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spk02: Good morning and thank you for standing by. Welcome to the Horizon Therapeutics Third Quarter 2021 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.
spk10: Thank you, Anthony. Good morning, everyone, and thank you for joining us. On the call with me today are Tim Walbert, Chairman, President, and Chief Executive Officer, Paul Holscher, Executive Vice President, Chief Financial Officer, Liz Thompson, Executive Vice President, Research and Development, and Andy Pasternak, Executive Vice President, Chief Strategy Officer. Tim will provide a review of the business, including our third quarter performance. Liz 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 will 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 risk factors and other information outlined in our latest Forms 10-K, 10-Q, and any 8-Ks filed with the Securities and Exchange Commission. 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 conference 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.
spk11: Thank you, Tina, and good morning, everyone. We delivered strong results again this quarter across our business and continued to generate record performance for our key growth drivers, Tepeza and Cristexa. The Tepeza relaunch continued to outperform our expectations, driven by rapid patient starts, strong new patient demand, and increasing prescriber base. As a result, we are increasing our full year 2021 to PESA net sales guidance to more than $1.625 billion. Cristexa generated another strong quarter with new patient growth across rheumatology and nephrology, as well as continued acceleration in the use of Cristexa plus immunomodulation, which is now more than 45% of new patient starts. We are raising our full-year 2021 Cristex and net sales guidance to more than $550 million. We also generated strong growth from both Revicti and Persisbee. In total, our net sales increased 63% year-over-year and adjusted EBITDA increased 54% year-over-year, underscoring our position as one of the fastest-growing biotech companies. Given our outperformance, we are increasing our full-year net sales guidance to $3.16 to $3.21 billion, and adjusted EBITDA guidance to $1.315 to $1.345 billion. The midpoints represent 45% and 33% year-over-year growth, respectively. Our strong performance was accompanied by several key achievements. We initiated our TPEZA randomized clinical trial and chronic thyroid eye disease patients in September. We announced results from our Cristexa mirror randomized clinical trial that demonstrated that Cristexa plus the immunomodulator methotrexate results in a complete response rate of 71% at month six, a more than 30 percentage point improvement compared to Cristexa plus placebo. In line with our strategy to expand our pipeline for future growth, We announced five new R&D programs during an inaugural R&D day in September. We presented new aplism data at multiple medical meetings, adding to the compelling evidence supporting the use of aplism in neuromyelitis optica spectrum disorder, or NMOSD. We acquired a new biologic drug product manufacturing facility in Waterford, Ireland, to support the continued growth of Topeza, Cristex, and aplism as well as our development stage biologics. From a talent and workplace perspective, we demonstrated gender and ethnicity pay equity for the second consecutive time based on a pay equity study conducted by Aon, a leading compensation consulting firm. We continue to be recognized as the best workplace, receiving 11 workplace recognitions this year, including being the highest-ranked company in the biotechnology and pharmaceutical category on Newsweek's inaugural Most Loved Workplace list, which recognizes employee happiness and satisfaction at work. Before I move on to our third quarter performance, I also wanted to highlight the announcement we made this morning regarding the retirement of our CFO, Paul Holscher. Paul's planning to retire in May of 2022 and will stay on an advisory role through May of 2023 to ensure a smooth transition. Aaron Cox, who has been named EVP Finance and has been my Chief of Staff and Head of Corporate Development for the last four years, will be taking on the CFO role. Paul has been a tremendous partner to me over the last seven years, and I'm very grateful for his leadership and dedication to Horizon. I'm equally pleased to name Aaron to the role of CFO. Aaron has a deep knowledge of the business. He's been a leader in many of our major strategic efforts. He's led our capital market activities and has a strong financial background. I'm confident that Aaron, along with our experienced financial leadership team, will continue to drive our long-term strategy at Horizon. Moving on to our third quarter results, beginning with Tepeza. Third quarter Tepeza net sales were $616 million, with year-over-year growth of 115%. With the year-to-date Tepeza net sales of $1.72 billion, Tepeza became our first medicine to generate a billion dollars in annual net sales. We continued our strong execution on the relaunch that followed the government-mandated first quarter supply disruption. Since then, we have helped patients whose treatment was disrupted resume their treatment. We've successfully converted new patients added during the disruption, and we continue to see strong new patient demand for Tepeza. We attribute this strong growth to the fact that we have continued to add new prescribers and further penetrate our existing prescriber base, deepening the penetration among ophthalmology subspecialists prescribing to PESA, such as oculoplastic surgeons, neuro-ophthalmic surgeons, and strabismus specialists. We also continue to expand our reach to ophthalmologists and endocrinologists referred to a TED specialist upon diagnosis. We also continue to significantly invest in direct-to-consumer marketing initiatives, including our branded and unbranded television campaigns, which have been effectively increasing awareness about TPEZA and TED. Our goal for these national campaigns is to increase awareness of TPEZA and accelerate the speed to diagnosis and treatment of TED. We're also starting to proactively engage physicians on the use of TPEZA in chronic patients. As we noted last quarter, we now have six publications studying the successful experience with TPEZA treatment for a total of more than 50 chronic TED patients, surpassing the number of TPEZA acute patients studied in the Phase III clinical trial. The commercial team is leveraging these new publications to educate physicians about the efficacy of TPEZA in chronic patients, with the goal to expand the use of TPEZA beyond the acute patient population. We remain very enthusiastic about the prospects for Tepesa to help more patients address the serious, debilitating, and sight-threatening aspects of TED. Given third quarter's better-than-expected results and continued strong new patient demand, we increased our full-year Tepesa net sales guidance to more than $1.625 billion, which is a near doubling of net sales in our second year of launch, despite the supply disruption and other limitations from COVID-19. Our guidance continues to assume that the third quarter is the highest net sales quarter for TPEZA in 2021. This is a function of three factors. First, disruptive patients who resumed treatment beginning the second quarter. Second, patients with patient enrollment forms, or PEPs, that were generated in the fourth quarter of 2020 and the first quarter of 2021 who started treatment after supply resumed in April. And third, new patients who started treatment in the second and third quarters. Our increased full-year guidance positions us for year-over-year growth of more than 60% in the fourth quarter. We estimate that the vast majority of fourth quarter growth will be driven by PEPS generated after reinitiation of supply in April. We continue to see significant opportunity ahead for TPEZA, both in the acute patient population as well as in the untapped chronic population. We remain well on track for a Topesa peak global net sales estimate of more than $3.5 billion. Cristexa delivered another quarter of strong performance, generating net sales of $158 million. As a result, we have increased our 2021 net sales guidance to more than $550 million, representing year-over-year growth of more than 35%. We're very pleased to announce top-line data from our MIRROR randomized controlled trial last week, demonstrating that 71% of patients randomized to receive Crostexa plus methotrexate achieved a complete response compared to 40% response rate for patients randomized to receive Crostexa plus placebo. Our clinical team is working to complete the analysis of the results to submit a supplemental biologics license application, or SBLA, in the first quarter of next year. We anticipate a standard 10-month review. An approval would allow our commercial team to proactively promote Cristexa plus methotrexate to physicians. In the meantime, our medical affairs and clinical teams are working to present the mirror trial results and additional analyses from the trial at medical congresses next year. We'll be engaging with key opinion leaders on the data as well. The mirror results are a culmination of significant investment we have made in immunomodulation for the last several years based on our long-held belief in its potential to increase the complete response rate of Cristexa, which Mira has now substantiated. Immunomodulation is a core element of our strategy to maximize the value of Cristexa, because it allows more patients with uncontrolled gout to benefit from the medicine, the only biologic approved for treatment of this debilitating disease. We've been seeing increased adoption of the approach and estimate that Cristexa plus immunomodulation is now being used for more than 45% of new patients. The Crostexa team is continuing to drive strong PEF growth and adoption by both rheumatologists and nephrologists. We're seeing results in the growth of our prescriber base. By October, more rheumatologists have prescribed Crostexa this year compared to the total number of prescribers in all of 2020. In nephrology, we significantly grew our prescriber base compared to 2020, to date exceeding the total of full-year 2020 prescribers by 30%. With Aplizna, our humanized monoclonal antibody B-cell depleter, we generated strong third-to-quarter net sales of $18.7 million. Given the timing of Aplizna approval last year at almost the height of the pandemic, we're executing a full relaunch of the medicine, leveraging the patient-centric approach we use for both Tepeza and for Crostexa, We made significant progress on that front. We completed the expansion of our commercial team in the third quarter. Our new team with deep neuroimmunology experience, relationships, and market knowledge is now fully onboarded and started meeting with key physician targets early in the fourth quarter. In less than six months, we developed and launched a new brand campaign based on key opinion leader feedback and market research. Our goal here is to drive awareness about APLISA and NMOSD reduce the time to diagnosis, and highlight the urgent need for treatment. We have put a robust commercial structure in place designed to support the complex aspects of the APLISNA patient journey. We've also bolstered our site of care and reimbursement support, and we have been receiving positive feedback from both physicians and sites of care. A critical part of our strategy is to drive physician and patient preference for APLISNA based on its differentiated mechanism of action, strong clinical data, and clear patient benefits, which we're doing through our investment in medical and scientific engagement to develop our scientific leadership position at NMUSD, which Liz will discuss in more detail shortly. It takes time to effectively launch and infuse rare disease medicine and educate stakeholders about the new medicine. We're off to a good start with the plism and expect to see the benefits of our new commercial organization and investments as we head into the new year. I'll now turn the call over to Liz.
spk08: Thank you, Tim, and good morning, everyone. The third quarter of 2021 marked another quarter of great progress in R&D. In addition to advancing our existing pipeline programs, we significantly expanded our pipeline, announcing the addition of five new programs during our inaugural R&D day in September. All told, our pipeline today has the potential for 10 new medicine or new indication approvals in the second half of the decade. The R&D Day also gave us the opportunity to showcase our talented and experienced team. It was a pleasure to be able to talk more about our R&D strategy, in particular how we're expanding our pipeline with early to late stage programs for sustainable growth in three ways. First, by acquiring and developing medicines for indications that address unmet needs in rare, autoimmune, and severe inflammatory diseases. particularly those in our therapeutic areas of focus. Second, by leveraging our internal research as well as research-based partnerships and collaborations to drive earlier stage innovation. And third, by maximizing the range of potential diseases our pipeline molecules can impact. I look forward to continuing opportunities to discuss our progress in each of these areas. Today, I'm going to recap some of our key programs similar to recent calls. I'll start with daxtelumab, or HCN7734. Daxtelumab is the first and only plasmacytoid dendritic cell, or PDC, depleter in clinical development. PDCs are found in high concentrations in diseased tissues of individuals with certain autoimmune and inflammatory diseases, and this results in the significant inflammation and tissue damage, which are the hallmarks of autoimmune disease. In addition to our ongoing Phase II trial evaluating dexvilumab for the treatment of systemic lupus erythematosus, we announced in September four new indications we are exploring. Two are lupus-related, discoid lupus erythematosus and lupus nephritis. The other two are alopecia areata and dermatomyositis. Discoid lupus is a scarifying disease that can be significantly disfiguring. It can also result in hair loss. One of the most important manifestations in lupus is the involvement of the kidney. PDCs can promote kidney damage and are associated with more advanced disease, which is why we're pursuing lupus nephritis. Next is alopecia areata. Patients with this disease, for which there are no FDA-approved therapies, experience baldness to varying degrees. Alopecia areata can involve the entire scalp or even the entire body. And finally, we'll be studying dextilamab for dematomyositis. a rare condition that manifests as severe skin rash and disabling muscle weakness. We expect to begin Phase II trials for these four new indications in 2022. Moving to Dazidalibep, or HCN4920, our CD40 ligand antagonist designed to block a central pathway involved in many autoimmune and inflammatory diseases. Dazidalibep is currently in Phase II trials for three indications, Sjogren's syndrome, rheumatoid arthritis, and kidney transplant rejection. During R&D Day, we announced a new indication for Dazodalibep in focal segmental glomerulosclerosis, or FSGS, a progressive kidney disease with high unmet need and no FDA-approved treatments. We expect to begin a Phase II trial for FSGS in 2022 as well. HCN 825, our oral selective Lpar1 antagonist, has shown early signs of clinical impact in fibrotic disease. We expect to initiate two pivotal Phase IIb trials for HCN825 by the end of this year, one in diffuse cutaneous systemic sclerosis and the other in idiopathic pulmonary fibrosis. For both of these disease states, we've worked closely with leading experts to incorporate learnings from prior trials to optimize trial outcomes. Moving to APLISNA, our anti-CD19 humanized monoclonal antibody, we're currently enrolling patients in two Phase III randomized controlled trials, one in myasthenia gravis, or MG, and the other in IgG4-related disease. MG is a chronic, rare, autoimmune neuromuscular disorder that affects the voluntary muscles of the body, especially those that control the eyes, mouth, throat, and limbs. IgG4-related disease refers to a group of disorders marked by tumor-like swelling and fibrosis of affected organs, such as the pancreas, salivary glands, and kidneys. We expect data for both trials in 2023. However, because the IgG4-related disease trial is event-driven, the readout timing may extend beyond 2023. Aplizna is indicated for neuromyelitis optica spectrum disorder, or NMOSD. a rare and devastating neuroinflammatory autoimmune disease that attacks the optic nerve, spinal cord, and brain stem. NMOSD is severe and relapsing, and because attacks can result in blindness, paralysis, and other disabilities, often permanent, it is critical to prevent relapses. We're rapidly building a base of compelling data to support the efficacy and safety profile of aplizna. This growing body of evidence is a key component of our clinical strategy, to establish scientific leadership in NMOSD. We shared data this quarter at key neurology congresses, including a presentation of a new data analysis from our Phase III NMOSD clinical trial. The results demonstrated the correlation of B-cell depletion and improved outcomes in patients receiving aplizna, showing that the greater the B-cell depletion, the better the patient outcome, providing additional evidence of the central role B-cells play in NMOSD. At another neurology conference, we presented data showing that aplizna may provide durable efficacy and a favorable safety profile for blacks with NMOSD, who often have earlier onset of the disease with more severe relapses. Finally, a new analysis of data from the open-label portion of the Phase III trial was published in the Multiple Sclerosis Journal that highlighted a positive sustained effect on attack risk. in people with NMOSD treated with a plisma for four or more years. For TPEZA, we began enrolling patients during the third quarter in the Phase IV placebo-controlled trial evaluating TPEZA for use in patients with chronic thyroid eye disease. TED, a serious, progressive, and potentially vision-threatening rare autoimmune disease, begins with an acute phase during which inflammatory signs and symptoms, such as eye pain, swelling, proptosis, or eye bulging, and diplopia, or double vision, progress over time. The acute stage is followed by a chronic phase in which inflammation is no longer present or is markedly diminished. However, significant signs and symptoms may remain and continue to negatively impact patients' quality of life. As a reminder, Tepaza is a broad indication for all TED patients, and physicians can prescribe Tepaza for chronic patients today. Our objective for the chronic TED trial is to generate clinical data to better inform payers and physicians about the efficacy and safety of TPEZA in people with chronic TED. We expect top-line results in the second half of 2022. We also continue to advance our TPEZA subcutaneous administration program as well as our clinical program for TPEZA in Japan. We've submitted our trial design to the Japanese Pharmaceuticals and Medical Devices Agency and anticipate a trial start in the first half of 2022. In addition, long-term data from our TPEZA OpticX open-label extension trial were recently published in Ophthalmology that showed high rates of maintained response for proptosis, CAS, and diplopia with no new safety signals. And as a reminder, the OpticX patients had longer disease duration than those in the Optic Phase III clinical trials. We also shared longer-term follow-up results from OPTIC at the annual meeting of the American Thyroid Association in October that reinforced previously reported data showing a sustained response in the majority of people treated with TPEZA. We plan to continue to share TPEZA data at upcoming medical meetings over the coming months. And finally, for Cristexa, we were very pleased to recently announce the positive results of our mirror randomized controlled trial evaluating immunomodulation with methotrexate. The trial, which met its primary endpoint at month six, demonstrated that 71% of patients who were randomized to receive Cristexa plus methotrexate achieved a complete response compared with 40% of patients randomized to receive Cristexa plus placebo. The results of the Cristexa plus placebo arm was very similar to the 42% response rate previously demonstrated with Cristexa monotherapy in the Phase III program, a consistency that helps support the robustness of the trial results. The addition of methotrexate resulted in a 31 percentage point improvement in the complete response rate over monotherapy. Seeing such a substantial improvement to a response rate is rare, and it reinforces the positive results of Cristexa plus immunomodulation we've seen from multiple published case series, as well as our own open-label trial evaluating Christexa with methotrexate. This important milestone is the culmination of significant investment over the last several years with the goal of enabling more people living with uncontrolled gout to benefit from Christexa. And we continue to explore ways to improve outcomes and identify new paths for treatment with Christexa as exemplified by our shorter infusion duration, monthly dosing, and re-treatment trials. Beyond these substantial efforts, we also continue to invest in developing new approaches that target the underlying cause of gout, such as our Arrowhead and Hemashare preclinical programs. As Tim mentioned, we expect to submit an SBLA application in the first quarter of 2022 to incorporate the MIRA trial data into the prescribing information, and we expect a standard 10-month review. we'll be announcing the results of the Cristexa PROTECT trial at this week's American Society of Nephrology Kidney Week. This trial evaluated Cristexa in the management of patients with uncontrolled gout who have undergone kidney transplants. We look forward to providing additional details on our key pipeline programs, as well as updating you on our continued progress in the coming months. I will now turn the call over to Paul.
spk07: Thanks, Liz. My comments this morning will primarily focus on our non-GAAP results, unless otherwise noted. Third quarter net sales were $1.037 billion, representing year-over-year growth of 63%, given by the record performances of our key growth drivers, Depeza and Cristexa, as well as the strong performance of our other rare disease medicines. Our orphan segment generated net sales of $951 million, a year-over-year increase of 78%, and representing 92% of total company third quarter net sales. Orphan segment operating income was $476 million. Net sales for the inflammation segment were $86 million, with segment operating income of $34 million. We continue to focus on maximizing the cash flow generated from this segment to reinvest in our growth drivers and our expanding pipeline. Our non-GAAP third quarter gross profit ratio was 85% of net sales. Non-GAAP operating expenses were $375 million. This included non-GAAP R&D expense of $74 million, or 7% of sales versus 4% of sales in the third quarter of 2020. Non-GAAP SG&A expense was $301 million. Third quarter adjusted EBITDA was $509 million, representing year-over-year growth of 54 percent. Non-GAAP income tax expense for the third quarter was $74 million. As we have seen in prior years, there can be variability in our tax rate across quarters. We continue to expect that the tax rate in the fourth quarter to be in the mid-teens to bring our full-year tax rate in line with our projected low double-digit rate. Non-GAAP net income for the quarter was $414 million, and non-GAAP diluted earnings per share were $1.75. The weighted average shares outstanding used to calculate third quarter 2021 non-GAAP diluted EPS were 236 million shares. Third quarter non-GAAP operating cash flow was $432 million. As of September 30th, cash and cash equivalents were $1.1 billion. giving us significant flexibility to invest in our growing operations and to further expand our pipeline, including additional strategic transactions. The total principal amount of our debt is $2.6 billion, with the earliest maturity in 2026. As of September 30th, our gross debt the last 12 months adjusted EBITDA leverage ratio was 2.0 times, representing an achievement of our gross leverage target of two times, well ahead of our year-end 2021 goal. Turning now to our guidance, this morning we announced that we are increasing our full year 2021 net sales guidance range to $3.16 to $3.21 billion, from $3.025 to $3.125 billion. This reflects our strong performance across all of our business units in the third quarter, as well as our increased full-year 2021 net sales guidance for Tepeza and Cristexa. For Tepeza, our updated 2021 net sales guidance is for more than $1.625 billion, representing year-over-year growth of more than 98%. As Tim noted, we continue to expect the third quarter to be the highest net sales quarter of 2021 for Tepeza. For Cristexa, our updated 2021 full-year net sales guidance is for more than $550 million, representing year-over-year growth of more than 35%. In our inflammation business unit, we expect less than $5 million of Duexis fourth quarter net sales in our 2021 guidance, given the at-risk generic launch that occurred in the third quarter. We're also increasing our adjusted EBITDA guidance range from 1.315 to $1.345 billion, from 1.26 to $1.3 billion. We expect our non-GAAP gross profit ratio for the full year to be approximately 87 percent. Our updated adjusted EBITDA guidance assumes an increase in non-GAAP operating expenses in the fourth quarter, driven by additional SG&A expense to support the Ablizna relaunch and continued investment into PESA. We expect full year 2021 R&D expense to approach double digits as a percentage of net sales. We continue to expect non-GAAP net interest expense for the full year to be approximately $75 million. We continue to expect a full year non-GAAP tax rate in the low double digits. We estimate that our cash tax rate will be in the mid to high single digits in 2021. As always, our tax rates could change significantly as a result of any acquisitions or divestitures we may make or any changes in tax laws. We expect our full year 2021 weighted average diluted share count to be approximately 236 million shares. With that, I'll turn it over to Tim for his concluding remarks. Thank you, Paul.
spk11: The third quarter was another excellent quarter, marked by strong commercial execution, continued progress on our strategy, and multiple achievements. We generated record financial results, driven by Tepeza and Cristexa, as well as robust performance for our other rare disease medicines, where we see continued strong underlying demand. We increased guidance for full-year Tepeza and Cristexa net sales, total company net sales, and adjusted EBITDA. We continue to expand our pipeline with the addition of five new Phase II programs. We announced positive top line results for our Cristexa mirror immunomodulation trial. We will be submitting an SBA to the FDA in the first quarter to update the Cristexa label. We completed the commercial expansion of Aplizna and relaunched it early this quarter. We continue to demonstrate the value we place on talent, demonstrating gender and ethnicity pay equity once again, receiving multiple additional workplace awards. Horizon remains one of the fastest growth and transformation stories in biotech, and we continue to generate significant value, not only for our shareholders, but also for the thousands of patients living with rare, autoimmune, and severe inflammatory diseases. We're excited about Horizon's future and remain focused on realizing the tremendous opportunity we see for the company ahead. With that, we'll now open up the call for questions. Tina?
spk10: Thank you, Tim. Anthony, please open up the call.
spk02: Okay. And just a reminder, to ask a question, you will need to press star 1 on your telephone. And to withdraw the question, press the pound key. And the first question comes from the line of Chris Scott from J.P. Morgan. Your line is now open.
spk12: Hey, guys. I appreciate the questions. I just have two on Tepeza. Maybe first talk about, I think what's implied is about a $550 million fourth quarter number for the drug. Is that a decent run rate to build off of as we think out to 2022? or are there still some sales in the fourth quarter from warehouse patients that came in during the supply disruption? And let me just ask my second one up front here, also on Tepeza, just chronic use, what percent of Tepeza sales are now in this setting, and are you seeing more uptake in chronic with some of the recent data publications, or do you think the Phase 4 study is really what's going to be needed here to get traction in that setting? Thanks so much.
spk11: Sure, Chris. As we look at the disrupted patients and how things have sequenced. They continue to come down. The vast majority of patients in the fourth quarter, we expect, will have been generated post-supply. And as we look at 2022, I guess the way to look at it is we've had four quarters of revenue in three quarters in 2021, a rare dynamic given the supply disruption. And the best way that we think to look at growth in 22 is on a full-year basis, so look at it year over year. And as we look at consensus estimates of mid-30% growth, we think that's a pretty reasonable view in context of that dynamic. Looking at the chronic population, we see that now increasing to low double digits as a percent of overall patients. So as I mentioned in my remarks, we have 50 patients of data across a number of published investigator-initiated studies, and our sales force has begun with case studies and presenting that data throughout the last several weeks. So we expect to continue to drive uptake in the chronic patient population.
spk10: Great. Thanks, Chris. Anthony, next question, please.
spk02: And your next question comes from the line of Jason Gerberry from DOA. Your line is now open.
spk00: Oh, hey, guys. Thanks for taking my questions. Just two for me. Tim, in the past, you guys have talked about some doctors who are low prescribers for TPEZA might prescribe something like one or two TPEZA scripts. Curious, you know, your commentary earlier, where are these low prescribers, where you've gotten them to? Have you had success pushing the low prescribers to becoming more mid to higher decile type of prescriber? And then just on the MIR trial outcome, I realize that we'll get more detailed data at a future medical meeting, but just can you comment directionally what we saw with the infusion reaction profile, if that looks similar to what was seen in the investigator trials and was an improvement relative to monotherapy? Thanks.
spk11: So first on the MIR, we expect to publish those results, and everything at least that we've seen to date is fully in line with expectations. And as we publish that data, we'll share more and more specific details. So looking then towards TPEZA, we continue to make progress across the prescriber base. The first phase of launch is always getting to those prescribers who are regularly seeing those patients, interacting with those patients like oculoplastic surgeons, neuro-ophthalmic surgeons, and strabismus specialists. And as you move through the launch, it's expanding that to ophthalmologists and endocrinologists, and overlaying that with our direct-to-consumer campaigns. So all that continues to progress, and that's evidence in the results we saw in the quarter.
spk10: Great. Thanks, Jason. Anthony, next question, please.
spk02: And your next question comes from the line of David Amsalem from Piper Center. Your line is now open.
spk05: Thanks. So one on Cristexa, one on Neplizna on Cristexa. So is it your expectation that you will be reaching a significant audience of physicians who are new to the product or who are on the fence about using it now that you have the mirror data in hand? Just talk about how you think about the expansion of the physician audience. And on Plisner, can you talk about what's driving new starts? Is it switching from rituximab or switching away from older immunosuppressants? or de novo patients, or some combination thereof, and in your conversations with KOLs and practitioners in general, where do you ultimately think the bulk of your business is going to be coming from, at least in the near term on the Plisna? Thanks.
spk11: Sure. With Chris Sexton, that's a really good point. When we look at the approach with immunomodulation, that has provided two real opportunities. One is to go back to those who didn't have a great experience with Cristexa as monotherapy and went away from the medicine many years ago. So that certainly has been an opportunity to go back and give those physicians a reason to believe that they may see different results with Cristexa plus methotrexate as evidence in the MIR trial. But also it's evidence when you have results that are 30-plus points better, so 70-plus percent response rates, like we've seen in mirror and replicated across the recipe trial with mycophenolate and the other studies that have been represented similar response rates, getting those de novo patients to physicians who haven't had a lot of experience, it's a much different approach, especially as you see infusion reactions and a number of the other issues that were faced early in the launch 11 years ago aren't issues today. So I think we expect to see growth in those new physicians, new patients, but also continue to go back to those physicians who didn't have a great initial experience. And in combination, that's what drove that 46% year-over-year growth we saw in the third quarter and us raising our guidance for the rest of the year. Relative to aplizna, we see about half of those patients currently on rituximab. That's the base of patients with NMOSD. As we look at Our new sales force that's out there, we're continuing to see, and we've generated data that we talked about last quarter being presented on patients who've switched from rituximab. I would say we see the majority of patients switching from rituximab, but also de novo patients coming onto the medicine. So I still think commiserate with how rituximab is used in the market, it's a little over half the market, and we're seeing that be the similar conversion rate to a Plasma And as we ramp up our commercial effort this quarter, we expect to be able to really start making a difference. We've got four-year data published. Liz also talked about impressive data in the black population. So we think all of that together with our expanded commercial effort positions us really well.
spk10: Great. Thanks, David. Anthony, next question, please.
spk02: Your next question comes from the line of Annabel Samimi from Stifel. Your line is now open.
spk09: Hi, thanks for taking my questions. I just want to get a little granular on both of those for a minute. So maybe you can talk about where these fields of the market dynamics through PRISNA are meaningfully different than in your other franchises. And I guess what gets you comfortable that you can repeat the same successes that you had, say, in Cristexa and Tepeza, given that it's a market that does have other therapies? And I guess what does that mean for other institutions like MG that does have a number of competitive programs? And then on Cristexa again, so the 45% patients on immunomodulation, are those physicians that aren't using immunomodulation, is there some other rate-limiting factor for those specific patients? Because it seems like there is a pretty decent amount of data already, not just with methotrexate, but with other immunomodulators that could have gotten them over that hump. So maybe you can just talk about what other rate-limiting factors there might be in getting patients to co-prescribe. Thanks.
spk11: Sure, Annabelle. I think it really comes down to the whole premise of doing the MIR placebo-controlled trial, and that is for submitting that, getting that included within our label, and giving us the ability to actively promote Christexa plus immunomodulation. Right now, we... are getting the word out via Congresses, medical education, and publication of the various studies that have been out there, and the MIR data hopefully will be published as we get into next year. So it's really about ability to drive that uptake versus it naturally being learned in scientific communication. And as we get that data out and hopefully approved towards the end of next year, that will put us in a position to actively drive patients onto the immunomodulation strategy that is supported now by the mirror results. Looking at a Plisna, I kind of look at it in a very similar way, is that with Tepeza, with Gristexa, we are competing with standard of care. And standard of care in the case of Tepeza is surgery that was seen as the best option at the time until a new advance was brought forward. And we see a Plisna in a very similar way. Rituximab was the best agent available at the time with not much else available in a population where flares and patients that can get sight-threatening complications just don't have the option. So we see Aplizna as competing with standard care. In this case, it's rituximab, and we'll approach it just as we have with our other medicines. helping them understand the long-term data that differentiated benefits of humanized monoclonal antibody, CD19 benefits versus CD20, and how we see mechanistically that works better within NMOSD. So we think we've got the data and an improvement from standard of care. It just happens to be a medicine in this case versus surgery or really not treating patients in the case of crostexin.
spk10: Thanks, Annabelle. Anthony, next question, please.
spk02: And your next question comes from the line of Ken Cacciatore from Cowan & Company. Your line is now open.
spk13: Hi. Good morning, team. Congratulations on all the progress. Just wondering, Tim, now you've had Tepiza, obviously, in the market for a sufficient amount of time to understand any kind of changing patient dynamics. So just wondering... As you continue to push DTC, are you moving at all into more mild patients? I know mild is still very bad for this patient population, but kind of anything generally surprising to you? Obviously, you've outperformed incredibly well, and I know we're driving into chronic a bit more, but maybe any context around differences from launch to what you're seeing now? And then, Paul, congratulations. I'll ask you a question. Maybe Tim will chime in as well. Obviously, there's going to be potentially a lot of bottom-line leverage as we go into next year as we start annualizing off of these really nice Tepiza and Cristex and Uplizna trends. Can you just speak to how we should be thinking about the potential leverage as we get below the top line into next year? Thanks so much.
spk11: Sure. Thanks a lot, Tim. When we look at the Tepiza trend, dynamics and how they've evolved. I'd say the biggest evolution has been the use in chronic patients. We're not seeing them go back to mild patients. We see the 15,000 to 20,000 moderate to severe patients coming into the market, and that 70,000 population of chronic patients to be the appropriate use of TPEZA. We don't have data, nor do we think TPEZA is a good choice in mild patients. Once they get to progressing and getting pain and diplopia and double vision, that's when we think TPEZA becomes the right treatment for those patients. So we're solely focused on the moderate to severe population of acute patients and driving that uptake in the chronic population. So that's the evolution we've seen. And, Paul, do you want to speak to leverage?
spk07: Yeah. You know, we're not going to give specific guidance on 22 until after the fourth quarter on our call in March. But as we've said in the past, over the coming years, we do expect margin expansion. And we do think that, you know, the EBITDA margin will expand as we get leverage on the SG&A spend. That should more than offset the significant increase that we have that we're making in our investment in R&D, as well as our investment in our international expansion ahead of really generating significant revenue there.
spk10: Thanks, Paul. Next question, please, Anthony.
spk02: And your next question comes from the line of Yatin Sonia from Guggenheim. Your line is now open.
spk06: Hey, guys. Thank you for taking my question, and congrats on very good execution. Question on Acrotexa. Could you give a little bit color on, you know, the contribution you're seeing from nephrology versus rheumatology segment? And then any thoughts? You know, obviously you are in the 40% range now with the combo use. what the peak might be and over what time period. Thank you.
spk11: Okay. Thanks, Hattin. So when we look at the CRISTEX, as I mentioned, looking at through three quarters, we had 30% more than all the prescribers in 2020 in nephrology versus exceeding the total number for rheumatology, three quarters versus 2020. So Nephrology, albeit off a small base, is growing even faster than rheumatology. As an overall contribution, again, we can't get to that data because a lot of these patients from nephrology are actually infused in similar places as rheumatology patients. But we're seeing strong growth in both of those segments. But off a smaller base, prescribers increasing more rapidly on the nephrology side. With immunomodulation, as we said, it is greater than 45%. We don't see 100% as a reasonable, but getting to that 70% to 80% range is, we think, pretty reasonable, and the ability to get there will be accelerated with getting approval of inclusion of this data in the label for CRISTEXA, which we expect at year-end next year.
spk10: Great. Thanks, Yatin. Next question, please, Anthony.
spk02: And your next question comes from the line of Akash Tewari from Jefferies. Your line is now open.
spk04: Thanks so much. Given the amount of case study reports you've seen and your power assumptions for your TPEZA chronic study, is your base case that the chronic TE data will look very similar to the acute population on proctosis response? And additionally, what was the dollar amount of supply disrupted patient restarts that contributed to Q3 sales? And what was the quarter over quarter demand growth for TPEZA X these patient restarts? Thank you.
spk11: So on specific, we're not getting into specific dollar contribution. In the third quarter, the disrupted patients continued to sequence through, and we expect the vast majority of patients in the fourth quarter to be those generated post the supply disruption. With the chronic readout and expectations around it, we look at it as a similar design and population that is being used in today, and would expect results in a similar range.
spk10: Thanks, Akash. Next question, please, Anthony.
spk02: And your next question comes from Gary Nachman from BMO Capital Markets. Your line is now open.
spk03: Hi, guys. Good morning. First on to PESA, just talk a bit more about your DTC efforts and what sort of impact you've been seeing from that finding these patients and improving diagnosis, how much you might step that up going into next year, especially as you want to expand more into chronic. And then in terms of your ex-U.S. efforts, I think Paul just touched on it before. So for Tepeza, outside of Japan, where else will you look outside the U.S.? Maybe also just talk about the timeline for doing the study in Japan, when it could reach the market. And then for UPlizna, just talk about what you're doing in the EU to prepare for the launch there, what the status is. Thank you.
spk11: Sure. Thanks, Gary. With UPlizna in Europe, we've hired our leadership team, one across on a pan-European basis as well as key reimbursement, and also several of the commercial leaders that we expect to be in place to launch beginning in Germany post-approval. which is still expected in the first quarter of next year. So we are continuing to ramp up our efforts there. Also looking to prepare and ramp up efforts in certain countries in Latin America. With TPEZA, we continue to prepare our study and working with the Japanese authorities and look to finalize that and get a clinical program beginning enrollment over the next few quarters. which will then set in timeline, you know, a few years out to get those results and get through the regulatory process. When it looks to DTC, we have ramped up those efforts substantially over the second half of 2021. And, you know, the real goal there has been to get patients, whether that is in One of our three ads, one is targeted at Graves patients to educate them that you may get thyroid eye disease, and that's more just to educate patients. If you look at our thyroid eye disease non-branded campaign and the Tepeza.com or Tepeza DTC campaign, both of those are geared toward helping patients get to our website and look to find specialists who treat thyroid eye disease. So educating the symptoms, and we've seen a significant increase and the number of patients going to the website looking for a specialist finder, and we hear stories from our field and other areas of significant increase in questions being asked as a result of these commercials. So the ROI and all the different metrics that we look at are performing exceedingly well, and we continue to expect to use that as a resource moving into next year.
spk10: Great. Thanks, Gary. Anthony, next question, please.
spk02: Okay, and your next question comes from the line of Mike Ulz from Morgan Stanley. Your line is now open.
spk14: Hey, guys. Thanks for taking the question. Just two for me. Maybe a follow-up on Cristexa. And, Tim, maybe you could just talk about some of the trends that you're seeing more recently in patient enrollment forms compared to what you saw earlier in the year. And then just on Cristexa in terms of the mirror data and what impact that could have on utilization, Is the way to think about it that presentation of the data early next year could drive some of that increased utilization, or is it really more the label expansion that allows you to promote correctly? Thanks.
spk11: Sure. Relative to PEP growth, we've been really impressed with the growth we saw in the third quarter, especially in the context of the Delta variant and the impact it had on the markets and the fact that we're able to still grow through that, and we continue to expect to see strong PEP growth throughout the fourth quarter and into next year. With the MIR data, as I said, it's greater than 45%. We plan on submitting that data to various Congresses, which would probably be presented mid-year based on our early estimates. And You know, I think that will continue to raise awareness and will have an impact, but optimal ability for us to proactively promote will be once it's included in the label, which is expected by year-end next year. Great.
spk10: Thanks, Mike. And, Anthony, we've got time for one more question, please.
spk02: Okay. And our last question comes from the line of Navanti from Citi. Your line is now open. Hi.
spk01: Good morning. I have two questions, please. The first one is, assuming we have positive data from the chronic TED trial, can you discuss your expectations around payer acceptance, dosing, and compliance to the drug? And my second one, if I may ask to comment on your retirement poll, was it driven by personal reason or to pursue another opportunity? Thank you.
spk11: Paul, do you want to comment first?
spk07: Sure. It's strictly personal reasons. As we noted, I'm going to stay on as CFO for another six months and then stay involved as an advisor for the company another year after that. And it's really just a point in my life where I'm ready to step back from day-to-day full-time employment.
spk11: Thanks, Paul. Relative to the question around chronic data and when we expect to get that data in the second half of the year, I think the key benefit there will be certainly to help from a reimbursement standpoint, and less about access and more about speeding the time to patients getting infused with their medicine. We don't think it will have an impact on dosing or compliance. We're seeing similar dosing and compliance. Everyone's getting the six full eight treatments over six months. Compliance is well north of 90% in both acute and chronic patients. So we think the main impact will be to help to accelerate reimbursement.
spk10: Great. Thanks, Yvonne. And Anthony, thank you. That concludes our call this morning. A replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
spk02: Ladies and gentlemen, this concludes this conference call. Thank you for participating. You may now disconnect.
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