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spk13: 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.
spk12: 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.
spk07: 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.
spk01: Thank you, Tim, and good morning, everyone. I will start with a summary of the VLF pipeline and then move to our Horizon programs. The VLA acquisition will add a portfolio of novel medicine candidates ranging from Phase I to Phase III. VLA's first commercially available medicine, Aplizna, an anti-CD19 humanized monoclonal antibody, obtained FDA approval for the treatment of MMOSD last June. VLA is also pursuing three additional indications for the medicine. An ongoing Phase III trial in myasthenia gravis, or MG, which is a chronic rare autoimmune neuromuscular disease, that affects voluntary muscles, especially those that control the eyes, mouth, throat, and limbs. An ongoing phase three trial in IgG4-related disease, a group of disorders marked by tumor-like swelling and fibrosis of affected organs, such as the pancreas, salivary glands, and kidneys. And finally, a phase two proof-of-concept trial in kidney transplant desensitization, which is currently paused due to COVID-19. VIB 4920 is a CD40 ligand antagonist and is being studied by VLA in three potential indications. An ongoing phase 2V trial in Sjögren's syndrome, a chronic systemic autoimmune condition that impacts exocrine glands, including the salivary and tear glands. Sjögren's syndrome is the second most common rheumatic disease after rheumatoid arthritis. A phase 2 trial in active rheumatoid arthritis patients. and a small Phase II proof-of-concept study in kidney transplant rejection. VIB7734 is a human monoclonal antibody that has the potential to become a novel treatment for autoimmune diseases in which plasma cytodendritic cells, or PDCs, overproduce interferons and other types of cytokines and chemokines. In systemic lupus erythematosus, or SLE, VLA recently decided to move into a phase 2 trial after demonstrating encouraging results from their phase 1B cutaneous lupus erythematosus trial. VIB7734 is also in phase 1 development for COVID-19-related acute lung injury. And finally, VIB1116 is a monoclonal antibody that is expected to move into phase 1 development in mid-2021 for autoimmune diseases, and we look forward to exploring the potential of this candidate. The VL acquisition will also add a talented team skilled in the development of medicines that treat autoimmune and inflammatory diseases with important early research and translational capabilities that will position us for growth now and in the future. We intend to explore the full potential of VLS pipeline to leverage our combined capabilities to maximize the potential of these molecules. Moving on now to discuss HCM825. our oral selective LPAR-1 antagonist that has shown early signs of clinical impact in fibrotic diseases. LPAR signaling has been implicated in fibrosis and inflammation, and preclinical and clinical evidence support the antifibrotic potential of LPAR antagonists across organ systems, including both lung and skin. We are on track to initiate our first pivotal phase 2B trial in HDN825 in diffuse cutaneous systemic sclerosis in the first half of this year. Diffused cutaneous systemic sclerosis is a rare, chronic, progressive autoimmune disease that often causes internal organ damage and has a high mortality rate. Given there are no FDA-approved treatments for patients today, diffuse cutaneous systemic sclerosis presents a significant unmet medical need. Current treatments provide symptomatic relief, but nothing actually slows disease progression. A more comprehensive treatment is needed to address the inflammation and fibrosis that drive this progressive disease and its high mortality rate. We expect to enroll approximately 300 patients who will be randomized in a one-to-one-to-one ratio to receive HCM 825 300 mg once daily, HCM 825 300 mg twice daily, or placebo, for 52 weeks. The primary endpoint of the trial will be changed in forced vital capacity, or FVC, after 52 weeks. This is an objective endpoint that measures lung capacity and is used to assess the progression of lung disease and the effectiveness of the treatment. Key secondary endpoints include the Health Assessment Questionnaire Disability Index, or HACC, Modified Rodman Skin Score, and ACR-CRIS. We expect enrollment to take approximately two years, and with a one-year endpoint, we expect data to be available in 2024. Mid-this year, we expect to start a second pivotal Phase IIb trial with HPN825 and idiopathic pulmonary fibrosis, which is the most common interstitial lung disease. SVC will be the primary endpoint here as well. Moving to TPEZA and our placebo-controlled trial in chronic TED. The aim of this trial is to generate clinical data to better inform payers and physicians who use TPEZA to treat their chronic patients. We expect this trial to begin in the second quarter, assuming Tepesa supply normalizes. Until data are available from our chronic TED trial, case reports can help inform physicians who may wish to use Tepesa in treating their chronic TED patients. Case reports of approximately 30 TED patients with chronic disease were presented at the virtual fall symposium of the American Society of Ophthalmic, Plastic, and Reconstructive Surgery, or ASOPERS, in November last year. and at other forums that showed chronic TED patients benefited after treatment with Tepeza. Also this week, a poster was included in the North American Neuro-Optimology Society, or NANOS, 2021 annual meeting of a patient with longstanding TED who underwent decompression surgery to treat her TED. Five months later, the patient experienced worsening diplopia and proptosis. Averse to a second decompression surgery, the patient began Tepeza therapy. Upon completion of her treatment, she had significant reduction in her proptosis of between 5 and 6 millimeters, and her lid retraction subsided substantially. We're also working on additional administration options for TPEZA, and in November, we partnered with Halocime to begin work to develop a subcutaneous formulation which may offer additional flexibility and convenience for patients. This year, we'll be starting our early clinical work on TPEZA with Halocime technology, initially to understand the pharmacokinetics, bioavailability, tolerability, and dosing regimen. We will work with the regulatory agencies to agree on the fully required data package, which we anticipate will include a confirmatory trial to demonstrate safety and efficacy of Tepesa, co-formulated with Halocine's PH20 molecule for subcutaneous delivery. For Cristexa, we currently have five R&D programs aiming to maximize its value in three ways. increasing the response rate, benefiting more patients with uncontrolled gout, and improving the patient experience. As Tim mentioned, we expect the readout from the Miro placebo-controlled trial in the fourth quarter of 2021. The PROTECT trial, which is studying the use of Pristexa for people who are living with uncontrolled gout and have undergone a kidney transplant, is now fully enrolled. We have already presented encouraging interim data for this trial, and are on track for final results by the end of this year. We're progressing with our trial evaluating impact of administering Cristexa over a shorter infusion duration. We're also on track to initiate our newest Cristexa pipeline trials, monthly dosing and retreatment in the first half of 2021. The goal of the monthly dosing trial is to explore whether that dosing regimen can provide similar outcome as the current dosing schedule while the Cristexa Retreatment Trial will evaluate whether patients can benefit from Cristexa plus methotrexate after developing an immune response to Cristexa when taken alone. In conclusion, it is a transformational time for R&D at Horizon. We look forward to integrating the VLA R&D organization once the transaction closes, as well as developing the extensive experience of our combined team to pursue the full potential of our development stage candidates and on-market medicines. With that, I will turn the call over to Paul.
spk09: Thanks, Karen. My comments this morning will primarily focus on our non-GAAP results, unless otherwise noted. I will start with our fourth quarter results, followed by our 2021 financial guidance. Fourth quarter net sales were $745 million, a year-over-year increase of 105%, and a record for the company. Our orphan segment generated net sales of $628 million, an increase of 151% year-over-year, representing nearly 85% of our total company net sales. The growth was driven by the exceptional Tepeza launch, with fourth-quarter Tepeza net sales of $344 million, along with strong growth for Cristexa, with record quarterly net sales of $129 million, representing quarterly sequential growth of 19%. Our fourth quarter operating margin for the orphan segment was 48%, a year-over-year increase of 1,500 basis points. Net sales for the inflammation segment were $117 million, with segment operating income of $67 million. Though net sales in this segment declined by 8% for full year 2020, inflammation segment operating income was roughly flat, evidence of the successful execution of our strategy to maximize profitability in this segment. We continue to reinvest the resulting cash flow of this segment into our growth drivers and expanding pipeline. Our fourth quarter non-GAAP gross profit ratio was 87 percent of net sales. Non-GAAP operating expenses for the fourth quarter were $279 million. This included non-GAAP R&D expense of $38 million a non-GAAP SG&A expense of $241 million, reflecting our increased investments into PESA. Adjusted EBITDA was $371 million for the fourth quarter, significantly exceeding expectations. The non-GAAP income tax rate in the fourth quarter was 17.1 percent, resulting in a 9.9 percent non-GAAP tax rate for the full year. Non-GAAP net income was $298 million, and non-GAAP diluted earnings per share were $1.28. The weighted average shares outstanding used to calculate fourth quarter non-GAAP diluted EPS were 233 million shares. Non-GAAP operating cash flow was $411 million, benefiting from the collection of significant deposit receivables in the fourth quarter. As of December 31st, our cash and cash equivalents were $2.08 billion, and the total principal amount of our debt outstanding was $1.018 billion. We plan to fund the Biela acquisition with $1.3 billion of new debt plus available cash on hand. The Hart-Scott-Rodino waiting period expired yesterday, in line with our expectations to complete the acquisition by the end of the first quarter. As Tim noted, the total value of the transaction is $2.67 billion, net of Biela's cash and cash equivalents. Based on this, our pro forma gross leverage ratio is expected to be about 2.6 times. We expect our gross leverage ratio to be near our target of two times by the end of 2021. We significantly strengthened our capital structure over the last two years, and we were very pleased that S&P recently recognized our efforts, upgrading our company rating to BB, a rating they affirmed following our announcement of the VL acquisition. Moving to our outlook for 2021. Our 2021 guidance excludes the impact from the operations of Viella, which we currently estimate will reduce our adjusted EBITDA by approximately $140 million. Our guidance also assumes FDA approval of the increased scale drug product manufacturing process of Tepeza and the successful completion of future committed manufacturing slots for Tepeza. This morning, we provided full-year 2021 net sales guidance of $2.7 to $2.8 billion, representing year-over-year growth of 25% at the midpoint. For Tepeza, we expect full-year 2021 net sales of greater than $1.275 billion, which continues to assume that the supply disruption could last through the first quarter. For Cristexa, we project net sales of more than $500 million, representing continued strong growth. We expect full year 2021 adjusted EBITDA of between $1.14 and $1.18 billion, representing growth of 16% at the midpoint. This reflects our expectations for strong growth in our net sales, partially offset by the roughly doubling of our R&D dollar spend compared to last year, as well as the investments we recently made to expand the Tepesla commercial organization and marketing initiatives. We expect our non-GAAP gross profit ratio for the full year to be between 86 and 87 percent. Non-GAAP net interest expense is expected to be approximately $45 million, which does not include the interest on the new debt to be issued to fund the VL acquisition. We expect the full year non-GAAP tax rate to be in the low double digits. As with every year, we anticipate variability in our non-GAAP tax rate on a quarterly basis. We estimate that our cash tax rate will be in the low to mid single digits in 2021. And as always, our tax rates could change significantly as a result of any acquisitions or divestitures made by the company or any changes in tax laws. We expect our full year 2020 weighted average diluted share count to be in the range of 232 to 234 million shares. Let me now touch on the first quarter. As we discuss every year, first quarter net sales are generally the lowest of the year, impacted by seasonality as patients experience changes in their health insurance coverage. Therefore, we expect a typical sequential step-down for our medicines. Additionally, operating expenses will increase as we approach mid-year, as additional marketing efforts for TPEZA continue to increase and our two Phase IIb trials in HCN 825 begin. And finally, we expect operating cash flow to increase significantly year over year, although, as usual, we expect first quarter cash flow to be the lowest of the year. With that, I'll turn the call over to Tim for concluding remarks.
spk07: Thank you, Paul. 2020 was a breakthrough year for Horizon, with the Tepezo launch far exceeding expectations and resulting in one of the best rare disease medicine launches ever. We generated record net sales of $2.2 billion, and adjusted EBIT over approximately $1 billion, driven by the tremendous success of Tepeza, as well as by strong growth of Cristexa and our rare disease medicines. We continue to execute on our strategy to maximize the value of Tepeza and Cristexa and expand our pipeline. The VL transaction is a great example. that truly serve unmet needs. We've made remarkable progress as a company, transforming Horizon in just a few short years. In just the last two years alone, our market cap has increased six-fold to approximately $20 billion today. Horizon is one of the fastest-growing biotech companies with a top-tier growth profile, and we expect the VLA acquisitions to build on the value we provide patients and to drive long-term value for our shareholders. We'll now open the call-up for questions.
spk12: Ursula, go ahead, please.
spk13: Ladies and gentlemen, to ask a question, please press star, then the number one on your telephone keypad. Your first question comes from Annabelle Samimi with Stifel. Hi, guys.
spk14: Thanks for taking my question and great year. I understand that you're not providing guidance based on the VL acquisition, and right now it doesn't include the $140 million, but as you approach the closing period, Aside from your patient hub and reimbursement team, do you have any better sense of how much your sales infrastructure you can leverage to Plinsna, and does that also help you get into the neuro-ophthalmologist's office to start targeting them for Tepeza? So, in other words, how should we think about SG&A? We already realize that R&D is doubling for good reason, so maybe you can give us a little bit of I guess, directional color there. And just one quick question on Tepeza. We've all seen that the Defense Act has had a significant increase in the demand for vaccines and the production of vaccines. Has that derailed anything with regard to your plans with Catalan? Thanks.
spk07: Sure. I'll start with Tepeza. We are in daily contact with Catalan education Based on that regular dialogue, we feel confident that we'll be able to continue to manufacture lots that are planned through the second quarter, and once we get the initial submission approved by FDA, that we'll be able to meet the demand for existing or patients that have stopped treatment, as well as new patients. So we continue to feel confident that based on discussions and where things are right now, that we can continue to manufacture product and get this through. I think, importantly, it's been discussed publicly that there's a good plan moving forward. Relative to the commercial infrastructure, certainly things that have added tremendous value with Cristex and Tepeza, we have over 1,300 sites of care for Tepeza that have been certified, and 650 of them actually infused Tepeza last year. and reimbursement support folks are added into the fold here. As you mentioned, neuro-optomic surgeons and physicians in general is an overlap, and that's something that we've certainly seen opportunity to leverage. When we commented on the $140 million, that is net of our expected increased investment in the commercialization of Aplizna as well as the R&D spend expected for Viola for this year.
spk12: Thanks, Annabelle. Ursula, next question, please.
spk13: Your next question comes from Jason Gerberry with Bank of America.
spk04: Hey, guys. Good morning. Thanks for taking my questions. I guess, too, for me, just can you guys comment at all how patient enrollment forms have been evolving during the period of shortage? Some of our checks indicated that physicians were still planning to work through their enrollment forms so that they weren't kind of inundated once the supply became available. So Just kind of curious if you can comment at all on the patient enrollment form trends. And then my second question, just on HZN825, just in lieu of competitor Galapagos' drug, which works through a similar mechanism, being discontinued on some safety concerns. This is now a second drug that's been stopped due to some safety concerns. You know, how does that alter your thinking regarding the viability of 825 drug realizing that the diffuse cutaneous is a different end market, but they discontinued that program as well. So, just kind of curious your thoughts on that. Thanks.
spk07: Sure, Jason. I'll answer the question and then hand it over to Liz to answer the five questions. Enrollment continues to go well. As I mentioned in my remarks, we have more enrollment forms in the queue than total patients treated in the fourth quarter. So, The team continues to execute. As I had also mentioned, we've completed the hiring and doubling of the commercial organization and field-based organization so that patient access managers across the board are having regular dialogue with physicians and patients. And our sales force continues to execute and drive patient enrollment forms. So that continues to go well. It's definitely moving in the right direction. FDA approval. Liz, do you want to take the HCN 825 question?
spk02: Yeah, thanks, Tim. So, you know, your question was how the Galapagos results change our thinking about HCN 825. And I'll note a couple of things about the Galapagos results first, which is that they discontinued both for underwhelming efficacy, and those are their words, as well as a dose-dependent safety signal that seems to be driven by IPF exacerbation. And this plays a little bit into our thinking in a couple of ways. Overall, this doesn't change how we think about the opportunity for 825. We don't know whether this is molecule-specific or mechanism-specific. But even if it is mechanism-specific, blocking autotaxin and blocking LPAR1 are different. Autotaxin is upstream of LPAR. by blocking the generation of LPA, it's actually affecting all different downstream pathways rather than specifically LPAR1 blockade. Theoretically, this can play out in safety effects. And I'll say that there is some evidence already that LPAR1 blockade is efficacious in IPF, and that clearly wasn't the case with the Galapagos molecule, or at least not at the levels they would have wanted. So overall, we continue to be very enthused about 825's prospects. and don't think that this meaningfully changes that. We will, of course, watch this space very carefully.
spk12: Thanks, Liz. Ursula, next question, please.
spk13: Your next question comes from David Anselm with Piper Sandler.
spk05: Thanks. So just on Cristexa, and I apologize if I missed this, can you talk about how we should think about the extent to which we're going to see a patient backlog here as the pandemic eases, bearing in mind that know this this is generally a high-risk population so that's that's number one and then secondly on please now and you may have talked about this but but I just wanted to get you know a sense of you know is there anything that you think in a general sense that you need to do differently from the Ella in terms of the commercial rollout and commercial support of the product thanks sure thanks David with the play that I think they've done a really good job in the law since a long
spk07: are very typical to launch in MOSD. There are some areas that we can just bring added resources, such as patient access managers, reimbursement specialists, and importantly, sites of care to ensure that these patients can find the right place to be infused and find that access. So I think adding incremental resources will definitely make a that's going to make it even easier to get these difficult patients onto treatment. And some of that applies as well to your comment on Cristexa, where certainly immunocompromised patients are ones that rheumatologists are concerned about. You know, I think there was a kind of a combination effect where we had great commercial execution in the third and fourth quarters with Cristexa, And the conviction among physicians that greater than 35% that are using immunomodulation led to faster conversion able or willing to go into rheumatologist offices, less overall visits, and more closed rheumatology offices. So that generally causes about a 60 to 90 day delay with that impact. So I think that will continue into the first quarter. We also have the reset that comes from patients having to get re-verified that we typically see that seasonal impact in the first quarter. But as we look for the full year, I think if strong increased penetration of our immunomodulation strategy and continued great growth and set up for path to that $1 billion in peak sales.
spk12: Thanks, David. Ursula, next question, please.
spk13: Your next question comes from Ken Cacciatore with the Cowan & Company.
spk08: Good morning, guys, and congratulations. Just trying to understand a little bit better the underlying TAPISA demand. trends. Just wondering, as you get these enrollment forms or as you're actively treating these patients, can you give us a sense of how many of the patients or percentage of the patients are active versus chronic? And then within the chronic population, can you just talk about to the degree in which they are typically in care or out of care? So are you advertising to bring these chronic patients in and how are you reaching them? And then second question would be, besides Immunoban, unless you want to comment on Immunoban's data, can you just talk about the TAPISA competitive landscape and also vis-a-vis the improvements you're making in TAPISA or seeking to make with the SC formulation? Are you changing doses or things that you're trying to do to continue to move the ball forward? Thank you so much.
spk07: Sure. So when it comes to acute versus chronic, the chronic is, patients. Relative to overall, as I mentioned, we're seeing strong continued enrollment or patient enrollment forms being submitted. So I think that sets up for a strong kind of bolus in population that can roll on to both those existing patients but also generating those new patients. So we're in key Congresses, With other competitive landscape, I think from an intellectual property standpoint, we feel confident that we've got a good pathway in place. And overall, we think we are well positioned to achieve our greater than $3.5 billion in peak sales. Good.
spk12: Thanks, Ken. Ursula, next question, please.
spk13: Your next question comes from Chris Schott with J.P. Morgan.
spk11: Hey, this is Katerina on for Chris. Thank you for taking our questions. And the first one is, can you talk about the gating of Tepasa sales in 2021 reflected in your guidance? Are you anticipating a fairly rapid recovery in revenues once you relaunch, or will it take a few months to kind of get to more normalized sales levels? And the second one is, can you update us on ex-U.S. opportunities for the product in terms of any discussions you've had with regulators, specifically Japan and Europe, but any other geographies as well that you're looking at? Thank you.
spk07: Sure. Thanks for the question. As we look at gating, certainly there's some potential for a revenue expectations.
spk12: And then the final question I think Thanks, Ekaterina. Ursula, next question, please.
spk13: Your next question comes from David Steinberg with Jefferies.
spk06: Thanks. I have a few questions. First, I was just curious how patients who had commenced therapy but then had to get out of therapy will be handled. You know, in some cases, there could be two or three months in between a dose. And I know that the company has, you know, tight connections with both the patients and the doctors. And so, for example, if a patient had gotten two courses of therapy and then went off, would they have to restart and start with course number one or just go back and start with course number three even though it's, you know, two or three months later? And then from that point of view, do you have any sense and maybe too early to tell whether if they have to start all over again, whether the eight courses of therapy would be fully reimbursed. And then regarding your acquisition of Viola, I'm just curious on the manufacturing side. I know that AstraZeneca is manufacturing the products. Once that transaction closes, will you stick with AZN or would you go third party or move in-house? And then finally, I know, Tim, you've mentioned several times that the PEFs are greater than the actual number of patients who were on therapy in Q4. Could you give us a little more granularity on that? Could you actually tell us how many PEFs you have in the queue or how many patients were actually on TPEZ and Q4? Thanks.
spk07: Sure, Dave. So I'm not going to get into specific numbers on PEFs or patients. But, you know, as you can tell, we had a strong fourth quarter, so I think that sets us up well for relaunch. Relative to, I'll just kind of work backwards, Dave. So with BLM manufacturing, Plisna has been manufactured by AstraZeneca, and they've done a great job there. And there's several years of supply of Plisna. So, you know, we will evaluate that situation after close and determine what the plans are. The development stage medicines have already been transferred to other contract manufacturers. So we don't see any risk or issues there. Getting to the question around what will happen with patients, so I think you start with, from a safety standpoint, you don't have significant, this is a less immunogenic molecule than, you know, if you look at a Cristex or a Rituximab, that there would be significant anti-drug antibodies upon reinitiation and challenges here. You've got a medicine that is pretty low immunogenicity involved and that shouldn't create significant safety concerns. But this is all really at a physician discretion level. They're gonna make the best decision for their patients. What we're hearing from physicians is they're gonna get patients back on treatment and finish their expected course of medicine. If there are particular instances where a patient, if you use your example of took two But for the most part, we've heard physicians will pick up where they left off.
spk12: Thanks, David. Ursula, next question, please.
spk13: Your next question comes from David Reisinger with Morgan Stanley.
spk10: Yes, thanks very much. Hi, Tim and team, and congrats on the tremendous progress. My question is on inactive TED, or I guess what you're describing as chronic. Okay. Some thought leaders have expressed a lot of enthusiasm about the efficacy of TPEZA in chronic patients. Could you discuss publications on its efficacy in these patients and potential future TPEZA adoption in this group? Thank you.
spk07: Sure, David. Thanks for the comments. You know, certainly we see the chronic population, the chronic thyroid disease, population is an important one. As I mentioned, the prevalent population of patients who are five years past the active phase is about 70,000 patients. So we certainly see a real opportunity there. And I think there's been about 30 patients that have been studied and published in various a lot of confidence that Tepeza will work well there, and certainly we're labeled to be reimbursing those patients given it's indicated. Liz, I don't know if you want to speak to the specific level of efficacy or anything to add there.
spk02: Yeah, I guess I'd just echo what Tim just said in that, you know, we've seen consistent reports across, you know, something like 30 patients in various case series and case reports, suggesting that across the board we're seeing clinically meaningful improvement in proptosis, which is the objective endpoint that was the endpoint in our phase three and phase two clinical trials. So we're pretty encouraged about how this is going to look, and this body of evidence just continues to grow, including with what I think you heard in Corinne's remarks, which was the most recent publication at NANOS, which has something like a five to six millimeter improvement in proptosis. Overall, it appears that there is a consistent body of literature supporting, you know, meaningful results in this patient population.
spk12: Thanks, Liz. Great.
spk02: Thank you.
spk12: Ursula, it looks like we've got time for one more question, please.
spk13: Okay. Your final question comes from Gary Nachman with BMO Capital Markets.
spk03: Okay. Thanks. Good morning. A couple more on Tepeza. First, where is the net price right now, and how will that be trending in 2021? just the pushes and pulls on that. And then once you start the Phase 4 study in chronic, how long to get the data on that to provide to the payers? So any changes in how you're thinking about the protocol, and will that be a quick process for the payers to reimburse? And then just one on BD, you know, I know the BLL deal is just about to close, but any additional capacity for BD after that deal closes? How far would you stretch the balance sheet? Thank you.
spk07: So I'll start with the BD. We continue to look at potential new development stage, licensing and acquisition, more in the range of what we did with Curzion and buying to pass on more structured deals. So that's the kind of licensing and acquisitions that we're pursuing right now. So we continue to, with our strong cash flow generation, as Paul said, our on regular treatment. And as far as the case for the chronic TED study, our plans right now are to start that in the second quarter. And I think, Tina, we expect that by year end. Is that early next year? Early next year. Early next year to get data from that. And we do think that will certainly help with payers in getting additional or really speeding the time to reimbursement in the chronic population.
spk12: Thanks, Gary.
spk03: Okay, thank you.
spk12: So thanks, Ursula. That concludes our call this morning. A replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
spk13: Thank you for participating in today's conference. You may now disconnect. Presenters, please hold.
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