Horizon Therapeutics Public Limited Company

Good morning, and thank you for standing by. Welcome to the Horizon Therapeutics PLC second quarter 2022 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 and Chief Investor Relations Officer. Ms. Ventura, please go ahead.

Thank you, Chris. Good morning, everyone, and thank you for joining us. On the call with me today are Tim Walbert, Chairman, President, and Chief Executive Officer, Liz Thompson, Executive Vice President, Research and Development, Erin Cox, Executive Vice President, Chief Financial Officer, and Andy Pasternak, Executive Vice President, Chief Strategy Officer. Tim will provide a review of the business, including our second quarter performance and our revised full year guidance. Liz will then review our R&D program, followed by Erin, who will discuss our financial performance and guidance in more detail. After closing remarks from Tim, we'll take your questions. We posted our investor slide deck this morning as well. 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 from these forward-looking statements 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. Your caution 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 to comparable GAAP financial measures in our earnings press release, our slide presentation, and other filings from today that are available on our investor websites at www.horizontherapeutics.com. With that, I will turn the call over to Tim.

Thank you, Tina, and good morning, everyone. Before we move into the details of the quarter, I wanted to summarize a few key points today. Our orphan segment generated net sales growth of 13% driven by our strong commercial execution. We delivered another quarter of outstanding Christexa performance of nearly 30%, driven by increased uptake of our immunomodulation strategy and strong momentum in nephrology. A relaunch of Aplizna is also tracking well, and our rare disease medicines business delivered another solid quarter. And as expected, Tepeza net sales were impacted by Omicron-related effects in the second quarter. Of course, we're disappointed that Tepeza didn't rebound from Omicron as fast as we anticipated. We expected Tepeza trends to continue to show the positive progress we saw in the post-Omicron recovery, and that didn't happen. We have spent a considerable amount of time to understand the reasons for this and identified what we need to do to accelerate growth. We are now executing on these plans to drive near-term results and realize the full potential of Tepeza, which is significant given our estimates of more than 100,000 addressable U.S. patients with thyroid eye disease. A revised full year to peasant net sales guidance this morning is for growth in the high teens. Still significant growth of our 2021 net sales of $1.66 billion. While our pace of growth to reach peak sales is different given the slower start to this year, we remain highly confident in our global peak annual net sales expectation of more than $3.5 billion. We expect to drive at least mid-teens growth next year. We also see upside opportunity to our peak annual net sales expectations from a potential launch in Europe, which I'll touch on later. With that, let me provide additional perspective on Tepeza and then move on to the rest of the business. We launched Tepeza into an undeveloped and complex market in what turned out to be an unprecedented external environment with both COVID and the ensuing government-mandated Tepeza supply disruption. The journey since launch has been anything but typical, driven by the fact that Tepeza, with its impressive profile, has dramatically changed the TED treatment paradigm for both physicians and patients. And we've learned a great deal. In fact, the first year of our launch, we initially expected net sales of approximately $35 million, and we ended the year at $820 million. We achieved this rapid success because we executed extremely well to prepare the market and drive adoption of Tepeza among our core prescriber base. Ocular specialists, such as oculoplastic surgeons, who are TED specialists and know the disease well. We generate particularly fast uptake with early adopters and their highly motivated patients who had symptoms aligned to our clinical child data. We have a clear commercial strategy, which, as we shared on our last earnings call, has not changed. With ocular specialists, we are focused on increasing the breadth as well as the depth of our prescriber base. so that they identify more patients appropriate for TPEZA. With ophthalmologists, we are working to increase the breadth of prescribers while encouraging those who are not yet comfortable prescribing to diagnose and refer to a TED specialist. And with endocrinologists, our focus is on driving an urgency for them to diagnose and refer their patients to a TED specialist as well. So what's changed since we provided our previous full-year guidance? First, Based on prior trends, we expected a faster pace of growth from ocular specialists as we moved from the early adopters and the most motivated patients to a broader set of physicians and patients. We realized that we underappreciated some of the challenges in further penetrating this segment and that it will take more time and effort to accomplish this. Second, we also expected a faster pace of referrals from ophthalmologists and endocrinologists to our core TAPESA prescribers. We now realize that our sales force does not have adequate bandwidth to properly dedicate the time required not only to engage with ocular specialists, but also educate physicians about TED to drive key referrals. This underscores the need to expand our sales force, which I'll touch on shortly. The timing and broad impact of Wilmacron complicated our ability to understand these dynamics more quickly to make these necessary adjustments. As we discussed in our first quarter call, Compesa growth trends dipped with Omicron earlier this year. We expected that to persist into the second quarter, with growth accelerating in the second half of the year as the Omicron impact waned. However, the recovery didn't progress as fast as we expected, indicating to us that Omicron wasn't the only dynamic impacting the business. After digging deeper, we better understood those dynamics. We made several adjustments and are deploying more resources in a targeted manner to drive short and long-term growth of Tepeza. First, we are adapting our commercial focus to these new learnings. This includes focusing our targeting, simplifying our messaging, and increasing the accountability of our field organization. Accordingly, we have recently made several changes to the leadership of Tepeza commercial and Salesforce organizations. Second, we're spending more time and focus on the reimbursement process, which as we've mentioned previously, is burdensome on physicians, especially with surgeons who are not accustomed to it. We have changed how the patient services team operates, combining our patient and reimbursement access teams to streamline the process to more effectively support physicians and patients in the patient access journey. These changes free up time for our sales force to focus on driving to PESA prescriptions. Third, we are spending more time educating physicians as part of the medical management process for their patients. Unlike most diseases which are managed by one physician, defensive patients are typically co-managed by their surgeon and either their ophthalmologist or their endocrinologist. We are educating physicians on monitoring requirements and best practice protocols through peer-to-peer education. And finally, based on recent learnings and findings from our market segmentation work, we realized the importance of expanding our sales force more significantly than we had initially planned. We're in the process of doing just that. We are adding about 60 field-based employees. This gives our sales representatives more time for engagement with ocular specialists and now ophthalmologists and endocrinologists. We'll now cover a universe of approximately 12,000 total physicians. This broader effort will enable them to further educate ophthalmologists and endocrinologists about thyroid eye disease, driving urgency to diagnose and refer their patients to a TPEZA prescriber. These physician specialties see tens of thousands of potential TPEZA patients, but are much less familiar with TED, the pathology of the disease, and the relevance of the TPEZA mechanism of action as a key treatment approach. So currently, we believe many patients never make it out of their ophthalmologist or endocrinologist office to find the care they need. And this is why our Salesforce expansion and our TPEC investments are so critical. Over time, we expect more and more ophthalmologists to prescribe TPEZA. We recently completed a survey of ophthalmologists whose awareness of TED and TPEZA is very high. The survey showed over 60% intend to increase their TPEZA prescribing. underscoring the benefits of a larger Salesforce expansion. We'll conclude my comments on Tepeza with a brief review of the market. It is one of the key reasons we are so confident in the continued growth of Tepeza. We recently completed an exhaustive market analysis to better identify the types of TED patients and where they're being treated. It confirmed that patient symptoms, regardless of the time since diagnosis, are what motivates them to seek treatment and drive physicians to prescribe Tepeza. This research also confirmed our estimates that there are more than 100,000 patients in the U.S. appropriate for treatment with Tepeza. We have segmented these patients based on disease severity and clinical activity score, or CAS. We estimate that more than 20,000 have high CAS with key severity symptoms, such as high proptosis, diplopia, or both. It is also where we have currently the highest penetration at less than 20%. These patients are more likely to be seen by an ocular specialist. We believe we have the highest penetration in this segment because it's where we conducted our pre-launch work, where we primarily focused our sales force, and where we have shown impressive efficacy in our randomized placebo-controlled trials. We estimate that more than 80,000 patients in the next segment are also appropriate for TPEZA. They have low clinical activity scores with high proptosis, diplopia, or both. And we have low single-digit penetration of this segment today. These patients are primarily treated by ophthalmologists or endocrinologists where, as I mentioned before, there is relatively low awareness of the disease. It's also where we're focusing our Salesforce expansion. In addition to our sales and marketing efforts, we are generating additional clinical evidence intended to drive adoption in low-CAS patients. Today, most TPEZA uses in high-CAS patients, so our chronic trial, the trial in low-CAS patients, will be important because it will round out the picture of the efficacy of TPEZA in all CAS types. We have already seen good efficacy from TPEZA in this patient population through various physician-driven case reports. We expect to release top line data from this randomized placebo-controlled trial in the first half of next year. We also anticipate presenting the data at key medical conferences and publishing it in peer-reviewed medical journals beginning in the second half of next year. As a result, we have the potential for more meaningful uptake in the market from this data beginning in 2024. Our continued significant investment in DTC will amplify all of our actions discussed today. and our campaigns continue to generate above average returns. Beyond the significant opportunity in the U.S., we expect our global expansion to contribute meaningfully outside of the U.S. beginning in 2025. While our current competitive peak annual net sales estimate does not assume a launch in Europe, we are finalizing our assessment of that opportunity and expect to be in a position to provide an update later this year. We expect this will provide upside to our peak annual net sales expectations for Tepeza. We have learned a great deal over the last two and a half years, first in creating the market for Tepeza, then as the market has evolved. Our track record of commercial execution gives us confidence in building towards a long-term growth expectation to help thousands more TD patients with this life-changing medicine. Moving on to Cristexa, second quarter net sales were $168 million, representing strong year-over-year growth of nearly 30%. This continued strong performance was driven by a growing adoption of both rheumatology and nephrology market segments, as well as uptake of Cristexa with immunomodulation, which is now running at more than 50% of new patients. Following the recent FDA approval of our SBLA for the co-administration of Cristexa with methotrexate, the team was well prepared to execute the launch. In less than 24 hours, we launched our new promotional campaign, trained the field force, and launched new websites for both physicians and patients. We also hosted a live national launch broadcast, which included physician and patient speakers to educate more than 700 physicians across the country. Since acquiring Cristexa, we have dramatically transformed the growth trajectory of this life-changing treatment for patients with uncontrolled gout. Through our efforts to educate the physician community on the benefits of Cristexa, as well as investing in clinical data to show its efficacy and safety, this SBLA approval is the culmination of our efforts. With the expanded label, our commercial team is now promoting the benefits of Cristexa with methotrexate for the first time. We expect this to drive higher clinical conviction, rounding our reach to more physicians and increasing patient penetration among current treating physicians. In fact, we are already seeing this happen. Physicians who have never prescribed Cristexa before, who have not prescribed in a long time, are changing their opinion. One physician who had not prescribed Cristexa in over a decade said the new data shifted the way he viewed Cristexa and he already had a patient in mind who would be a good candidate for treatment. Building on the momentum we are seeing in this launch and to leverage the current nephrology progress, we're expanding the Chris Texas sales force by approximately 20% over the coming months. We're driving a significant momentum with this medicine, giving us continued confidence in our peak annual net sales expectation of more than $1 billion. With Aplizna, we delivered another strong quarter, generating net sales of $39 million, where we doubled our US sales compared to last year. We continue to make progress on our relaunch in the United States and are encouraged by the steady and consistent growth of new prescribers and new patient starts. As part of our global expansion strategy, our commercial launch is now underway in Germany. We're increasingly confident in the prospects for replacement in NMOSD, and we're progressing towards our global peak annual net sales expectation of more than $1 billion across all potential indications. I will now turn the call over to Liz.