Horizon Therapeutics Public Limited Company

Good morning, and thank you for standing by. Welcome to the Horizon Therapeutics fourth quarter and full year 2020 earnings conference call. As a reminder, today's conference call is being recorded. I would now like to introduce Ms. Tina Ventura, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Ursula. Good morning, everyone, and thank you for joining us. On the call with me today are Tim Wahlberg, Chairman, President, and Chief Executive Officer of Corinne Rosen, Executive Vice President, Research and Development and Chief Scientific Officer, Paul Holscher, Executive Vice President, Chief Financial Officer, Liz Thompson, Group Vice President, Clinical Development and External Search, and Andy Pasternak, Executive Vice President, Chief Strategy Officer. Tim will provide a high-level review of the business, our 2020 performance, and 2021 guidance. Corrine will then provide a review of our R&D program, followed by Paul, who will discuss our financial performance and guidance in more detail. After closing remarks from Tim, we'll take your questions. As a reminder, during today's call, we'll be making certain forward-looking statements, including statements about financial projections, development activities, our business strategy, and the expected timing and impact of future events. Our actual results could differ materially due to a number of factors. including the extent and duration of the effects of the COVID-19 pandemic, as well as other factors outlined in our annual report on Form 10-K for the year ended December 31st and our earnings press release, which we issued this morning. You are cautioned not to place undue reliance on these forward-looking statements, and Horizon disclaims any obligation to update such statements. In addition, on today's call, non-GAAP financial measures will be used. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings press release, and other filings from today that are available on our investor website at www.horizontherapeutics.com. I will now turn the call over to Tim.

Thank you, Tina, and good morning, everyone. Our fourth quarter capped off an exceptional year for Horizon. We achieved record full-year total company net sales of $2.2 billion, representing year-over-year growth of 69%. This was driven by our successful launch of Tepesa for thyroid eye disease, achieving $820 million in its first year on the market, as well as continued double-digit growth of Cristexa, our biologic for uncontrolled gout. Tepesa and Cristexa finished the year strong, both growing double digits in the fourth quarter versus the third quarter. We also achieved record full-year adjusted EBITDA of approximately $1 billion, which increased more than 100% compared to 2019. Our 2020 adjusted EBITDA margin was 45.4%, a more than 800 basis point increase compared to 2019, which drove a full year ahead of our previous plans. This morning we issued first full year 2021 guidance that again represents strong double-digit year-over-year growth. Our full year net sales guidance of $2.8 to $2.8 billion represents 25% growth at the midpoint. Our Joseph EBITDA guidance of $1.14 to $1.18 billion represents 16% growth at the midpoint and includes significant investment in driving to PESA uptake and our pipeline. We are roughly doubling our R&D spend compared to 2020 and initiating six new trials independent of the Viola acquisition. Additional milestones achieved in 2020 include the acquisition of Curzian Pharmaceuticals, giving us HCN825, our LPAR1 antagonist that is expected to enter two phase 2B pivotal trials this year. We now have 14 programs total in our pipeline. We also advanced our Cristexa immunomodulation strategy, where we continue to see an increase in the use of Cristexa plus an immunomodulator, now at more than 35% of new patient starts. This led to a strong second half and fourth quarter for section at sales growth, and we finished the year up nearly 20% despite the impact of COVID-19. And we significantly strengthened our balance sheet, ending the year with more than $2 billion in cash, which is more than double the principal amount of our outstanding debt. This provided us with significant flexibility to prove pursue business development opportunities, and position as well to acquire Viela Bio for a total transaction value of $2.6 billion net of Viela's cash. The acquisition of Viela accelerates our strategy to build a robust development stage pipeline to drive long-term value in four ways. First, it adds a deep mid-stage biologic pipeline with four candidates currently in nine development programs. Each of these molecules targets central pathways that are implicated in a wide range of autoimmune diseases, providing many avenues for potential growth. We currently have a strong on-market portfolio of medicines with high growth potential, and the Biela pipeline will position us well to drive growth in the second half of the decade. Second, it expands the capabilities of our current strong R&D team, particularly early-stage research and transitional capabilities as well as deep scientific knowledge in autoimmune and severe inflammatory diseases. These capabilities will allow us to continuously innovate beyond what is included in our combined pipeline today. Third, Viola allows us to continue to pursue our global expansion strategy that we've initiated with the PESA and HGN 825. And finally, Viola further diversifies our on-market medicine portfolio with the addition of Uplizna. an infused biologic medicine indicated for the rare disease neuromyelitis optica spectrum disorder, or NMOSD. It is a human monoclose antibody with a well-understood mechanism of action, high efficacy levels, and a favorable dosing schedule, as well as a safety and tolerability profile. As a leader in commercializing rare disease medicines, we see many additional opportunities to add value from a commercial perspective. This includes generating and conveying additional evidence that reinforces the value of APLISNA, as well as building the necessary infrastructure to support a favorable physician and patient experience, while ensuring the right sites of care are available to treat patients. Examples of successful approaches we have used are both Cristexa and Tepesa. It builds a strong strategic fit with our portfolio and our therapeutic areas of focus, including ophthalmology, rheumatology, and nephrology. We also believe three currently approved or clinical stage VLA candidates, which include UPLISNA, VIB 4920, and VIB 7734, each represent a more than $1 billion annual net sales opportunity. We're on track to close the acquisition by the end of the first quarter. Now moving on to our fourth quarter results. Depends on fourth quarter net sales of $344 million, representing sequential quarter-over-quarter growth of 20%, with full-year net sales of $820 million. If we had not had the supply disruption at the end of the quarter and had a normalized level of inventory in the channel, we estimate that sequential growth would have been well over 30%. The Tepeza launch truly exceeded all expectations and has turned out to be one of the best rare disease medicine launches in history. As we announced last quarter, based on the potential we see for Tepesa and its ability to help many more patients suffering from thyroid eye disease, we are further investing in Tepesa to support continued long-term growth. This includes our U.S. infrastructure and marketing initiatives, supply capacity, and global expansion. In the fourth quarter, we doubled the commercial and field-based organization, which includes new sales representatives, patient access liaisons, regional reimbursement liaisons, site of care managers, and medical liaisons. They all have completed training or are in the field educating physicians on the importance of TED treatment, strengthening the co-management of the disease across key physician specialties, and establishing and reinforcing the treatment path, infrastructure, and referral network. Our sales force has continued to drive demand for new patients during supply disruptions. Current total pending patient enrollment forms, or PAPs, a leading indicator of demand, exceed the total number of patients who were on therapy in the fourth quarter. We continue to see strong clinical conviction from Tepeza prescribers, which drove uptake of Tepeza among our roughly 1,000 top-tier, high-volume physician targets and TED specialists. We see significant opportunity for continued growth given an annual incident population of acute TED patients of 15 to 20,000, as well as a prevalent population of 70,000 U.S. patients who've had chronic TED for five years or less. The expansion of our commercial infrastructure has also served us well during the supply disruption, as our Dependent team has been able to provide valuable support to physicians, patients, sites of care, and payers, keeping them updated and helping them navigate through this disruption and be prepared for relaunch. I'll now give an update on Tepeza's supply. We've been investing in our long-term manufacturing supply capacity since the acquisition of Tepeza and have continued our efforts since it was approved. The fact that they were able to meet the significantly higher demand for the launch 23 times our initial guidance is a testament to our comprehensive supply strategy and our talented team. Our strategy included increasing both drug substance manufacturing through our partner, AGC Biologics, and drug product manufacturing, or the filling and finishing of Tepeza vials with our drug product manufacturer, Catalan. Following approval, we began efforts to increase the scale of each drug product manufacturing lot. This effort proved particularly important in December when the U.S. government mandated COVID-19 vaccine production at Catalan dramatically restricted capacity for the production of Tepeza. We've been out of supply since the end of December and have continued to make good progress towards bringing Tepeza back to market. We submitted a prior approval supplement to the FDA for this new manufacturing process. With the supply produced to date, plus the manufacturing capacity currently planned at Catalan, we expect to be able to serve existing patients and new patients, allowing us to relaunch Tepeza following FDA approval. We continue to have good dialogue with the FDA, including answering several series of questions from them. We're hopeful that the agency approves the supplement on an expedited basis. We continue to estimate that the disruption could last through the first quarter. We also remain on track to receive FDA approval to start producing defensive supply from our second drug product manufacturer by the end of this year. We're looking forward to being able to again provides Tepeza to patients who have no other options available to them to treat their TED, a highly debilitating and sight-threatening rare disease. With our expanded commercial organization, an improving COVID-19 environment, a return of Tepeza supply, and lack of any other approved options for TED patients, we remain highly confident in Tepeza's long-term potential peak annual net sales target of more than $3.5 billion globally. With Cristexa, we reported record full-year net sales of $406 million, representing year-over-year growth of 19%. We significantly exceeded the guidance we provided at the onset of the pandemic, a testament to the efforts of the Cristexa Commercial Organization and our immunomodulation strategy. This strategy is key to the long-term success of Cristexa. A body of evidence has been building that demonstrates the response rate of Cristexa plus immunomodulation is significantly higher than the response rate seen with Cristexa alone. This data is resonating with physicians, with more than 35% of new patients now starting Cristexa plus immunomodulation. It's quickly becoming the preferred treatment option for patients with uncontrolled GAP, driven by the data published to date that shows an approximate doubling of the patient response rate using Cristexa plus immunomodulation versus Cristexa alone. This was demonstrated in the first In this trial, called RECIPE, patients on Cristexa plus the immunomodulator mycophenolate mofetil achieved an 86% response rate at the 12-week primary endpoint. Our mere randomized controlled trial is a 12-month trial evaluating the efficacy and safety of the use of Cristexa plus methotrexate. The trial completed enrollment in August of 2020, and we remain blinded to the results of the trial to date. The primary endpoint is at six months, and secondary endpoints go out through 12 months. As we've discussed in the past, in the past we had planned to approach the FDA to potentially submit the six month results for inclusion in the cross-sectional prescribing information. In our ongoing dialogue with the FDA, the agency recently informed us that they want the trial to continue unblinded through the full 12 month period without unblinding at six months. given that patients could be on Cristexa plus methotrexate for a longer period of time in clinical practice. We therefore expect the primary and secondary endpoint results, along with key safety information, to be available in the fourth quarter of 2021. We expect to submit the data to the FDA for potential inclusion in the Cristexa prescribing information in the first quarter of 2022. Our strategy for Cristexa on growth again this year. We are well on track to achieve our peak U.S. sales, annual net sales estimate of more than $1 billion. Our rare disease medicines, Revicti, Precise B and Actimune, had an impressive year and finished 2020 with total growth of approximately 11% compared to 2019. We continue to see strong combined active shipping patients and high rates of compliance and adherence. In addition to the acquisition of Viella, which represents a significant transformation of our R&D organization, we also continue to advance our other clinical programs. With Tepeza, we partnered with Halazine to develop a subcutaneous formulation of Tepeza, which may offer additional flexibility and convenience for patients. With ACN 825, we have finalized the protocol for our diffuse cutaneous scleroderma trial and we're on track to start this trial in the first half of this year. We're also pursuing interstitial lung disease, starting with idiopathic pulmonary fibrosis, or IPF, as a potential indication for HN825. If we're successful in the development of HN825 for these indications, we estimate that HN825 could generate more than $1 billion in peak annual net sales globally. With Cristexa, we've recently announced two new trials, the monthly dosing, and the retreatment trials. We now have five trials to maximize the value of Cristexa. Finally, I want to note that our success this year is a testament to our talented employees. We continue to receive multiple recognitions as a best workplace, 13 total in 2020, reflecting the high-level engagement of our employees. In addition, we are taking steps to foster inclusion and combat racism. We donated $500,000 to community organizations that are addressing racial inequality and racism, and $1 million to endow scholarships for students of color. We've also instituted diversity and inclusion efforts within Horizon to further embed inclusion, diversity, equity, and allyship at all levels of the organization. Our progress in 2020 underscores our position Matt is growing biotech companies with a top-tier growth profile, and we remain focused on continuing to drive significant value for our shareholders, patients, and all of our stakeholders moving forward. I will now turn the call over to Corinne for an update on our R&D programs.