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spk02: Good day, and thank you for standing by. Welcome to the Connexa Pharmaceuticals first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star 0. I would now like to hand the conference over to Rachel Frank, head of investor relations. Please go ahead.
spk10: Thank you, operator. Good morning, and thank you for joining Connexa's call to discuss our first quarter 2022 financial results and corporate update. A press release highlighting these results can be found on our website under the Investors and Media section. As for the agenda, our Chief Executive Officer, Sanj K. Patel, will start with an introduction. Ross Mote, our Chief Commercial Officer, will provide an update on our ARCLIS commercial execution. Then Mark Ragosa, our Chief Financial Officer, will review our first quarter 2022 financial results. And finally, Sanj will return for closing remarks and to kick off the Q&A session for which John Paolini, our Chief Medical Officer, and Eben Tesari, our Chief Operating Officer, will also be on the line. Before getting started, please note that we will be making forward-looking statements today that are subject to risks and uncertainties that may cause actual results to differ materially from these statements. A review of such statements and risk factors can be found on this slide, as well as under the caption, Risk Factors, contained in our SEC filings. These statements speak only as of the date of this presentation, and we undertake no obligation to update such statements, except as required by law. With that, I will turn it over to Sanj.
spk08: Thanks, Rachel, and good morning, everyone. I'm really happy to review our first quarter 2022 results today. It's been a full year since the commercial launch of Arclist for recurrent pericarditis. We're really happy with the progress we've made so far and in bringing Arclist to patients in need. I'm delighted to report that the net revenue for Arclist for the first quarter of 2022 was $22.2 million. Ross will cover our commercial performance in more detail, and overall, we've been incredibly pleased with the growth in prescriber adoption, patient adherence, and payer coverage. We're obviously also highly encouraged by the steady commercial growth of Arculus to date, and we plan to fully maximize on this opportunity. In addition to the launch, we remain focused on helping even more patients and building the most value from across our portfolio of clinical stage programs, and these include Vixarilumab, KPL-404, and Mavrolimumab. Starting with Vixarilumab, we're currently enrolling and dosing in a randomized placebo-controlled Phase IIb dose-ranging study in Parego nodularis. We expect data from this study in the second half of this year. For KPL-404, which is our CD40 program, we're enrolling and dosing in a phase two study in rheumatoid arthritis. This is a disease where the dose response has been well characterized, and our 12-week study is designed to provide not only PK characterization, but also an early signal of efficacy with chronic administration in a well-described patient population. The trial will potentially stand primarily as a proof of concept and could enable optionality to evaluate a range of other autoimmune diseases. For MAVRI, we remain highly encouraged by its broad potential, which, as you recall, has been demonstrated by positive clinical data across multiple indications. We're currently evaluating its development in rare cardiovascular diseases where the GMCFF mechanism has been implicated. We also continue to be very active in our business development efforts, which are focused on opportunities that have synergies with our existing commercial infrastructure, as well as the other assets in our pipeline. In essence, we are making tremendous progress across our entire portfolio, and we believe well-positioned for growth. So with that, I'll turn it over to Ross to review our commercial performance in more detail.
spk04: Thanks, Sanj. We're extremely pleased to share with you that Q1 represented continued positive growth in our launch trajectory, generating $22.2 million and close to 20% sequential growth versus Q4. This growth is in spite of the typical seasonal headwinds associated with specialty drugs at the start of the year. Concluding Q1 now gives us 12 months of experience on the market in recurrent pericarditis, and we have generated $60.7 million in net sales launched to date. 2022 will be our first full year of sales. And we are excited by the continued momentum we've generated and the feedback we're gaining from prescribers, payers, and ultimately patients who are experiencing the transformational impact that Arculus can bring to this disease. We continue to guide to full-year net revenue of between $115 and $130 million. On slide eight, I will dive into more detail on the drivers behind the recurrent pericarditis revenue. Owing to our efforts to enhance the awareness of ARCALIS, in Q1, we saw a continued increase to the prescribing base. We now have more than 400 individual prescribers, predominantly cardiologists, who have identified and prescribed for at least one recurrent pericarditis patient. Furthermore, we also saw an increase to the absolute number of physicians who have prescribed for two or more patients. Repeat prescribers account for around 17% of our ever-increasing prescriber base. This demonstrates the continued growth in the breadth of prescribing, as well as the positive experiences physicians and patients are having, resulting in a growing depth of prescribers. On the payer side, as I mentioned a moment ago, in regard to the typical Q1 seasonality insurance issues, we saw a substantial number of our patient population switch insurance plans in Q1. requiring new approvals and interim supports on our free goods bridge program. Nevertheless, we continue to see a very high approval rate across all payer segments, resulting in a 95% approval rate in totality. Therefore, almost all of these patients came back onto commercial therapy during the quarter. In terms of duration, We're just about at the one year stage since our launch, so we have a small cohort of the early launch patients who have been on continuous therapy throughout this time, and we continue to see robust adherence, compliance, and the timely refill of scripts. We realize we still need more time to determine how long patients will ultimately remain on continuous commercial therapy, but what we do know today is that of those patients who started Arclist in the first launch quarter, around 60% remain on therapy at the end of Q1. While this will continue to evolve, the limited data on hand suggests continuous treatment durations of around 12 months. Additionally, as you can see from the lower right-hand side of this slide, we recently conducted market research on product satisfaction in recurrent pericarditis. We're delighted to hear that patients are experiencing a very high level of satisfaction on ARC lists. especially when compared to other treatments that have been prescribed. This speaks well to our ambition of ARCLIS becoming the standard of care in recurrent pericarditis. Moving to slide nine, we're pleased to see renewed avenues now open for us for disease awareness and promotional activities. For the first time since we launched deep in the COVID-19 pandemic, The main target conferences are now available for dissemination of data and opportunity to meet face-to-face. In April, we attended ACC, and we made a big splash to a wide audience with our commercial booth, which resulted in over 400 individual details with healthcare professionals. And additionally, over 120 delegates attended our Arclist Product Theater. We now have ACR and AHA both on the horizon in November, so we're delighted with these opportunities ahead to reach more physicians. The results from research we recently conducted show that following an interaction with our field force, physicians become significantly more aware and knowledgeable of recurrent pericarditis and Arclist, and as you see from the bottom right of this slide, their likelihood or intent to prescribe Arclist in the subsequent months also significantly increases. Moving to slide 10, I'd like to share more information on how Arclist is starting to become the standard of care in recovering pericarditis. Following the strength of data from our phase three study, Rapsody, which resulted in 97% of patients experiencing rapid symptom relief, 92% of days with minimal or no pericarditis pain, and a 96% reduction in the risk of recurrence, we are now starting to see key thought leaders in this space publish and contribute to the new and evolving treatment paradigm. An example of this in a recent publication from a pericardial disease expert published in Current Cardiology Reports emphasized Arculus as a treatment of choice for recurrent pericarditis specifically ahead of the use of corticosteroids and even ahead of NSAIDs and colchazine if patients are intolerant. Indeed, this is exactly how we've been positioning Arculus promotionally. And if we look at the prior treatments our patients have been on, we see that Arculus is generally being utilized ahead of steroids. And in addition, payers are generally not mandating step edits of these nonspecific therapies. We believe this is acknowledgement from physicians and payers that they are appreciating the steroid-sparing data from Rapsody and the ability for Arculus to specifically inhibit interleukin-1 alpha and beta, which is the underlying driver of recurrent pericarditis. These data set us up well for our anticipated continued growth and how we plan to become the standard of care in helping recurrent pericarditis patients. In summary, on my final slide, We're now one year out from launch, and we have had a cracking start. I'd like to take a moment to thank our fantastic Conixa teams in the office and in the field who have worked incredibly hard to bring Arculus to patients in need. It's rare to have a successful drug launch, but to do so in the midst of a global pandemic is an incredible performance. We're delighted that physicians and payers are embracing a new treatment approach, And, of course, we look forward to continuing to support our patients who are providing constant positive feedback on their experience and the improvements they feel while under ARCLIS treatment. Since launch, we've recorded $60.7 million of net revenue. We've set a solid foundation that will empower our growth in the quarters and the years ahead. I'll now hand over to Mark for our financial results.
spk06: Mark. Thanks, Ross. Good morning, everyone. Our detailed first quarter 2022 financial results can be found in the press release we issued earlier today. Over the next couple of minutes, I'd like to call your attention to a few items on this slide. First, total revenue in the first quarter of 2022 was $32.2 million, and consisted of product revenue of $22.2 million, representing ArculusNet sales, and collaboration revenue of $10 million, representing the upfront payment from Wodong Medicine for the MAVRI rights in the Asia-Pacific region. Of note, the upfront payment of $12 million from Wodong Medicine for ARPALIS rights in the Asia-Pacific region was deferred and will be recognized over the life of the agreement. Second, operating expenses, which this year also included cost of goods sold and collaboration expenses, were $55.5 million in the first quarter of 2022 compared to $49.3 million in the first quarter of 2021. Third, collaboration expenses in the first quarter of 2022 were $8.3 million and consisted of two obligations to Regeneron, an ARCLIS profit split expense of $2.3 million and an expense of $6 million representing 50% of the $12 million upfront payment from Wadong Medicine for ARCLIS rights in the Asia-Pacific region. Fourth, Convicta's net loss in the first quarter of this year was $25.2 million compared to a net loss of $49.5 million in the first quarter of last year. Fifth, first quarter 2022 financials do not reflect the net cash impact from our collaboration with Wadong Medicine, and we ended the period with cash reserves of approximately $145 million. And finally, we expect total 2022 ARCLIS net revenue between $115 and $130 million. And based on our cash reserves, as well as continued ARCLIS commercial execution, we expect to be able to fund our current operating plan into at least 2024. With that, I'll turn the call back to Sanj for closing remarks.
spk08: Thanks, Mark. In essence, it's a really exciting time for Connexa. In addition to the successful start and commercial launch in recurrent perioditis, We're also building a foundation as an emerging leader in immune-modulating therapies. On the commercial side, you've heard we're revenue-producing, and after only three quarters, the ARCLIS collaboration is already profitable. Looking to the rest of the year, we've guided, as Ross said and Mark, an estimated net revenue of $115 to $130 million, which would represent a more than 200% growth year over year. We've got a near-term milestone coming up with the data from the Phase 2b trial of VIXA in the second half of this year. We're also enrolling in the Phase 2 proof of concept study in RA with our CD40 program, and this could provide additional optionality for a range of autoimmune diseases. As I said earlier, we're also utilizing the data from our MAVRI program to evaluate rare cardiovascular diseases that have synergies with our existing cardiovascular commercial infrastructure. Importantly, as Mark just said, we're well capitalized and have cash reserves expected to fund our operating plan into at least 2024. The bottom line is we have no need to raise additional capital at this point, and we continue to drive our portfolio forward. As I mentioned earlier, we're also very much interested in potentially augmenting our pipeline with additional assets through our business development activities. That remains a key focus. Ultimately, We are determined to continue to help patients in need, help create massive value, and aim to fulfill our goal of becoming a generational company. With that, I want to thank you for your time today, and I'll hand it back to the operator to open up for questions. Thank you.
spk02: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from the line of Anupam Rana with JPMorgan. Your line is open.
spk07: Hey, guys. Thanks so much for taking the question. A quick one for me. I know you said that you have 400 prescribers plus right now, which has grown from 300 plus in the 4Q update. What portion of your target prescribers have you penetrated? I guess I'm trying to understand where the new scripts will be coming from. Will they be coming from new prescribers or repeat prescribers? And then a second question, which is, can you remind us how long an initial script is written for? You know, we've heard some patients on anakinra from, you know, 12 to 24 months. So how do you think about that 60% of patients on therapy from 2Q21 staying on therapy here in year two? Thanks so much.
spk08: Thanks, Adam. Ross, do you want to start with that? And myself or John or Heather can jump in.
spk04: Yeah, very happy to. Hi, Anupam. This is Rod. So you're absolutely right. We've got more than 400 individual but unique prescribers of ARCLIS so far in recurrent pericarditis. That's grown substantially since our time of launch, around 100. or more than 100 in every quarter since we launched with the growing depth of prescribing, currently 17%, roughly, of the 400 base. So we're very pleased with that. In terms of your comments around whether it's kind of the target physicians or not, I mean, most of the prescribing is coming from our current target base. As you know, we spent a lot of time prior to launch really understanding who we're looking after, which physicians and which centers are looking after recurrent pericarditis patients, and we have a highly targeted approach around that, so very pleased to see that the majority is coming from the target base, although we also recognize that we're not reaching all of the recurrent pericarditis patients across the U.S. with our targeting strategy. So non-personal promotion continues to be incredibly important to us, as does the contacts that we make at congresses and through other routes as well. So there is a mixture of non-targets prescribing as well, but to a much lesser extent. In terms of the duration, your 12-month prescription comment is right. We see that the majority of prescribers prescribe Arclist for 12 months as an initial script. Some obviously prescribe for less than that as well, often indicating that they may want to see the patient in the clinic after a three-month or six-month time period, particularly when they're new to prescribing Arclist, and they may renew the prescription. prescription after that. But yes, the majority are 12 months. Linked in with that as well, the majority of the payer approvals are also for 12 months before requiring for a reauthorization of that approval. So that kind of bodes well also to the potential duration. And as we said, around 60% of those Q2 early launch patients were still on therapy through the end of Q1, which again kind of builds into the the confidence of duration potentially being around 12 months, although acknowledging it's a small cohort, the data will continue to evolve, and we need to see a more robust number of patients get into that time point and wait to see what the right-hand side of that curve looks like over time to be able to provide more information around the actual eventual duration.
spk07: Thanks so much for taking our questions. Thanks, Anubhav.
spk02: Thank you. Our next question comes from Paul Choi with Goldman Sachs. Your line is open.
spk01: Hi. Thank you. Good morning, and congratulations on the progress here. I was wondering if you could maybe elaborate a little more on your comments regarding Q1 pair dynamics and how we should think about ARCA list dynamics in the future here in Q1. How much of it was, I guess, what was due to the So the new RP indication versus continual processing versus CAPS, which I think has, of course, been on the market for a while.
spk04: Yeah, Paul, so this is Ross again. So, yes, the vast majority of the comments are around recurrent pericarditis. CAPS obviously continues, as does DERA, and we continue to support those patients through our patient services program in exactly the same way as we do with recurrent pericarditis. But I think now at this stage of our launch, 12 months, out, you know, the vast majority of patients that are on our list are now in recurrent pericarditis opposed to the other two indications. So that's more greatly associated with recurrent pericarditis. And yeah, for the Q1, you know, payer dynamics, I mean, it's really down to the payer plans and people changing insurance and supporting people through bridge whilst they get the approvals under the new insurance plans, as well as, you know, renewed co-pay payments and increasing the Connexa support around that to help patients through that time point as well. So we see the Q1 dynamics or headwinds there as transitory, and we expect things to kind of return to somewhat normality in Q2 and beyond.
spk01: Okay. Thanks for that, Ross. And then one pipeline question with regard to VIXA. I guess, you know, given the data's coming up here in the second half of the year, can you maybe just sort of frame, you know, as to how you would think about what would be a competitive result in, you know, given what is a somewhat crowded landscape and just how you're thinking about what areas you'd focus on for differentiation versus some of the other sort of clinical stage assets in the category. Thank you very much.
spk08: Thanks, Paul. John, do you want to start and then maybe Evan jumps in?
spk05: Sure, happy to do so, and thanks for the question, Paul. Good morning to you. So, yes, as you remember, the Phase IIa study already demonstrated proof of concept of Vixirelinib and prurigo nodularis in terms of the primary and secondary endpoints being highly statistically significant, but also with clinically meaningful outcomes in terms of reduction of pruritus as well as lesion resolution. So the purpose of the Phase IIb study is really just to test for practical monthly subcutaneous dosing. And that's the purpose of this study with 180 patients. So in that sense, we will gather important information over 16 weeks with regard to reduction in pruritus, as well as following patients longer in terms of lesion resolution, which, as you know, Vixarelamab has a dual mechanism of action, blocking not only interleukin-31, which is implicated in pruritus, but also blocking oncostatin M, which has been implicated in hyperkeratosis and fibrosis, so that dual mechanism. So I'll turn it over to Evan to talk about the competitive landscape. Thank you.
spk03: Yeah, thanks, John. And maybe I'll just add that, you know, we think that if we are able to replicate the results of our Phase IIa study with the monthly dosing out of the 2B program that we're currently running, Vixor Elimab is incredibly well positioned given the data we've generated to date versus the two main other competitors in the field.
spk01: Great, thank you.
spk02: Thank you. Our next question comes from the line of David Nearingarden with Wedbush Securities. Your line is open.
spk00: Hey, thanks for taking the question. Congrats on the profitable franchise. It's really cool to see. Just a couple questions on the commercialization. The patient turnover, are there, or do you have a handle on any of the patients who are essentially I hate to use the word, but feel they're cured or feel that they won't have a recurrence and so have dropped off therapy. And then on a related note, are there patients or do you have a better handle, maybe I should say, on the proportion of patients coming in who might have pre-existing conditions that really prevent them or would prevent them from going on steroids or some of the you know, other treatments that are used. And so, you know, these, maybe they're not long-term recurrent patients, but they have, you know, their first episode and they, you know, and the doctor notices they have underlying conditions that aren't amenable to, you know, treatment with steroids. And so they go on Arclist. Thanks.
spk04: Yeah. Hi, David. This is Ross. So maybe I can take a start on, on those two questions. So firstly around the patient turnover, um, So, yes, since the time of launch, obviously, we've seen some patients that have stopped therapy, whether that's through the physician believing that they came in at a particular time point in their disease and they needed a shorter duration and then trial to stop, or whether it's through the patient's belief that they are somewhat over the condition and able to try to stop as well. So we've seen that to some degree, although I think the percentages kind of show that, you know, most patients remain on therapy for a longer time period. And, you know, ultimately we also see patients that are coming back and restarting on therapy as well. If they have trial to stop and, you know, recurrent pericarditis, what happens is symptomology will come back pretty rapidly and aggressively if the duration is too short and And then we know from the Rhapsody data as well, it's well published, the patients can restart on therapy if they do get symptoms, again, of recurrent pericarditis or enter into another flare. So we've seen several patients restart on therapy as well. So it's good that physicians and patients know that as a safety net, I guess, if they do stop therapy too early. But ultimately, in the mainstays, for the physicians to really judge based upon the you know, the cadence and severity of their flares, what the appropriate duration would be for the patients and try to guide them towards the natural history course of the duration of the disease and matching treatments against that. On the side of the proportion of patients who have pre-existing conditions kind of preventing them from steroids, it's not something that we've looked at a huge amount. I mean, I think it's widely acknowledged that steroids are probably not the best solution for this type of disease. We also know that the toxicity effects of being on long-term steroids or high doses of steroids can be very detrimental to patients. It's also well published that being on steroids increases the risk of recurrence when you take patients off the steroids and really go back to square one for these patients. So we want to avoid that, and I think that's what we're seeing is becoming more and more commonplace In the field since the time of launch, people are understanding that steroids are not the best treatment answer here, and ARCLIS targets the root cause of the disease. So generally it's not because of preexisting conditions, but more so understanding the underlying mechanism of action of the disease and ARCLIS as a treatment addressing that and getting patients onto the right treatment the first time around.
spk00: And then maybe one quick follow-up on that. sales and marketing, do you anticipate any additional spend, incremental spend to continue to market Arculus maybe to the less frequent prescribers or to patients who maybe are more on the acute side of things rather than two or three recurrences?
spk04: Yeah, so maybe I'll make a start on that, and if Mark or anyone else wanted to jump in, obviously, please feel free to do so as well. So, I mean, ultimately, it's something that will always be under evaluation. You know, we're always looking at the best, most efficient way of addressing the opportunity, and we did a lot of work prior to launch to get, you know, the field teaming right and the non-personal promotion side of things correct so we could reach as many recovering pericarditis patients as possible. We've always had a very methodical, data-driven approach in how we address the market, so it's something we constantly look at, and you know, whether that means in the future, you know, maximizing more non-personal promotion opportunities, more congresses, looking at the field team and many other areas, then we will obviously always continue to look at that to make sure that we're driving value for patients and for Connexer and for all our stakeholders.
spk08: I think you said it very well, Ross. I mean, bottom line is obviously we're very excited about the opportunity. Clearly, it's a growing opportunity. And I We're doing a lot of analytical work right now and continue to look at it, but it's been a great set of execution on the commercial side, so we'll just continue looking at that. But I think you're definitely right. There is increasing opportunity, and so we're very much focused on that.
spk02: All right. Thank you. Thank you. Our next question comes from the line of Jeff Meacham with Bank of America. Your line is open.
spk11: Hi. This is Alex Hammond for Jeff Meacham. Thank you for taking our question. So given you have cash to get you to 2024, can you provide any additional color on your BD strategy? Have the depressed mid valuations change your appetite at all? And what qualities are you looking for in assets besides just being in your general wheelhouse? Thank you so much.
spk08: Thanks, Alex. Maybe I'll make a couple of comments, and Evan, feel free to jump in. Obviously, as you said, we feel great about the cash position, which allows us to get into at least 2024. And obviously, that's relying on our continued commercial execution as well. But on top of that, you're right. It's very obvious right now that there's a lot of depressed valuations out there and technologies or products are undervalued and trading below cash. So we're certainly very keen to look at ways to augment our pipeline. We've got some great, you know, products that are in the modulating space, but there are technologies or products that we could add. So we're looking at that very keenly. You know, ideally, it'd be great for it to be able to have synergies with our existing commercial infrastructure, as well as our development pipeline as well. But we've got a team here that's very adaptable, obviously a lot of rare disease experience, but now obviously with full year of commercial execution and event, we've shown that we can execute commercially as well. So we're looking across the various stages of development for products and technologies. And it's certainly an exciting time for a team like ours, as you know, created this franchise and this company in just around six years from a blank piece of paper, primarily through business development. We do have our own research as well, looking at early stage programs. Most of those are in the immune modulating space, but we're open to looking at other rare diseases and and other opportunities where we can bring value and ultimately execute. And having the cash is nice. So we'll be very judicious. Capital allocation is very important to us. But obviously having values that are realistic as well are important too. But Evan, anything that you want to add?
spk03: No, I think you said it really nicely, Sanj. You know, it's really about maximizing value to patients. And we're always looking.
spk02: Thank you. Our next question comes from the line of Lisa Baco with Evercore ISI. Your line is open.
spk09: Hi there. Most of my questions have been answered, but just one. Maybe you can talk about the shape of R&D for this year. Just looking historically, it seems to bounce around a little bit. How should we be thinking about the shape of your R&D spent for this year? Thank you.
spk08: Mark hasn't had a bit of muscle memory, so go ahead, Mark. Jump in.
spk06: Emily, I don't think... You know, there's much to comment on regarding where we're allocating our resources right now beyond what we'll disclose publicly. So, really, obviously, the commercialization of ARCA, let's put on the R&D front, you know, the progression of the clinical trials of VIXA and PN and 404 and RA. And really, you know, the timing of clinical trials is key here to R&D. So, you know, as I mentioned, you know, VIXA is sort of in the final stages of the Phase IIb. We're expected in the second half of this year. We just initiated the RA trial sort of at the end of 2021. Thanks. Thank you.
spk02: I'm showing no further questions at this time. I would now like to turn the conference back to Sanj Patel, Chief Executive Officer.
spk08: Thanks very much, operator. Noah, thank you for all the questions and obviously for everybody joining our call today. I hope you got a sense of the excitement that we've all got, and we definitely look forward to providing additional updates as we move into the rest of the year. I think Ross said it very eloquently and appropriately. We've had a cracking commercial execution start, and we certainly intend to keep that going. So let's crack on. Thank you, everybody.
spk02: This concludes today's conference call. Thank you for participating. You may now disconnect.
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