Idorsia Pharmaceuticals Ltd

Welcome to your publication of our results. The press release went out this morning at 7 a.m. Central European time. With me on this call are our CEO, Jean-Paul Cosell, our CFO, André Muller, and our Chief Commercial Officer, Simon Joes. Next slide, please. Just to remind you, we will be making forward-working statements in this call, so please be attentive to the disclaimer. You've therefore been adequately warned about the risks and benefits of owning or shorting out stock. Next slide, please. So, let's kick it off. Jean-Paul, the mic is yours.

Yes. So, yesterday, you have seen that we have informed the market that the REACT study did not meet the primary endpoint. And, of course, we are very disappointed and very sad, I have to say. But it should not really hide the achievement, next slide, that happened in 2022, which provide momentum for 2023. Next slide. A lot has been achieved in 2022. First, the QVDIC was approved in the U.S. FIVLAS was approved in Japan. and launched in Japan, Qvivic was launched in the U.S., Qvivic was approved in Europe, and we got the results of apocytantin showing a very significant blood pressure reduction. And then we got the results of daridorexant in insomnia in Japan, And Curivik, at the end of the year, was launched in Germany and Italy. And SceneryMod phase three in lupus was initiated. And finally, just before the end of the year, aproxytentin was filed for U.S. The NDA of aproxytentin was filed in the U.S. So Simon is going to describe our commercial plan, and the launch of our first two products. Next slide.

Thank you, Jean-Paul, and good morning and good afternoon, everyone. 2022 was indeed a transformative year. We obviously launched our first two products, and I believe we built a very strong foundation for future growth. And obviously, today, I'm pleased to be able to share with you the positive momentum we're seeing with the launches of Qvivic in the US and Europe and, of course, PIVLAS in Japan. Next slide, please. So I'll start with Qvivic, which, as you all know, was launched in the US in May and in the first two European markets in November, as Jean-Paul said, in Italy and Germany. In 2022, net sales totaled 6.5 million Swiss francs. Obviously, as I've mentioned before, net sales in the U.S. don't reflect demand or prescriptions dispensed. To enable early patient access to Qvivik, we continue to offer our strong copay program, including a free first 30-day prescription. And of course, demonstrating demand is critical to support our ongoing negotiations to expand payer coverage, and I'll provide an update on our progress there in a few minutes.

Next slide, please.

So, turning now to the prescription volume for Qvivic in the U.S., you've seen this slide in prior earnings calls showing the TRX volume by strength on the left and the split by retail dispensers, which you see reported by IQVIA. and those dispensed by VitaCare, our pharmacy services provider on the right. And obviously we've updated these last three months since you saw this chart in October for the Q3 call. I'm pleased to be able to share that TRX volume continues to grow with almost 15,000 prescriptions dispensed in December, despite the usual dampening impact of the holidays. which, as you can see, was the case with VitaCare, who were closed for the public holidays during the Christmas to New Year period. And we continue to be pleased that the 70-30 split of the 50 milligram and the 25 milligram strengths is, as you can see, being maintained. Next slide, please. You can also see the same positive trajectory in cubic writers, which continue to grow month over month. And although we continue to expect to see our writer base growing as we move into 2023, our clear focus is now going to be on increasing the number of prescriptions from each writer, turning the current breadth of prescribing into greater depth of use. And on the right-hand side, you see the split by prescriptions, with 65% of prescriptions now coming from primary care physicians and 21 coming from psychiatrists. And this is broadly in line with the structure of the insomnia market. Next slide, please. Encouragingly, we continue to see the source of business for Q-Vivic coming from either new patients or where switched from the older, widely used sleep medicines such as Z-drugs, benzos, and trazodone. Only a small number of patients on Q-Vivic are coming from the other DORAs. around 6% of switches, and only 3.5% of all patients. This is critically important to us, as to achieve our long-term goals, we need to dramatically grow the DORA class, in addition, of course, to making Qvivik the leading DORA. Next slide, please. And here's the effect on prescriptions. You can see that Qvivik volume has essentially been additive to that of Belsomra and Devigo, expanding the DORA class as a whole. And naturally, Qvivic is taking share within the class as it grows. The chart on the right shows that after just eight months on the market, Qvivic has achieved 41% share of the DORA class in NBRXs, surpassing Devigo and in quarter four, it approaches Belsomra. And during that same period, the DORA class has grown 67%. Next slide, please. Taking a closer look now at how our MBRXs are tracking in recent weeks, you can see here that Qvivic is now neck and neck with Belsomra, and we expect to become the leading DORA in MBRXs any week, now that we are through the holidays and payer coverage is increasing. Of course, refills and continuing prescriptions are just as important as acquiring new patients, arguably more so in the long run. The chart on the right shows the continued growth and acceleration in CBRXs, or continuing prescriptions, indicative of the patient satisfaction with Qvivic we generally hear in the market. The MBRX performance versus Balsomra is particularly impressive when you consider that Belsomra generates over 50% of its prescriptions from Medicare Part D, where Qvivic is yet to be covered. Next slide, please. So, although it's clear we would have passed Belsomra MBRXs in the commercial segment only, we actually can't get MBRXs by channel, so I can't show you that in the constructor graph to prove it. But we are able to do this with TRXs, and as you can see here, in the commercial segment only, where we can compete equally, Qvivix has passed Dave Ego TRX share and is on a trajectory that will pass Belsomra in the next few months. This is probably the most appropriate head-to-head comparison of performance while we continue to expand our access and before we have Part D coverage. Next slide, please. And of course, speaking of coverage, I'm pleased that we have made some real progress in the beginning of this year. As many of you will now know, Qvivic was added to the Express Script's national preferred formory from January the 15th, gaining parity access with the other DORAs in their approximately 22 million lives covered, representing about 13% of the commercial market. Now, there are a further 30 million lives, about another 19% of the commercial segment, in the downstream plans that can now take the ESI rate that we've agreed with them. We're also on formulary TRICARE, which covers 9 million US military service members and their families, another further 5.4% of the commercial segment. So, as you can imagine, we are now actively pulling this expanded coverage through via the sales team and other promotional activities. And, of course, we're in discussion with all the ESI downstream accounts to secure coverage there, too. And we continue to have active discussions with the other commercial payers and the Part D plans. Next slide, please. So, to just conclude the U.S. by briefly touching on our branded direct consumer advertising featuring QVIVIC patient ambassadors Lindsey Vonn and Taye Diggs, These initiatives have demonstrated a very significant increase in all our key metrics, including traffic to qvivic.com, where we now have exceeded 1.7 million visitors, paid and organic search, copay card downloads and utilization, and ultimately doctor conversations and qvivic MBRXs and continuing scripts. Next slide, please. But looking beyond the U.S., QVIVC is on track to become a global brand. In November last year, we achieved our first European launches in Germany and Italy, and I'll speak more about our progress there in a moment. We've also completed our phase three study in Japan and are preparing to file the marketing authorization application in the second half of this year with our local partner, Nishida. We also announced the licensing agreement with Sincere in November 2022, to develop and commercialize the redirect scent in the Chinese market. Next slide, please. Now in Europe, Qvivic is the first and only DORA available to patients. And I really see great potential here, given the higher need and dissatisfaction with existing treatments in the region. In Germany, we launched Qvivic in mid-November. And as I'll show you in a minute, it's got off to a great start. As I've mentioned before, in the German market, there is a four-week prescription limitation for all hypnotic and sedating agents known as analaga dry. The GBA issued a draft resolution last year to exempt cuvivic from analaga dry, which, if approved, would mean cuvivic would be the only sleep medicine reimbursed for long-term use in Germany for adults. We also launched in Italy last November into the private market as insomnia products there are not reimbursed. At launch, prescribing of Qvivic is limited to specialists. It's not uncommon for that to be the case with new CNS products, and the feedback to date has been extremely positive. And launch preparations are underway in Switzerland with launch planned in mid-23 in the private market. This is whilst our reimbursement dossier is under review. And in the UK, we plan to launch in the second half of this year following final NICE guidance. We submitted our dossier to NICE last summer, and we'll have an advisory committee in March. And lastly, launch preparations are also underway in Spain and France. Next slide, please. So I'll turn to Germany briefly. Whilst it's early days, Qvivik has got off to a strong start in Germany. This chart shows the weekly sales units from wholesalers to pharmacists. And you can see the very positive momentum in the initial weeks post-launch. which has continued now after the dip during the holiday period. There were a significant number of German sites in the pivotal trial programs at Qvivik, and we're seeing a great deal of interest among the German medical experts and GPs in the new mechanism of action and differentiated efficacy and safety profile of the product. Next slide, please. And here we see the initial uptake in Italy. This weekly data is projected by IQVIA from a panel of pharmacies around 20% across Italy, so we should treat it with some caution. Nevertheless, we see a positive initial trajectory, especially when considering that we are launching in a private pay market with specialists prescribing only at this stage. We recently had a launch event with key opinion leaders who showed a lot of excitement about the product and shared their positive initial experience with QVIVIC. I look forward to sharing more progress in Europe over the next months. Next slide, please. So, just to finish up with and turn into PIVLAS in Japan. We launched PIVLAS, as you know, in April last year to prevent vasospasm following an aneurysm or subarachnoid hemorrhage. This has a two to three times higher incidence in Japan than we have in the western markets. Next slide, please. And again, you've seen this chart. It's now been updated with the end-of-the-year numbers. We continue to see very positive trajectories since launch. We've generated net sales of 44 million Swiss francs since April against the currency headwind I hasten to add, with over 95% of target hospital accounts ordering. Medical experts and neurosurgeons are supporting the inclusion of TIVLAS in SAH treatment protocols. And at the end of last year in December, approximately 25% of SAH patients received PIV-LAS based on the incidence of SAH in Japan. And we expect adoption to continue to grow this year. So in summary, I think 2022 was a transformative year where we put our commercial plans into action and we launched our first two products. Qvivec is building momentum with very positive feedback from physicians and patients alike. In the US, we expect this momentum to increase and start translating into net sales as we expand payer access. And in Europe, although it's early days, Qvivec is off to a strong start in Germany and Italy, and we're preparing for additional launches later this year. And I'm confident the strong foundation we've built in 2022 sets us up for a year of strong growth and additional launches in 2023. And thank you for your attention. I'll now hand over to André.

Thank you, Simon. So, next slide, please. Let's go directly to slide 23 and how the US GAAP net result came about. I would like to start with the 757 non-GAAP operating loss of 2022. You may recall that we have not changed the guidance from the full year result 2021, so in February 2022, the Q3 results published in October 2022, maintaining net operating, non-GAAP operating results of minus 785. So, you see actually a difference of 28 million. And this 28 million is actually the contractor revenue on SIMCLT of $30 million upfront. So, what I want to emphasize here, is that, yes, clearly sales were lower than expected, but it also means that we closely monitor our OPEX to remain committed to these gains. We're now coming with a few comments on the net revenues. The 97 million on the top left consists In 50 million sales, as Simon said, PIVLAS in Japan, 44 million, badly impacted by the FX rate with the weakening of the Japanese yen. And roughly 6 million with the direct funds, U.S. accounting for 5.5, and Germany for almost 1 million. On the contract revenue, so the remaining 47 million, as Joss said, seems here accounted for 28 million Swiss francs. We had 2 million from Ponvory, revenue sharing from Janssen, 3 million from Eurogreen with an extension of the research collaboration. and 14 million deferred contract revenue from the previous collaboration, including J&J, regarding a proceed and time. So with this, and we'll, in the next slide, we'll comment the non-GAAP operating expenses of 854, but there are DNA and stock-based compensation in line with the previous years at respectively 20 and 26 million. So leading to a U.S. GAAP operating results of minus 803. And below that, you see it's 25 million, which is mainly interest. around $16 million. That's the coupon of 2.125% paid on the $600 million convertible bond, so approximately $12.2 million. The coupon on the $200 million convertible bond, so $0.75, for $1.5 million, And you may recall, I explained it in the Q3 results, the sale and leaseback transaction is, according to the US GAAP treatment, treated as debt. And to this extent, we have also a relating funding cost of 1.6 million. On top of the interest of 16 million, you have also a tax of 8 million. 2.5 million withholding tax on the upfront from since here. We had also 4 million of foreign taxes, mainly in Japan and U.S., given our tax organization with our commercial affiliates being what we call limited risk distributors. and we have 1.5 million deferred tax. So this leads us to a U.S. GAAP net result of minus 828 million. Let's move to the next slide, 24. Speaking of the non-GAAP operating expenses here, Cost of sale is mainly consistent on the righties that we pay on the Class of 2010. So it's 4 million. The real cost of goods is really low on the sales. So for the remaining 2 million, it's more distribution and warehousing. As you can see, research with 117 million is almost flat, or I would say flat if you take into account CPI. And you see that development is slightly below last year at 240 million. In this 240 million, you have roughly 100 million which are functional expenses. So it's a real fixed cost base. of our development organization, clinical, but also pharmaceutical and chemistry. And the remainder, so approximately 140 million, that's really the study cost. Here we have three main drivers. First, the . You know, we are enrolling with the SOS AMI. And to this extent, we have spent more, significantly more than in 2021, with 41 million for . Twenty-eight in clinical, so remaining in order to get this auto-injector in connection with . The other main driver are . So, we are now, as you've seen, we have finished phase two. This was the main phase two B. We are starting phase three. This was the main driver for the expenses, study expenses, around 26 million. And the other big driver is with still 26 million. Not so much in the global clinical, which is around 8 million, notably with the initiation of the pediatric, but also with the Japanese trial. And as Jean-Paul said, now we got the results, Japanese pivotal trial. accounted for 9 million. And that's our share, because Moshida, our partner, took also 50% of the local development costs. So these are the main drivers. As you can imagine, a proceed-Zenton comes to an end. Class-Zenton will also come to an end, especially moving forward in 2023. And Lusterastat still is pending because we have an open label extension, but these amounts are relatively small compared to Selatogrel, Senerimod, and Daridoxant. SG&A, so in this 492 million, the main cost is really driven by commercial with marketing and selling expenses, around 400 million, of which a significant amount is spent in the US, around 300 million. And Simon explained to you that here we need to have a sales force detailing the PCPs, We need also, and you have seen the impact of DTC digital and TV ads. So this was a significant effort, not fully reflected in the net sales, but we need first to grow demand and continue on this positive trajectory to convert demand to volumes into net sales now that we get commercial coverage. And soon, hopefully, as Simon said also, but that's 2024 with Medicare Part D. With this, we end up with 854 million non-GAAP operating expenses, so a significant jump compared to 2021. mainly driven by the launch activities in the U.S., preparing preparation in Europe and Canada, and also we see a launch in Japan. Next slide, please. Cash flow. So you'll recall that we started this year with stronger balance sheets, 1,188,000,000 liquidity. As I said, the non-GAAP operating results of 757, we just explained, capex around 27,000,000. Significant working capital requirements. with 65 million with an inventory built notably with registered starting material for but also a significant increase in trade receivables. Of course, with Japan sales, you have roughly 100 days of sales outstanding. But also with the U.S. because of the U.S. sales model. You know, we sell to the wholesaler at WAC or gross net or gross selling price. And we get a 60-day payment term with this wholesaler. But all the gross to net, so all the rebates are paid at 15 days. So, of course, this generates, because we have demand, because growth sales are going up, we have, with this, a higher working capital requirement. Sale and leaseback, this was already in Q3, 162, and the other items are actually what we already mentioned below EBIT, interest expense, tax expense, and a small adjustment to reconcile with the non-GAAP operating result. So by the end of December 2022, we end up with a liquidity of 466 million Swiss francs. Next slide, please. Here you see the structure of this liquidity by the end of 2022. 336 million on the right chart in Swiss rank, and 116 in U.S. dollar, because that's a natural hedging, notably accounting for sales, OPEX, notably with the U.S. commercial organization. Next slide, please. I will finish with the financial guidance for 2023. You see here net revenue of 230, operating expenses of 880. These are non-GAAP measures leading to a non-GAAP EBIT of 650. As of last year, we can be reassured that we are committed to manage this EBIT target at 650 million. If you take U.S. GAAP, you see a delta between in the operating expense of 65 million, which is mainly driven by stock base compensation with a significant increase. The reason for it is that we, in order to preserve our cash, 70% of next year or 2023 bonus to employees across the organization will be paid in shares, account for roughly 20 million. And if you had time to read the governance report, you've seen that we launched in 2022 a plan called Ambition 2027 with granting to most employees an incentive plan split evenly between restricted share units and performance share units that will have some metrics in 25, 26, and 27. but you still have to account next year or see a full year impact in the u.s gap of this ambition 2027 a new initiative to retain to retain the employees at idosia and lastly we are growing in terms of organization so you have also a a higher impact of the organization in 2023 compared to the previous year. With this, we believe that the U.S. gut operating loss would be around 735 million. Next slide, please. You may have seen already this profitability target which we issued at the J.P. Morgan Healthcare Conference. We remain committed to reach sustainable profitability in 2025 with a global revenue above $1 billion. And here again, we only account what we know, i.e., the rate of QVIVX. the sales of pivulas in Japan only, and the tiered royalties that we are attached to with Janssen regarding a proxy center. With this, I send over to Jean-Paul.

Thank you, André. So, you have seen that next slide. We are continuing to advance of pipeline and um you have heard about uh next slide uh people eyes and the infortunities react but also the japan commercial success to vivic which is basically to an end of the clinical development plan and the apostate and time which is five we we are going to during the year have a discussion with regulatory authorities for Lucerastat. And we are in phase three, recruiting for Stelatogrel and SceneryMod. I will concentrate on these phase three products. We have many other products coming in phase one and two. Most of them, we are looking for partners because they come to areas where we are not focused. And we are in discussion for several of these products with potential partners. Next slide. So last year, we announced the results of aprocitantin, and I really like to show this data, which are really very impressive. You see how the two doses of aprocitantin could decrease blood pressure and maintain the blood pressure reduction during the year, during eight months, which was asked to be done by the FDA, and where the withdrawal shows the real effect of the drug, because it's really after chronic treatment, it's at the end of the treatment, and you see how the blood pressure is maintained under apocytetan and comes back with placebo. Next slide. If we looked at ambulatory blood pressure where there is a much lower placebo effect because it's much more precise. It's done at home. There is no influence of the white coat effect. And you see that, especially during the night, there is a very significant effect of aproxytentan. And you must not forget that these patients were basically treated at least by three anti-hypertensive medications, but more than 60% where with four medications and some patients were under five or six anti-patentive drugs. Next slide. So, apocytetan has been filed with the FDA, and the date is in December this year, and Janssen will be responsible for commercialization of this product. Stenatogrel. Next slide. Celatogrel is really a very innovative product. It's a very short active and fast active because it's also given with an auto-injector. It's an anti-aggregant which can be given by the patient himself. We can auto-administer this drug. And this should change. the approach of the myocardial infarction. Next slide. Because today, patients with such a pain, with a thoracic pain, need to call the emergency unit, the ambulance, and it takes an average three to four hours before the patient is treated. Here, just a few minutes after the pain, The patient has been trained to inject himself, then call the emergency unit. And then you save three or four hours of progression of the myocardial infarction. And we know that these are the essential hours which are going to define and determine the future of this patient. Next slide. We also started the care study, which is a study of stenery mode in lupus with one dose, two, which has been defined by the phase two and showed a really very significant and meaningful improvement of disease activity with an effect which increased with time and which has been very well characterized, especially which has been shown to be much higher, the treatment effect is much higher in patients with a high interferon gene signature. And, of course, we could define the safety of and the good safety profile of scenery mode at this dose, and this has allowed us to stop the phase three program, next slide, where the opus which consists of two trials of each 420 patients, 210 in placebo, 210 in scenario mode. We have agreed for the design of the study with the FDA. Next slide. So, as I have described, we are continuing to build momentum in 2023. we are going to have higher and broader coverage in the U.S. This is a priority for us, for QVVIC. The APROCYTENTAN has been submitted already in Europe, and we are waiting for the QVVIC regulatory decision for QVVIC in Canada. And as mentioned, the SERASTAT is going to be discussed with regulatory authorities, and the QBVIC will be launched in Switzerland and UK. And the NDA of QBVIC will be submitted in Japan at the end of the year. And we will have also the decision for apocytetan at the end of the year. So I hope I have described the really very eventful, I think, 2023, which we will have. Thank you very much.

Thank you, Jean-Paul. With that, we have come to the end of our prepared remarks and are ready to take your questions. First, a few housekeeping rules, please. May you refer your questions to one only and then jump back into the queue. Operator, please populate the lines.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. We will take our first question, and the question comes from the line of James Gordon from J.P. Morgan. Please go ahead. Your line is open.

Hello, James Gordon from J.P. Morgan. Thanks for taking the question. I'll do one question then, which would be funding. So what near-term options are you weighing? Are you potentially considering an equity raise and then to tide you over until later in the year? Or are you still optimistic that we could see a partial divestment on APRA Economics? And if the latter, what is the trigger that is needed to get it over the line? Might you have to wait for APRA to be approved or the filing accepted? And maybe if I could just squeeze in a clarification, not a question, which is there was talk about a higher stock option expense. Does that explain why there's a bigger difference between core and reported off-ex this year? Should we assume there's something like a 40 million step up in option expense?

Thanks, James. So those are actually two questions. Thank you for speaking at it, Audrey.

I follow your rule, Andrew, so I only take your second question, which is easier. No, James, first question on funding. Well, first, we've always been transparent that we're not funded to break even. With the guidance that we gave at 650 compared to 466 million cash by the end of 2022. Obviously, we need to raise cash relatively in the short term, next few months. We are looking at several possibilities to fund the company. Non-equity dilutive remains our preferred option. I will not tell you where we are in the discussions with potential royalty monetization investors. Jean-Paul also alluded to a discussion on potential out-licensing deals. So these are the two main avenues for non-equity dilutive funding. But saying it's a preferred option does not exclude equity dilutive. And here it would be equity because I think that a convertible bond would be highly unlikely in the current market conditions. So at the end, we really want to remain nimble and will remain pragmatic to ensure business continuity at Eidosia. Your second question regarding, you know, this stock-based compensation, the impact this year, this is valid for 2023, what I described to you. So the impact this year is really limited, and the rules were clear, bonuses except for the executive team are paid in cash, so that sets it for 2022. But for 2023, as I said, we changed these rules, so 70% of the bonus across the organization will be paid in shares. And again, a fair fight for talent, especially in Switzerland, but also in the U.S., and to this extent, we believe that retaining the people with this ambition 2027, again, look at the governance report, will help us. But that's not cash. That's only P&L impact, and that's why we have it as a reconciliation item between non-GAAP and U.S. GAAP.

Thank you, Audrey. Next question, please.

Thank you. We will take our next question. And the question comes from the line of Harry Sefton from Credit Suisse. Please go ahead. Your line is open.

Brilliant. Thank you for taking my question. So it's on net pricing for QVIVC. Based on the reported sales and scripts for Belsomra, it has a net price of about $150 a month. Is that a good benchmark that we can use for QVIVC, given your reimbursement negotiation with VSI? And what proportion of employers have currently opted in for QVIVC coverage? Thank you. Thank you, Harry.

Simon, I think that one's for you.

Yeah, we're not going to give net price guidance. I mean, clearly right now we're – have a lot of drug given away free because of VitaCare as we generate demand and generate coverage. But I will say, of course, that we priced Q-Vivic at a premium at the WAC level because of the premium profile that we believe the drug has. And it's important for us to continue to try to sort of flow that down as we go through the various different sort of rebate discussions and net conversations that we have. um right now um it's difficult to give you an exact number on coverage in the commercial space because obviously you've got a number of downstream plans that we're working through we have a number that you know already in because as i think i've mentioned to you before when you launch you usually end up with something in the order of 20 open coverage for plans that either are not that well controlled or where they give you sort of a conditional access whilst you're negotiating but I think our broad estimate right now is that we're probably somewhere in the sort of mid-40s in terms of commercial coverage, and that we would expect to start to move that up into the 50s as we start to bring through the downstreams that I referenced with ESI when we get into sort of quarter two.

Thank you, Simon. Thank you, Harry. Operator, next question, please.

Thank you. We will take our next question. Our next question comes from the line of Rosie Turner from Jefferies. Please go ahead. Your line is open.

Hi. Thank you for taking my question. I'll jump back in the queue after this one. But yeah, so New Sarastat, that long-term extension study, did I hear just towards the end of the call that that is being discussed with authorities? I think we saw on the FDA website it's been extended out further. So is there something going on there? Is it something that could kind of we should potentially be thinking about adding back into numbers. Thank you.

Thank you, Rosie. Jean-Paul, do you want to comment on?

No, I think we have been waiting really to get two years' data on the renal effect of lucerastats, which are, in my mind, quite impressive. We have also measured subgroups, some very specific subgroup of patients. I do not want to to give competitive information. So, but, you know, we need to discuss with both Europe and the U.S. in order to really see where we can go. It's very clear that the drug is active, but this is a regulatory issue. Thank you, Jean-Paul.

Just very quickly, Rosie. So, yes, that observation is correct. The open label extension was extended from 48 months out to six years, given that the first patients were actually reaching that four-year mark.

Perfect. Thank you.

Thank you, Rosie. Operator, next question.

Thank you. We will take our next question. Our next question comes from the line of Thibault Botherin from Morgan Stanley. Please go ahead. Your line is open.

Yes. Thank you for taking my question. So, on QEVIC sales expectations for this year, When we look at your guidance, it looks like you're expecting roughly 100 million Swiss francs for QEVIC globally. If you could just help us understand the split that you expect broadly between U.S. and ex-U.S. Follow-up on this, in the U.S. dynamics for QEVIC, right now Balsama is annualizing around $80 million a year in the U.S., So if you could help us understand the dynamics for QBVIC in the U.S. in terms of, I guess, one side is prescription growth, the other side is transition to paying prescriptions. So if you could help us how we should, how you're kind of thinking about this through the year, and basically does this mean that the vast majority of sales for QBVIC this year should be kind of back-end loaded toward the end of the year? Thank you very much.

Thank you, Thibault.

I can take those parts. Thibault, I would like to help you, but I'm not sure we'll be able to do so. Or just for your second question. Yeah, it's more skewed to the end of the year because here, as Simon said, well, we believe that we'll drive higher volumes week after week, and that with the PACE coverage, these volumes will convert into net sales. So, yes, clearly there is a higher amount in Q4 and in Q3 compared to Q2 or Q1. That's one. On the other side, having a breakdown of the net revenue, i.e. sales, and contract revenue. The only thing I can tell you is that in contract revenue, we do not speculate on new out-licensing deals. And we have a few of those in the air, but it's like M&A, you need to be too. So we have not factored here any additional additional contract revenue. So you can reasonably expect that it's mainly driven to 230 million, mainly driven by sales. PIVLAS, you've seen the trajectory quarter over quarter. So PIVLAS has a significant amount, but the biggest one is QEVIC in the US.

Okay, thank you, Andre. Before handing over to Simon to give some clarifying points on how his views are on Belsomra, we're not guiding on product specific. The consensus right now that resides on our website calls for 110 million of QVIVX sales and 95 million of Fivlat sales. And I feel comfortable with those numbers being out there in current consensus. Simon, do you want to make some comments on the Belsomra and where that stands right now in terms of its numbers and how does that compare?

Yeah, I mean, I think as I showed in the presentation, we're close to being through on MBRXs. I think we'll be through on TRXs in the next few months. So we'll be in a position where we're driving more volume than Belsomra in the next few months, I'm sure. And then, as Andre said, it's really now about pulling the payer coverage through to convert that volume into net sales. I mean, I think Really, you end up with several benefits of payer coverage. You end up obviously converting free scripts to paid scripts, and that generates net sales. But it also removes the NDC blocks that are in place when payers are blocking you, and that allows currently written scripts to start to move. And also we know from our research that the lack of coverage is certainly a disincentive for doctors to write more. So I think that obviously with our Salesforce activity and now that we've got the coverage, we will expect to see demand grow as a result of this. So I think that the payer access for sure. has a net sales benefit, obviously, but it also plays an important role in demand generation as well. And I think we would expect both of those things to collectively play through the next year. And as Andre said, that will build over time, which means that we're more back-end loaded than front-end.

That's very helpful. Thank you very much. Sorry, just on the second part, quickly. So from your answer, we can infer that the vast majority of cubic cells you're expecting are going to be in the U.S. in 2023.

Yeah, U.S. accounts, the majority. I will not quote how much VAST means, but the majority in the U.S. clearly is.

Okay, thank you very much. Thank you, Thibault.

Operator, next question. Thank you. Once again, if you do wish to ask a question, please press star 1 and 1 on your telephone. And we will take our next question. The question comes from the line of Rajan Sharma from Goldman Sachs. Please go ahead. Your line is open.

Hi. Thanks for the question. Just had one on PIVLAS. So I think you talked about penetration at 25% in December, which looks flat compared to November, as you updated in January. So can you just talk about how you see penetration evolving from here, given that you're at 95% of target accounts? Thanks.

Yes, sure. Yeah, sure. I mean, I think I've said in previous calls that we absolutely expected a pretty rapid ramp and then it's going to start to, that curve is going to start to slow down. I mean, I think you often see that with specialty drugs, but we're certainly seeing it with PIVLAS because what we've seen is the the trial sites and the investigators jump in very quickly, which is what's given us this sort of rather rapid uptake, as we've seen in the first sort of eight or nine months. And I think you'll now start to see that the increase will be more modest each time we come through quarter on quarter. So I expect it to grow. I just don't, we shouldn't expect to sort of I think I said this at Q3, we shouldn't expect it to be linear. We're going to be at 100% market share by the summer if we go on at that rate. So we really are expecting to continue to see growth, but I think it'll become now more modest as we move into the rest of the market and people who have less experience with the drug and will perhaps move a little bit more slowly than the investigators.

Thank you, Simon. Operator, do we still have questions?

Yes, we do. One moment, please.

Please stand by.

And your question comes from the line of Shushila Hernandez. Please ask your question.

Hello. Thank you for taking my question. I just have a question on your early stage pipeline. You already briefly touched upon it. What is your strategy here, and what is your priority here? Thank you.

Jean-Paul? What's our strategy on the early stage pipeline?

The early stage pipeline, we have discovered, you know, we have profited of many, many projects which really have come to breakthrough. And we are really focusing only on specialty products, you know, very, very, because these are our choice. You know, we... Now I have the possibility to do research on very selective topics. So first is specialty products, very limited, often drugs, and high medical need, most first-in-class, sometimes best-in-class, but I would say nearly 90% first-in-class. and with very significant breakthrough. But as you know, these are compounds in phase one, in phase two, and there is always, you know, not 100% sure that they will make it to the end. And this is why we look for partners like we have done with Neurocrime, where, you know, these are, they are working with our calcium T channel because they are really a CNS, very specialized company. And we try to do the same for many of these early projects. We keep, we will keep the development for maybe one or two, but most of these products should be partner.

Thank you, Jean-Paul. Thank you, Sheila. Operator, do we have more questions?

Thank you. One moment, please. We will take our next question. And the question comes from the line of Joe Walton from Credit Suisse. Please ask your question.

I just wonder if you could tell us a little bit more about your response to the REACT study, when you'll make a final decision, how long it should take, and is there any write-off at all if you decide not to take the product outside of Japan? And please just confirm the You will be taking that data to Japan, to the regulators, but presumably you are confident that there will be no change in the trajectory of PIVLAS adoption in Japan post the ex-Japan data.

Yeah, it is true. You know, this is, as I mentioned, different dose, different conditions, different conditions. administration mode. So I think this is really a very different study. Of course, we are analyzing the data, but with a negative primary endpoint, you can assume that we will not find it neither in Europe or US. I think it's better now to really concentrate on Japan and concentrate on other projects.

uh that's uh that's the uh the unfortunately the end of klaus and tan for us and europe and are there any kind of financial consequences andre no our financial consequences uh you know we uh as uh i uh said uh we only uh plan uh for what we uh know uh so to this extent i was uh not uh not planning anything regarding REACT filing in the US or Europe, or additional costs in connection with the pre-launch activities. There were no changes in the guidance that we gave, and because there's no impact of CLASO beyond the ongoing commercial execution in Japan. Okay, thank you, Audrey.

We've come to the top of the hour. Operator, do we still have any questions in the roster?

There are no further questions.

Okay, well, thank you very much, Heidi. So we've come to the end of our webcast. Thank you very much for your ongoing support of IDORSIA. Operator, please close the line.