dose selection, we'll continue working to understand what we're seeing in the ongoing non-critical program, and we'll keep you posted on our progress. In addition to 10.013, we are making progress with our research program to identify oral medicines directed at other targets across the classical selective terminal pathways of the complement system, including C2, which is a critical upstream serine protease enzyme for activation of the classical and lexical pathways. As we reported in January, we have developed potent selective molecules targeting these two, and these are currently in the adoptive stage. Our long-term goal is to bring multiple novel orally-delivered products forward to treat many complementary diseases. Now I'll pass it to Anthony.

Thanks, Ellen. You can find our detailed fourth quarter and year-end financials in today's earnings press release, and I'd like to call your attention to a few items. Total revenue for the year came in at $271 million, over $250 million of which came from Orladeo in just its second year since launch, more than doubling net revenue from the prior year. Revenue for the fourth quarter was $79.5 million, of which $70.7 million came from net sales of Orladeo, with the remainder coming from sales of Rappaport, including the fulfillment of the last of our contract government stockpile orders. Operating expenses, not including non-cash stock compensation for the quarter, were $110.6 million. This puts full-year OPEX at $374.6 million. The increase compared to prior guidance was driven by almost $10 million of accelerated costs related to close-out activities for the termination of the 9930 and 9250 programs. Cash at the end of the year was at $444 million. Earlier in the year, we provided guidance for 2023 oil and air revenue of no less than $320 million. For OPEX, we expect 2023 to be flat the prior year at around $375 million. We previously stated that 2023 R&D investment would be in line with prior year. We're now forecasting that R&D expenses will decrease year over year following the discontinuation of the 1930 and 1950 programs. and the delay in the 10-013 clinical program that Helen described. This will be offset by additional commercial investments that we're making both here in the U.S. and as we continue our international expansion. As our revenue and OPEX curves continue to converge, we expect net cash utilization in 2023 to decrease compared to 2022, even when factoring in debt and royalties. The combination of our strong balance sheets Increasing revenue and our disciplined approach to capital allocation puts us in an outstanding financial position with an ever-decreasing reliance on the capital markets for funding. Now, operator, we'll be happy to open up this Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, you will need to pick up your handset before pressing the keys. To withdraw your question, please press more than two. At this time, we will pause momentarily to assemble our roster. And our first question comes from Jessica Fye of JPMorgan. Please go ahead.

Great. Good morning, guys. Thanks for taking my questions. Two for me. I guess first, what else can you share with us about the dose-dependent finding with 10.013? And second, maybe a nuance here, but if I recall at the healthcare conference, you indicated that 1Q revenue would be roughly flat with 4Q. I think now you're saying flat to slightly down. Does that just mean we should think of 4Q revenue as being even higher than it would have been otherwise, or does that take a little bit of the buffer out of whatever might have been in your full-year guidance? Thank you.

I'll take the first one.

Yeah, sure. Good morning. In the non-clinical findings, what we're saying is that we are seeing something at a time point that we did not see at a time point in our other study. The impact then is that we want to learn more about the safe range of exposure, and we need to understand the difference.

And, Jess, as far as the Q4 and Q1 revenue, so this is not Q4 being bigger than it should be. It's really based on what we're seeing out there with Q1 reauthorizations. It's always a challenge every year. And what we're seeing is that this year it's just this isn't an Orlaneo-specific thing. Just broadly, the reauthorization process is just more work than ever. And so that's why we think it could be a little bit down. or flat to Q4, but patient growth trends are on track, and no less than $320 million is very much on track.

Yeah, and that part's really important to remember, that patient numbers are going up each quarter, but the reason revenue is flat to slightly down is because we have more patients on free drug going through the reauthorization.

Great. Thank you.

You're welcome.

The next question comes from Tazine Ahmed of Bank of America. Please go ahead. Hi, guys. Good morning, and thank you for taking my question. On Orlodeo, John, I'm just wondering, you know, what do you think could change in order for sales to be, you know, above the minimum that you have just guided to for this year? So, you know, outside of negotiating with payers, where else would you see a potential for upside relative to how you're looking at the market right now?

Yeah, I think for right now, we believe 320 is the number, and that's the number people should put in their model. But in terms of what could be a tailwind, I think Charlie's team is more successful than we had planned around getting patients from free drug to paid drug. He's got this expansion, mini expansion that they went through late last year. Maybe that has more of an uptick, you know, on revenue as well. Those could be things that could be a lift.

Okay, great. And then maybe one question on 10013. I think you had previously highlighted that there was no crystallization toxin before in your preclin models. Is that still the case?

Yeah, this is very different than the 99. Your question is around 9930 in comparison to 1013? Yeah. Yeah, this is very different from that.

Okay, thank you.

You're welcome.

The next question comes from Chris Raymond of Piper Sandler. Please go ahead.

Thanks. And if you don't mind me beating the dead horse here, it sounds like you guys don't want to answer a ton of questions on exactly what you saw, but I guess I'll just ask. On 10.013... when would you be in a position to tell us exactly what you found and, you know, what's the path forward and the next steps for when the issues will be resolved? And then on the C2 program, you know, I know you described this as a program that's in development, but can you maybe give a little bit more color maybe on the timeline pathway to be in the clinic on that program?

Yeah, I'll take those. The second one, you can take the first one. So what we said in January is the C2 programs and lead optimization. And it's hard to predict when it'll get into TOCS and phase one studies, but it's a lead optimization now. Once we pick a lead, we'll go into TOCS and move forward from there, but we can't get timing on that right now. And the first question's around.

Yeah, so on 10.0.13, what we're saying is that we're seeing something that is different. We're seeing it at the same time point where we didn't see it before. What that means is that we need to learn more. We need to learn more about that difference, and we need to learn more about the nature of what we're seeing. The goal here is to understand the safe range of exposures, and that's the point of the non-clinical work at this point. The goal in the clinic is then to understand the effective dose in patients. So our next steps are to sweep the non-clinical study and understand what we can from there, also to go into the study stations that we've been planning and assess those stations and get to an understanding both of what is the safe range and what's the effective range for the dose, so that we can define dose according to the program.

Yeah, Chris, it's an ongoing chronic tox study right now, and so until we're completed, that's hard to give you some sense of when we'll have a better picture.

Thank you.

The next question comes from Lisa Baco of Evercore ISI. Please go ahead.

Hi there. Thanks for taking the question. Can you give us a sense of the degree of free drug and sort of gross to net and where you're at for the beginning of 2023?

Sure. Lisa, overall, what we've said is based on our contract status, we expected at least 80% of patients to be on paid drug, 20% on free. In recent quarters, we've seen that pick up above 20%. And then in Q1, it's just a larger portion that will temporarily, pretty much all the patients are going through reauthorization in Q1, and so a lot of them step back very temporarily to free products. So I think overall, that plus the fact that we also have the impact of commercial copay assistance is the greatest in Q1 Medicare donut hole payment. You're going to see the lowest, the worst gross to net in the first quarter.

Yeah, and then it will normalize back up once we get into Q2, Q3, Q4. When we were in Q4, Lisa, we saw gross to net non-reimbursed products at around 15 points.

Okay, thanks. And can you tell us a little bit more, give us a little more color on the mini expansion that you described? Sure.

Yeah, so the basic, the essence of that was we expanded the number of sales regions. It was not a major sales force expansion, but we made our regions smaller, so added more regional managers so that they can work closely with their teams as well as some of the top KLLs. Then simultaneously, we also added more to our market access team and our patient access specialist team so that we can do more to work with customers, and particularly patients, in helping get paid therapy.

Okay, thanks. And then just follow up to Chris's question. When are you going to complete this chronic preclinical talk study?

It'll be sometime this year.

Okay. And any sense, do you think this might be something specific to the species? And, like, what species have you been looking at?

That's a really good question that we don't have an answer to.

Okay. Can you mention the species just for us?

Yeah, not at this time, no.

Okay. Okay. And then just on a question for me, are you able to get clinically into what you think is an efficacious dose range? Or, as you described, going more slowly now in kind of your dose escalations, are you going to be kind of capped below what you think is the target efficacious dose?

Our hope is that we get to an effective dose in a safe range. I don't think we can answer that question today, you know, given what we're seeing, but that's the hope.

And I would add, we already know from the data that we presented in January, we're seeing an excellent suppression of the alternative pathway of complement at 24 hours already with the dose that's been evaluating health volunteers. So, We have more to learn about this range, but we encourage that information.

Okay, thank you. You're welcome.

The next question comes from John Wolofin of JMP Securities. Please go ahead.

Hey, thanks for taking the question. Just a couple on Orlodeo. I wonder if you could tell us what the quarter-over-quarter patient growth was in fourth quarter, and then with regards to the $320 million guidance, What's the breakdown between U.S. and ex-U.S. contribution there?

Sure, John. We haven't specified the growth. What I can say is we are on the same trend both in terms of new patient acquisition that we've seen over the last many quarters and also our discontinuation rate. It's been very stable. So what that means is that every quarter we're growing nicely, and that's what gives us so much confidence in the $320 million this year and the a long-term projection to a billion dollars.

Yeah, I think in terms of contribution from you, the way I think about it, John, is U.S. continues to be the majority of revenue. When we get to a point, and we will get to a point hopefully where we'll split out U.S. and ex-U.S., that'll be when ex-U.S. accounts for around 10% of total revenues. when that'll be. We'll see, but at the moment, you know, I think we're doing really well in both the U.S. and from a global expansion perspective.

That's very helpful. Thank you.

The next question comes from Ken Cassiotor of Cowan & Company. Please go ahead.

Hey, team. Good morning. Obviously, it's been a fantastic launch of Orla Deo. You set up a great U.S. commercial infrastructure that would seemingly be attractive to many companies that don't have a U.S. infrastructure or would want some further leverage. I'm guessing just looking at the P&L, the product's now profitable, which is a credit to the organization, excluding R&D, and you did it fast. We often, or we rarely, I should say, see such a gap between a profitable product and kind of pipeline replenishment. Just wondering how you all think about maximizing the value of this dichotomy, which is going to grow a little bit now, unfortunately, over time here. Kind of an organization that's a little bit in two separate worlds. Can you just talk about that, how you think about maximizing that value and maybe kind of just strategically what you all are thinking? Thanks so much.

Yeah, thanks, Ken. We agree with you that it's off to a fantastic launch and have a real high degree of confidence that we're getting to the billion dollars in peak sales and we're on that trajectory. So And that it's, you know, on a standalone basis, it's profitable today. And I even said in my prepared remarks that, you know, with the investment that we're making, we're getting closer to profitability because revenue is growing faster than expense, basically. So anyway, I think, you know, we're always looking at the goal here is to have a second product that's as big or bigger than Orladeo. That may take us longer. you know, with our pipeline. And so we're also evaluating BD activities as well. We brought Clayton Fletcher on board recently, who's a very experienced biotech BD person. And, you know, we're probably getting more inbound stuff than we ever have in the history of biopress. So we'll continue to evaluate that stuff. You want to make sure that if you're bringing something in, it's something that can create real value. And so we're constantly looking at that as well.

Thank you. You're welcome.

The next question comes from Justin Kim of Oppenheimer. Please go ahead.

Hi, good morning. Thanks for taking the question. Just with the upcoming Quad AI meeting and based on the recent commercial progress, is there anything that needs to be better clarified with the prescriber-based independence? Just wondering sort of what your goals are and any changes in the dynamic of where new scripts are coming from, either from a patient perspective or clinician?

Hey, Justin. So, you know, I think as far as clarified, we're just continuing the messages that we've been delivering about how well Orla Deo is working in patients, particularly over the long term. You look at our long-term data, our 96-week data, where patients were getting down to 16 out of 17 months attack-free, What we'll see at Quad AI is more data of the same coming out from our clinical trials that confirm that. And so it's really just about getting to all these physicians and showing them how well Orladea works both in clinical trials and then now how well it's working in the real world, and then how well it works regardless of where patients are coming from. So some of the patients who do absolutely the best on Orladea are those who switch from other prophylaxis products that were already stable on those other products, they switch to Orlaneo, and they continue to do really well with very good HIV control. It's sort of a long-term building of that, and there are lots of doctors who already get that, and then there are others who just haven't absorbed that message yet, and we're confident that we're going to get to them as well.

Yeah, I think the other thing, Justin, is that there are docs out there that, you know, they're patients-controlled, And that's good enough for them. And so what we've got to be able to do is say, no, a patient could do a whole lot better in terms of burden of therapy if they went to a once daily oral and to chip away at that. And I think part of Charlie's expansion, you know, where we're having the regional business directors focus on KOLs is to get those potential high prescribers to start to break through even further, you know, get the ones that haven't prescribed to prescribe and the ones that have to prescribe more.

I guess I'm just sort of curious, in terms of your views on the long-term growth trajectory, is that mix of where this is coming from expected to change, whether it's between the 500 and non-500 base? I mean, just trying to understand if that split of 50-50 is expected to continue and for how long.

I think it's a good question. First of all, I'm really happy with that balance because what it shows is that we're reaching all parts of the market and we're growing in both segments. So we're constantly expanding the number of top 500 doctors who are new Orlodeo prescribers, and then we're seeing them, once they do, go deeper into their list. And then that next thousand or so doctors, we're expanding into them as well. So there's What it tells me is there is a lot of opportunity left in front of us, both amongst what HCPs can do and then, you know, the number of patients that still haven't experienced the benefit of Orladeo. And, you know, our goal long-term is to give every patient who needs to be on prophylaxis a chance to try Orladeo because most of them are going to do really well.

Yeah, I think there's two really interesting pieces of evidence that we're going that direction to. One is quarter to quarter we're expanding the prescriber base, and the second is the market research quarter after quarter after quarter says that docs are going to prescribe more in 12 months than they're currently prescribing. And that's a combination of people who have not yet prescribed that will in the future or those that are prescribing that will prescribe more. So those, we think, are two really encouraging pieces of data that give us a lot of confidence it's going to keep growing.

Great. Thanks so much. You're welcome.

The next question comes from Brian Abrams of RBC Capital Markets. Please go ahead.

Hi, good morning. Thanks for taking my questions. You guys have talked about a recent slower conversion from free drug to paid commercial drug in fourth quarter and of late, and I just want to better understand this trend Do you think this is reflecting just expanding to new physicians who are maybe less used to prescribing Rolodeo? And are there ways to help educate those physicians about how to process the necessary paperwork? Or is there anything different about these patients? Either they have milder disease or weren't on prior prophylaxis or have different types of insurance plans that may be contributing to this greater lag time? And then just real quick on 10.013, Were the preclinical findings you observed shared with relevant regulators, and is there any need to, I guess, pause dosing, or should we just expect you'll be looking at shorter durations and or lower dose levels as the clinical studies proceed? Thanks.

I'll take the first question, Brian. Yeah, so it's really much more the first thing you said. So as we're expanding to less experienced prescribers within the HAE space, it's work to get any drug, whether it's Oral-A or any other HAE therapy approved by insurers. It's not a contracting issue. It's really about providing all the information, the lab tests, the clinical history, the complete information that payers want to see before approving any treatment for HAE. And so that's a big part of the team expansion that we've described. So we have more people out there to help with this process to get patients to paid therapy. And it's really about having a very complete prior authorization and reauthorization to make sure that we help them give all the information that the payers need. So I'm actually, with what I'm seeing, I'm confident that we are going to make great improvements in this ratio of paid to free product. It's not all going to be in Q1. It's going to be a year-long process. But I think we are very much on the right track.

Yeah, so the question on 10.013, so this is the non-clinical information we're reporting today. This is an ongoing study, and so we still have more to learn here. We always are in close touch with regulators over what data comes in programs that's non-clinical and clinical. We have differed the higher dose levels in our healthy volunteer study until we learned more about this information, but we do still plan to go forward in patients and take the drug therapeutic range in patients to understand there. What we're saying is that as the non-clinical data informs your understanding of the range of exposures, we expect that we'll have some delay in how high we go to the faster dose, sorry, how fast We go to the higher doses in patients in that patient study.

And, Brian, if I could just come back. I realize I probably didn't answer part of your question, which is just on patient mix. It doesn't have anything to do with the patient mix. It's all about the other things that I described, just giving the doctors or, sorry, giving the plans the information that they need. And remember, half of our patients at launch have been patients switching from other protein products. So it's really not about the patient mix.

That's really helpful. Thanks, Charlie. Thanks, Helen. Appreciate it.

The next question comes from Mari Raycroft of Jefferies. Please go ahead.

Hi, good morning, and thanks for taking my questions. I was wondering for Quad AI later this week if you can provide some preview around observed similarities or differences in treating pediatric HAE patients and remind what the SNDA timeline could look like And how does the pediatric opportunity fit into your $1 billion in peak sales estimate?

Sure. So where we are with our pediatric clinical trial is it's open, it's enrolling. And so it'll take a little time to get that fully enrolled until we get to the SNBA. But what we're seeing, and one thing that we'll present this week at Quad AI is just the overall burden of treatment and of HAE identified by both caregivers, parents, and patients. And one thing we hear over and over again is when a kid has symptomatic HAE, sometimes the treatment is injectable. can be worse than, almost worse than the attacks themselves. It can be really traumatic for kids to have regular injections or infusions. And so there's just real demand for an oral therapy to help these kids. And so we have, long term, we think that this is going to be, it's not so much about the number of patients treated, it's about the fact that we're going to be able to make the lives better for a lot of these kids. And then, of course, it's a genetic disease. So We see typically families will often use the same types of products, and so it gives us an opportunity to kind of tell the Orlodeo story to a complete family, which we're really looking forward to.

I think the other thing, Maury, is the formulation that we have for this is – we used to call it mini tabs. What do we call it? Granules? Granules. But it's like sprinkles that you put on a cake almost at that size. You know, asking a little kid to take a capsule is a difficult thing, too. So we've come up with a formulation that you could put on applesauce, on yogurt, and just make it way less traumatic, you know, along the lines of what Charlie was describing, and that will be huge. And then this is a patient for life, right? And so it's not a huge market, but we think it's an important one, and we think, you know, these are customers that we could have for a very long time.

Got it. That's helpful and makes sense. And maybe one other quick question. Just for the 10.013 delays, is that factored into the 375 million OPEX assumptions for next year? Can you talk more about OPEX assumptions in general for next year, for this year?

Yeah. So it's factored in. The way to think about OPEX for the year, so flat year over year, but what we've said is that commercial expenditure is going to increase based on the additions that Charlie has talked about, predominantly here in the US, as well as expansion from a global perspective, given that we're now up in 15 countries and we'll be going to more. For R&D, the delay is factored in. Depending on what we see on an ongoing basis, that may change when we get more information. And we'll update that later in the year. But yes, it is currently factored in. And what we said about R&D is it's going to decrease year over year anyway. When we were talking about this about a quarter ago, we said it was going to be flat, but now we're saying it's going to be down, but offset by the commercial investment that we've seen. And then most importantly, with revenues increasing, And then seeing that flattening of the OPEX line and the convergence of those two lines, the net cash utilization and what that means as we move towards profitability, I think has a lot of value for the company.

Got it. Thanks for taking my question.

The next question comes from Jenna Wang of Barclays. Please go ahead.

Thank you for taking my questions. The first one is regarding 10013. So just want to confirm, is it fair to say that we should not expect the FDA clinical hold regarding this program? And then my second question is regarding the Oladayu. In early January, you mentioned that the retention rate is about 60%. Can you clarify if that is one-year or three-month retention rate? And also, do you expect a similar retention rate maintaining in 2023?

The first question on 10.013, we're not on clinical hold with this program. It's also difficult to say what will happen in the future, so that's where we are today.

And as far as the patient retention, Gina, yeah, 60% was at one year. And we would expect what we're seeing in the overall retention rate is it's really stabilizing out. And so that's part of our confidence in no less than $320 million this year. And so we'd expect the same retention trend overall in 2023. Thank you.

Our last question comes from Rohit Bhatian of Needham & Co. Please go ahead.

Hi, this is Rohit on for surge. Thanks for taking our questions. Just in terms of peak fill estimates, do you still expect about 20% to 25% to come from ex-U.S. territories? And can you talk about your expectations for the long-term competitive landscape for Orla Dale?

Sure. Absolutely. When we talk about the billion dollars, we still see about 20% of that coming from Europe and the rest of the world. All the trends in the 15 countries where we've launched so far give us confidence that we will get to that 20% at peak.

With regard to the competitors, it's a pretty crowded space, but with regard to Oral specifically, it's been challenging for some to to advance their programs. And so what that means for us is we have more time to get people to try our drug and see if it works for them. And what we've learned in the marketplace is to get people to switch, there's got to be some meaningful benefit that they're not seeing with the drug that they're on. And it can't be efficacy because if you're on our drug, you're controlled. If you're not controlled, you're not staying on our drug. And so that goes for injectables as well. And I think a tailwind that We're curious, Charlie has pointed this out multiple times, but we'll be curious to see is as new products come to market, if a physician is saying, hey, maybe I'll switch from one injectable to another, why wouldn't they try an oral first? And then if it didn't work for that patient, switch to the new injectable. So it could be a tailwind.

Thank you.

You're welcome.

This concludes the question and answer session. The conference has now also concluded. Thank you for attending today's presentation and you may now disconnect.

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Good morning and welcome to the BioCHRIST fourth quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to John Bluest at Biochrist. Please go ahead.

Thanks, Andrea. Good morning and welcome to Biochrist's fourth quarter and year-end 2022 corporate update and financial results conference call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO John Stonehouse, CFO Anthony Doyle, Chief Commercial Officer Charlie Geyer, and Chief R&D Officer Dr. Helen Thackeray. Following our remarks, we'll answer your question. Before we begin, please note that today's conference call will contain forward-looking statements, including those statements regarding future results on audited and forward-looking financial information, as well as the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance, or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website. I'd now like to turn the call over to John Stonehouse.

Thanks, John. 2022 was another outstanding year for Ladeo as we doubled sales in our second full year of launch on top of the fantastic start we had in the first year. It shouldn't be surprising given the excellent safety efficacy in one's daily oral profile. We are consistently hearing from patients that Orladeo is changing their lives. As you will hear from Charlie, in the U.S., our prescriber base continues to grow both in breadth and depth. In addition, Orladeo is already commercially available to HAE patients in 15 countries around the world. The ability of Orladeo to deliver meaningful results for patients is driving the steady patient growth we are seeing quarter after quarter. And in 2023, we expect this strong, steady demand to continue, leading to the global sales of no less than $320 million. Our goal with this guidance is very simple, to be accurate. Accurate guidance has been our track record since launch because we're the only ones with access to the prescription data through our sole source specialty pharmacies. With our sales performance in 2021 and 2022 and our guidance in 2023, you now have three data points to get a sense of the slope of the Orladeo launch. We are on a trajectory to achieve peak global sales of $1 billion, and our IP for Orladeo extends out to 2039, so we expect to be at peak sales for many, many years. While our revenues continue to grow, we expect our operating expenses to be flat year over year as we have made and will continue to make thoughtful capital allocation decisions on our pipeline investment. This reduction in net cash use has strengthened our financial position, moved us closer to profitability. You will hear more detail on this from Anthony shortly. Now I'll turn the call over to Charlie to review Orladeo Performance in more detail.

Thanks, John. The base of patients treated with Orladeo in the United States continued to grow as expected in the fourth quarter, as new patient starts and patient retention remained consistent with the trends we have seen over the last two years. The prescriber base expanded strongly again, and existing prescribers continued to add new prescriptions. New starts on Orladeo were also distributed evenly, with just over 50% coming from the top tier of healthcare providers who treat half of all HAE patients. As we begin 2023, we have confidence that we will achieve no less than $320 million in global revenue this year. Our U.S. field team expansion is in place, and patient growth trends are on track. Our European growth is also gaining momentum, and we continue to lay the foundation for Orladeo expansion globally. And this weekend, we will present more long-term clinical and real-world evidence at the Quad AI meetings. adding to the growing body of evidence showing how Orladeo can improve the lives of patients living with HAE. We have noted before that typical US payer reauthorization dynamics for rare disease products like Orladeo will soften Q1 revenue growth as many patients shift temporarily to free product. What we are seeing so far this year tells us that Orladeo revenue is likely to be flat to slightly down compared to Q4, even as our patient base continues to grow. We ended 2022 with a total number of patients on Orladeo that we expected, and the patient growth trends we see in the U.S. and around the world give us confidence, not only in our 2023 trajectory, but also that Orladeo peak revenue will reach a billion dollars. Ellen, I'll turn the call over to you.

Thanks, Charlie. Today, I'd like to provide some additional updates on the next steps for VTX1013, our potential once-daily factory inhibitor for complement-indicated disease. As we shared last month, initial data from our Phase I single ascending dose and multiple ascending dose trials in healthy volunteers showed rapid, sustained, and greater than 97% suppression of the alternative pathway of the complement system, 24 hours following a single 110-mg dose. and UPX10013 has the state and generally well tolerated at all doses studied state and clinic. These data provide early support for the development of UPX10013, and we believe this product has the potential to differentiate from one daily oral vaccine inhibitor for multiple confidence cases. The next key step in clinical development is dose ranging work in patients, with the goal of confirming optimal dosing in pivotal studies. non-clinical program helps us to assess the safe dosing range we can evaluate in humans. Recently, we have seen emerging dose-related observations early in an ongoing chronic non-clinical study, which were not seen at the same time period in a separate, already completed study. We need to understand the full picture of these differences as we complete the currently ongoing study. In the meantime, as a result of these observations, The pace at which we can evaluate higher doses in humans to assess efficacy will be slower, and we expect a related delay in the timeline. So, in order to progress towards clinical dose selection, we'll continue working to understand what we're seeing in the ongoing non-critical program, and we'll keep you posted on our progress. In addition to 10.0.13, we are making progress with our research program to identify oral medicines directed at other targets across the classical and selective terminal pathways of the complement system, including C2, which is a critical upstream serine protease enzyme for activation of the classical and selective pathways. As we reported in January, we have developed potent and selective molecules targeting C2, and these are currently in the adoptive stage. Our long-term goal is to bring multiple-model, orally-delivered products forward to treat many comprehensive needs. Now, I'll pass it to Anthony.

Thanks, Ellen. You can find our detailed fourth quarter and year-end financials in today's earnings press release, and I'd like to call your attention to a few items. Total revenue for the year came in at $271 million, over $250 million of which came from Orladeo in just its second year since launch. more than doubling net revenue from the prior year. Revenue for the fourth quarter was $79.5 million, of which $70.7 million came from net sales of Orla Day, with the remainder coming from sales of Rappaport, including the fulfillment of the last of our contract government stockpile orders. Operating expenses, not including non-cash stock compensation for the quarter, were $110.6 million. This puts full-year off-ex at $374.6 million, The increase compared to prior guidance was driven by almost 10 million of accelerated costs related to closeout activities for the termination of 9930 and 9250 programs. Cash at the end of the year was at $444 million. Earlier in the year, we provided guidance for 2023 or later revenue of no less than $320 million. For OPEX, we expect 2023 to be flat the prior year at around 375 million. We previously stated that 2023 R&D investment would be in line with prior year. We're now forecasting that R&D expenses will decrease year over year following the discontinuation of the 1930 and 1950 program and the delay in the 10-013 clinical program that Helen described. This will be offset by additional commercial investments that we're making both here in the U.S. and as we continue our international expansion. As our revenue and OPEX curves continue to converge, We expect net cash utilization in 2023 to decrease compared to 2022, even when factoring in debt and royalties. The combination of our strong balance sheet, increasing revenue, and our disciplined approach to capital allocation puts us in an outstanding financial position with an ever-decreasing reliance on the capital markets for funding. Now, operator, we'll be happy to open up this Q&A.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, you will need to pick up your handset before pressing the key. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. And our first question comes from Jessica Fye of JPMorgan. Please go ahead.

Great. Good morning, guys. Thanks for taking my questions. Two for me. I guess first, what else can you share with us about the dose-dependent finding with 10.013? And second, maybe a nuance here, but if I recall at the healthcare conference, you indicated that 1Q revenue would be roughly flat with 4Q. I think now you're saying flat to slightly down. Does that just mean we should think of 4Q revenue as being even higher than it would have been otherwise, or does that take a little bit of the buffer out of whatever might have been in your full year guidance? Thank you.

I'll take the first one.

Yeah, sure. Good morning. In the non-clinical findings, what we're saying is that we are seeing something at a time point that we did not see at a time point in our other study. The impact then is that we want to learn more about the safe range of exposure, and we need to understand the difference.

And, Jess, as far as the Q4 and Q1 revenue, so this is not Q4 being bigger than it should be. It's really based on what we're seeing out there with Q1 reauthorizations. It's always a challenge every year. And what we're seeing is that this year it's just this isn't an Orlaneo-specific thing. Just broadly, the reauthorization process is just more work than ever. And so that's why we think it could be a little bit down. or flat to Q4, but patient growth trends are on track, and no less than $320 million is very much on track.

Yeah, and that part's really important to remember, that patient numbers are going up each quarter, but the reason revenue is flat to slightly down is because we have more patients on free drug going through the reauthorization.

Great. Thank you.

You're welcome.

The next question comes from Tazine Ahmed of Bank of America. Please go ahead. Hi, guys. Good morning, and thank you for taking my question. On Orlodeo, John, I'm just wondering, you know, what do you think could change in order for sales to be, you know, above the minimum that you have just guided to for this year? So, you know, outside of negotiating with payers, where else would you see a potential for upside relative to how you're looking at the market right now?

Yeah, I think for right now, you know, we believe 320 is the number, and that's the number people should put in their model. But in terms of what could be a tailwind, I think, you know, Charlie's team is more successful than we had planned around getting patients from free drug to paid drug. He's got this expansion, mini expansion that they went through late last year. Maybe that has more of an uptick on revenue as well. Those could be things that could be a lift.

Okay, great. And then maybe one question on 1.0.0.1.3. I think you had previously highlighted that there was no crystallization toxin before in your pre-clin models. Is that still the case?

Yeah, this is very different than the 99. Your question is around 99.30 in comparison to 10.0.13? Yeah. Yeah, this is very different from that.

Okay, thank you.

You're welcome.

The next question comes from Chris Raymond of Piper Sandler. Please go ahead.

Thanks. And if you don't mind me beating the dead horse here, it sounds like you guys don't want to answer a ton of questions on exactly what you saw, but I guess I'll just ask. On 10.013... when would you be in a position to tell us exactly what you found and, you know, what's the path forward and the next steps for when the issues will be resolved? And then on the C2 program, you know, I know you described this as a program that's in development, but can you maybe give a little bit more color maybe on the timeline pathway to be in the clinic on that program?

Yeah, I'll take those. The second one, you can take the first one. What we said in January is the C2 program's lead optimization. It's hard to predict when it'll get into TOCS and phase one studies, but it's a lead optimization now. Once we pick a lead, we'll go into TOCS and move forward from there, but we can't give timing on that right now. The first question's around.

On 10.0.13, what we're saying is that we're seeing something that is different. We're seeing it at the same time point where we didn't see it before. What that means is that we need to learn more. We need to learn more about that difference, and we need to learn more about the nature of what we're seeing. The goal here is to understand the safe range of exposures, and that's the point of the non-clinical work at this point. The goal in the clinic is then to understand the effective dose in patients. So our next steps are to complete the non-clinical study and understand what we can from there, also to go into the study of the patients that we've been planning and assess those patients and get to an understanding both of what is the safe range and what's the effective range for the dose, so that we can define dose to get forward into the program.

Yeah, Chris, it's an ongoing chronic tox study right now, and so until we're completed, that's hard to give you some sense of when we'll have a better picture.

Thank you.

The next question comes from Lisa Baco of Evercore ISI. Please go ahead.

Hi there. Thanks for taking the question. Can you give us a sense of the degree of free drug and sort of gross net and where you're at for the beginning of 2023?

Sure. Lisa, overall, what we've said is based on our contract status, we expected at least 80% of patients to be on paid drug, 20% on free. In recent quarters, we've seen that pick up above 20%. And then in Q1, it's just a larger portion that will temporarily, pretty much all the patients are going through reauthorization in Q1, and so a lot of them step back very temporarily to free products. So I think overall, that plus the fact that we also have the impact of commercial copay assistance is the greatest in Q1 Medicare donut hole payments. You're going to see the lowest, the worst growth to net in the first quarter.

Yeah, and then it'll normalize back up once we get into Q2, Q3, Q4. When we were in Q4, Lisa, we saw growth to net on reimbursed products at around 15%.

Okay, thanks. And can you tell us a little bit more, give us a little more color on the mini expansion that you described? Sure.

Yeah, so the basic, the essence of that was we expanded the number of sales regions. It was not a major sales force expansion, but we made our regions smaller, so added more regional managers so that they can work closely with their teams as well as some of the top KLLs. Then simultaneously, we also added more to our market access team and our patient access specialist team so that we can do more to work with customers and particularly patients to help them get to paid therapy.

Okay, thanks. And then just to follow up to Chris's question, when are you going to complete this chronic preclinical talk study?

It'll be sometime this year.

Okay. And any sense, do you think this might be something specific to the species and, like, what species have you been looking at?

That's a really good question that we don't have an answer to.

Okay. Can you mention the species just for us?

Yeah, not at this time, no.

Okay. Okay. And then just on a question for me, are you able to get clinically into what you think is an efficacious dose range or, as you described, going more slowly now in kind of your dose escalations? Are you going to be kind of capped below what you think is the target efficacious dose?

Our hope is that we get to an effective dose in a safe range. I don't think we can answer that question today, you know, given what we're seeing, but that's the hope.

And I would add we already know from the data that we presented in January that we're seeing an excellent impression of the alternative pathway of complement at 24 hours already with the dose that we've been evaluating health volunteers. We have more to learn about this range, but we encourage that information.

Okay, thank you. You're welcome.

The next question comes from John Wolofin of JMP Securities. Please go ahead.

Hey, thanks for taking the question. Just a couple on Orlodeo. I wonder if you could tell us what the quarter-over-quarter patient growth was in fourth quarter, and then with regards to the $320 million guidance, What's the breakdown between U.S. and ex-U.S. contribution there?

Sure, John. We haven't specified the growth. What I can say is we are on the same trend both in terms of new patient acquisition that we've seen over the last many quarters and also our discontinuation rate has been very stable. So what that means is that every quarter we're growing nicely, and that's what gives us so much confidence in the $320 million this year and the a long-term projection to a billion dollars.

Yeah, I think in terms of contribution from you, the way I think about it, John, is U.S. continues to be the majority of revenue. When we get to a point, and we will get to a point, hopefully, where we'll split out U.S. and ex-U.S., that'll be when ex-U.S. accounts for around 10% of the revenues. when that'll be. We'll see, but at the moment, you know, I think we're doing really well in both the U.S. and from a global expansion perspective.

That's very helpful. Thank you.

The next question comes from Ken Cassiotor of Cowan & Company. Please go ahead.

Hey, team. Good morning. Obviously, it's been a fantastic launch of Orla Deo. You set up a great U.S. commercial infrastructure that would seemingly be attractive to many companies either don't have a U.S. infrastructure or would want some further leverage. I'm guessing just looking at the P&L, the product's now profitable, which is a credit to the organization, excluding R&D, and you did it fast. We often, or we rarely, I should say, see such a gap between a profitable product and kind of pipeline replenishment. Just wondering how you all think about maximizing the value of this dichotomy, which is going to grow a little bit now, unfortunately, over time here, kind of an organization that's a little bit in two separate worlds. Can you just talk about that, how you think about maximizing that value, and maybe kind of just strategically what you all are thinking? Thanks so much.

Yeah, thanks, Ken. We agree with you that it's off to a fantastic launch and have a real high degree of confidence that we're getting to the billion dollars in peak sales, and we're on that trajectory. So, And that it's, you know, on a standalone basis, it's profitable today. And I even said in my prepared remarks that, you know, with the investment that we're making, we're getting closer to profitability because revenue is growing faster than expense, basically. So anyway, I think, you know, we're always looking at the goal here is to have a second product that's as big or bigger than Orladeo. That may take us longer. you know, with our pipeline. And so we're also evaluating BD activities as well. We brought Clayton Fletcher on board recently, who's a very experienced biotech BD person. And, you know, we're probably getting more inbound stuff than we ever have in the history of biopress. So we'll continue to evaluate that stuff. You want to make sure that if you're bringing something in, it's something that can create real value. And so we're constantly looking at that as well.

Thank you. You're welcome.

The next question comes from Justin Kim of Oppenheimer. Please go ahead.

Hi, good morning. Thanks for taking the question. Just with the upcoming Quad AI meeting and based on the recent commercial progress, is there anything that needs to be better clarified with the prescriber-based in attendance? Just wondering sort of what your goals are and any changes in the dynamic of where new scripts are coming from, either from a patient perspective or clinician?

Hey, Justin. So, you know, I think as far as clarified, we're just continuing the messages that we've been delivering about how well Orla Deo is working in patients, particularly over the long term. You look at our long-term data, our 96-week data, where patients were getting down to 16 out of 17 months attack-free, What we'll see at Quad AI is more data of the same coming out from our clinical trials that confirm that. And so it's really just about getting to all these physicians and showing them how well Orladea works both in clinical trials and then now how well it's working in the real world, and then how well it works regardless of where patients are coming from. So some of the patients who do absolutely the best on Orladea are those who switch from other prophylaxis products that were already stable on those other products, they switch to Oraliveo, and they continue to do really well with very good HIV control. It's sort of a long-term building of that, and there are lots of doctors who already get that, and then there are others who just haven't absorbed that message yet, and we're confident that we're going to get them as well.

Yeah, I think the other thing, Justin, is that there are docs out there that, you know, they're patients-controlled, And that's good enough for them. And so what we've got to be able to do is say, no, a patient could do a whole lot better in terms of burden of therapy if they went to a once daily oral and to chip away at that. And I think part of Charlie's expansion, you know, where we're having the regional business directors focus on KOLs is to get those potential high prescribers to start to break through even further, you know, get the ones that haven't prescribed to prescribe and the ones that have to prescribe more.

I guess I'm just sort of curious, in terms of sort of your views on the long-term growth trajectory, is that mix of where this is coming from expected to change, whether, you know, between the 500 and non-500 base? I mean, just trying to understand if that split of 50-50 is expected to continue and sort of for how long.

I think it's a good question. First of all, I'm really happy with that balance because what it shows is that we're reaching all parts of the market and we're growing in both segments. So we're constantly expanding the number of top 500 doctors who are new Orlodeo prescribers, and then we're seeing them, once they do, go deeper into their list. And then that next thousand or so doctors, we're expanding into them as well. So there's What it tells me is there is a lot of opportunity left in front of us, both amongst what HCPs can do and then, you know, the number of patients that still haven't experienced the benefit of Orladeo. And, you know, our goal long-term is to give every patient who needs to be on prophylaxis a chance to try Orladeo because most of them are going to do really well.

Yeah, I think there's two really interesting pieces of evidence that we're going that direction to. One is quarter to quarter we're expanding the prescriber base, and the second is the market research quarter after quarter after quarter says that docs are going to prescribe more in 12 months than they're currently prescribing. And that's a combination of people who have not yet prescribed that will in the future or those that are prescribing that will prescribe more. So those, we think, are two really encouraging pieces of data that give us a lot of confidence it's going to keep growing.

Great. Thanks so much. You're welcome.

The next question comes from Brian Abrams of RBC Capital Markets. Please go ahead.

Hi, good morning. Thanks for taking my questions. You guys have talked about a recent slower conversion from free drug to paid commercial drug in fourth quarter and of late. And I just want to better understand this trend. Do you think this is reflecting just expanding to new physicians who are maybe less used to prescribing Rolodeo? And are there ways to help educate those physicians about how to process the necessary paperwork? Or is there anything different about these patients? Either they have milder disease or weren't on prior prophylaxis or have different types of insurance plans that may be contributing to this greater lag time? And then just real quick on 10.013, Were the preclinical findings you observed shared with relevant regulators, and is there any need to, I guess, pause dosing, or should we just expect you'll be looking at shorter durations and or lower dose levels as the clinical studies proceed? Thanks.

I'll take the first question, Brian. Yeah, so it's really much more the first thing you said. So as we're expanding to less experienced prescribers within the HAE space, it's work to get any drug, whether it's Oral-A or any other HAE therapy approved by insurers. It's not a contracting issue. It's really about providing all the information, the lab tests, the clinical history, the complete information that payers want to see before approving any treatment for HAE. And so that's a big part of the team expansion that we've described. So we have more people out there to help with this process to get patients to paid therapy. And it's really about having a very complete prior authorization and reauthorization to make sure that we help them give all the information that the payers need. So I'm actually, with what I'm seeing, I'm confident that we are going to make great improvements in this ratio of pay to free product. It's not all going to be in Q1. It's going to be a year-long process. But I think we are very much on the right track.

Yeah, so the question on 10 to 13, so this is the nonclinical information we're reporting today. This is an ongoing study, and so we still have more to learn here. We always are in close touch with regulators over what's coming and what data comes in programs that's nonclinical and clinical. We have deferred the higher dose levels in our healthy volunteer study until we learn more about this information, but we do still plan to go forward in patients and take the drug therapeutic range in patients to understand there. What we're saying is that as the non-clinical data informs your understanding of the range of exposures, we expect that we'll have some delay in how high we go to the faster dose, sorry, how fast We go to the higher doses and patients.

And Brian, if I could just come back, I realize I probably didn't answer part of your question, which is just on patient mix. It doesn't have anything to do with the patient mix. It's all about the other things that I described, just giving the doctors, or sorry, giving the plans the information that they need. And remember, half of our patients that launched have been patients switching from other protein products. So it's really not about the patient mix.

That's really helpful. Thanks, Charlie. Thanks, Helen. Appreciate it.

The next question comes from Mari Raycroft of Jefferies. Please go ahead.

Hi, good morning, and thanks for taking my questions. I was wondering for Quad AI later this week if you can provide some preview around observed similarities or differences in treating pediatric HAE patients and remind what the SNDA timeline could look like And how does the pediatric opportunity fit into your $1 billion in peak sales estimate?

Sure. So where we are with our pediatric clinical trial is it's open, it's enrolling. And so it'll take a little time to get that fully enrolled until we get to the SMBA. But what we're seeing, and one thing that we'll present this week at Quad AI is just the overall burden of treatment and of HAE identified by both caregivers, parents, and patients. And one thing we hear over and over again is when a kid has symptomatic HAE, sometimes the treatment is injectable. can be almost worse than the attacks themselves. It can be really traumatic for kids to have regular injections or infusions. There's just real demand for an oral therapy to help these kids. Long-term, we think that this is going to be, it's not so much about the number of patients treated, it's about the fact that we're going to be able to make the lives better for a lot of these kids. Then, of course, it's a genetic disease. We see typically families will often use the same types of products, and so it gives us an opportunity to kind of tell the Orlodeo story to a complete family, which we're really looking forward to.

I think the other thing, Maury, is the formulation that we have for this is – we used to call it mini tabs. What do we call it? Granules? Granules. but it's like sprinkles that you put on a cake almost at that size. And so, you know, asking a little kid to take a capsule is a difficult thing, too. So we've come up with a formulation that you could put on applesauce, on yogurt, and just make it way less traumatic, you know, along the lines of what Charlie was describing, and that'll be huge. And then this is a patient for life, right? And so it's not a huge market, but we think it's an important one, and we think you know, these are customers that we could have for a very long time.

Got it. That's helpful and makes sense. And maybe one other quick question. Just for the 10.013 delays, is that factored into the 375 million OPEX assumptions for next year? Can you talk more about OPEX assumptions in general for next year, for this year?

Yeah. So it's factored in. The way to think about OPEX for the year, so flat year over year, but what we've said is that commercial expenditure is going to increase based on the additions that Charlie has talked about, predominantly here in the US, as well as expansion from a global perspective, given that we're now up in 15 countries and we'll be going to more. For R&D, the delay is factored in. Depending on what we see on an ongoing basis, that may change when we get more information. And we'll update that later in the year. But yes, it is currently factored in. And what we said about R&D is it's going to decrease year over year anyway. When we were talking about this about a quarter ago, we said it was going to be flat, but now we're saying it's going to be down, but offset by the commercial investment that we've seen. And then most importantly, with revenues increasing, And then seeing that flattening of the OPEX line and the convergence of those two lines, the net cash utilization and what that means as we move towards profitability, I think has a lot of value for the company.

Got it. Thanks for taking my question.

The next question comes from Jenna Wang of Barclays. Please go ahead.

Thank you for taking my questions. The first one is regarding 10013. So just want to confirm, is it fair to say that we should not expect the FDA clinical hold regarding this program? And then my second question is regarding the Oladayu. In early January, you mentioned that the retention rate is about 60%. Can you clarify if that is one-year or three-month retention rate? And also, do you expect a similar retention rate maintaining in 2023?

The first question on 10.013, we're not on clinical hold with this program. It's also difficult to say what will happen in the future, so that's where we are today.

And as far as the patient retention, Gina, yeah, 60% was at one year. And we would expect what we're seeing in the overall retention rate is it's really stabilizing out. And so that's part of our confidence in no less than $320 million this year. And so we'd expect the same retention trend overall in 2023. Thank you.

Our last question comes from Rohit Bhatian of Needham & Co. Please go ahead.

Hi, this is Rohit on for surge. Thanks for taking our questions. Just in terms of peak fill estimates, do you still expect about 20% to 25% to come from ex-U.S. territories? And can you talk about your expectations for the long-term competitive landscape for Oradea? Okay.

Absolutely. When we talk about the billion dollars, we still see about 20% of that coming from Europe and the rest of the world. All the trends in the 15 countries where we've launched so far give us confidence that we will get to that 20% at peak.

With regard to the competitors, it's a pretty crowded space, but with regard to Oral specifically, it's been challenging for some to to advance their programs. And so what that means for us is we have more time to get people to try our drug and see if it works for them. And what we've learned in the marketplace is to get people to switch, there's got to be some meaningful benefit that they're not seeing with the drug that they're on. And it can't be efficacy because if you're on our drug, you're controlled. If you're not controlled, you're not staying on our drug. And so that goes for injectables as well. And I think a tailwind that We're curious, Charlie has pointed this out multiple times, but we'll be curious to see is as new products come to market, if a physician is saying, hey, maybe I'll switch from one injectable to another, why wouldn't they try an oral first? And then if it didn't work for that patient, switch to the new injectable. So it could be a tailwind.

Thank you.

You're welcome.

This concludes the question and answer session. The conference has now also concluded. Thank you for attending today's presentation and you may now disconnect.