Idorsia Pharmaceuticals Ltd

Good day and thank you for standing by. Welcome to the Eidosia Half-Year 2024 Financial Results webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 11 on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Andrew Weiss. Please go ahead.

Thank you, Nadia. Good afternoon. Good morning to you all. My name is Andrew Weiss. I'm the head of investor relations and corporate communications here at Adorsia. And welcome to our webcast conference call to discuss our first half results 2024 today. On the call are our CEO, Andre Muller, and our chief financial officer, Arno Grunewald. who are both with me for the first time in their new roles to give you additional color on what we announced this morning. Then, for the Q&A session, we will have our General Manager and President of IDORSA US, Tosh Butt, and our President of the IDORSA UCAN region, Benjamin Limal. Next slide, please. Before handing over the microphone, I need to remind everyone that we will be making forward-looking statements. You have therefore been appropriately warned about the risks and opportunities of investing in Eidosia shares. With that, I hand over to André for his introductory remarks. Next slide.

Thank you, Andrew. Good afternoon. Good morning, everyone. Chris, 11 years at Actelion in Eidosia. I had several opportunities to be presenting to you, but actually it's the first time as CEO of Eidosia. So it's good to be back on regular reporting cycles after the delayed publication of the full year 23 and first quarter 2024, which was published just eight weeks ago. As a result, it's not surprising that there are no groundbreaking news, but I'm happy to be reporting that we are on track with the activities we described at that time. I want to start with saying a very big thank you to Jean-Paul, who I'm sure is listening in. We owe him a big debt of gratitude for his leadership as CEO and as a long-term significant shareholder, as he and Martine invested north of the 1 billion Swiss franc in Eidosia. Without him, without them, I'm not sure we would be there. My immediate focus as CEO is, of course, getting the best possible deal for Aprocitemtan, making sure that we maximize the short to mid-term potential of QVIVIC, and conduct a portfolio review to ensure our R&D priorities match also our funding situation. I'll give you more information on these activities later in the year. Until then, let's have a look at the highlights of this first half of 2024. First, we announce the Viatris collaboration for Selato Gel and Senerimod. This deal secures the future of two very promising developmental programs, retaining long-term shareholder value through potential milestone royalties. We have also secured the approval of aprositantin, so Trivio in the US, Jerego in the EU. We strongly believe that aprositantin has the potential to revolutionize a serious and growing public health problem, commonly known as resistant hypertension. Loan preparation is underway, and in parallel, we are actively engaging with potential partners, as I already alluded to. We have also restricted the convertible bond, which was originally due mid-July. hence extending our cash runway. Having secured the bondholders agreement and the Swiss court decision, we are now waiting for the final confirmation, which is expected by the end of August. Curivic is making progress globally. We'll give a little more detail on the US, Europe, and Canada. But as you can see here, our partner, CIMCIR, has also submitted an NDA in China. At the recent AGM, mid-June, all resolutions were approved, including the new governance structure. I would like to thank our previous board members who did not stand for re-election. So, Yon, Aldac, Felix, Erhard and Peter Kellogg. I want also to welcome our new board member, Bart Filius, and of course congratulate all the other board members who stood for re-election, which of course includes Jean-Paul, who is our new chairman, and Mathieu, who is now the vice chairman and lead independent board member. And lastly, we've seen a new compound enter into clinical development. It's our first synthetic glycan vaccine to be tested for Clostridium difficile infection. Next slide, please. So as you can see, a lot has been achieved in the first half. But there is still a lot to be done in the second half of 2024. We need to extend the cash runway. The best viable option is closing a collaboration with APROSI 1010, with potential partners. We'll continue to prepare for the launch of TriView in the US. We'll continue to increase sales for Qvevic, and we'll continue to innovate. We'll go in more detail for some of these points. Next slide, please. At the end of June 2024, more than 155,000 US patients have been treated with Qvevic since launch. Almost 450,000 prescriptions have been dispensed, and product has been prescribed by more than 45,000 healthcare professionals. The chart on the left shows the quarterly evolution of the QIVIC sales. The chart on the right shows how our salesforce numbers have decreased in the same period. and we had to downsize Salesforce to 100 sales reps, which we feel is now the right number based on the access we have and on our scheduled status. Having optimized our resources and promotional efforts and adjusted our commercial approach towards a payer-paid model, Setting a new baseline for sales in the U.S., I am pleased that we have been able to maintain a demand for QEVIC and even see growth in sales. We continue to remain hopeful that our citizen petition can lead to a de-scheduling of the dual rational receptor antagonistic class for insomnia medicines. This would remove a significant barrier to prescribing QV in the US. Next slide. Trivio. We are on track to make Trivio commercially available in early Q4 2024 and plan for a full commercial launch in early 2025. As you can see, commercial supply, ramps program, distribution network, first wave of the MSL routine will be up and running by the beginning of Q4. As you know, APRO-CITENTAN is the first innovation targeting a novel pathway in hypertension in almost 40 years. And these needs, as any innovation, physician education through the MSL and the Congress that we will be attending during the course of this year. As a reminder, Trivio is one daily tablet. It's one dose. It's easy to use for patients and easy to prescribe for physicians. And very important, it can be used in patients with renal impairments. We've been encouraged by the initial conversation with the payers who understand that Tribio is addressing a significant patient need, and that treating the patient who remain uncontrolled at a much higher risk of serious cardiovascular events. Next slide. So moving to Europe and Canada, so what we call the UCAN region. You remember that in Q4 2020, we had a 2.4 million impact of the negotiation with the first Amnok price negotiation in Germany. Apart from that, sales have shown a steady increase since launch, and then you see the recent acceleration. with 3.5 in Q1 2024 and 6 million in Q2 2024. This is the effect of additional markets and it's also driven by a great performance in Germany and an outstanding launch in France where we are starting to see the need for an effective, safe insomnia treatment translating into a demand. It's still very early days in many countries, but I'm confident that we'll continue on this trend in the coming months as we aim to expand access in key European markets. So let's have a look now how these access activities are progressing. Next slide, please. Germany, as you know, QERIC is now the only insomnia treatment that does not have the four-week limitation, meaning that we are able to have, and now we are really having another round of negotiation, so-called Unlock 2 process, which should end by the end of Q1 next year. In the UK, Q-Vivic is reimbursed, is recommended as a first-line pharmaceutical treatment for patients with chronic insomnia after or as an alternative to CBT-I. Coverage through the ICBs, integrated care boards, continues to grow and reach 78% by the end of Q2. Friends, Tuvivik, as you know, was launched by the end of March 2024 as the first and only pharmacotherapy recommended for the treatment of chronic insomnia disorders. And as already said, we had an excellent launch in Q2. In the other countries, we have launched in the self-pay market. So Canada, QVVIC is available to private market patients since November 2023. Almost 70% of the private Canadian lives are covered, which represents approximately 55% of the insomnia market. In Nepal, we are also working on the submission of QVVIC to public Canadian payers. with a possible decision in H1 2025. Switzerland was launched to see a self-pay market in June 2023, and there are some ongoing discussions regarding reimbursement. Italy, we launched QEVIC in November 2022. A self-pay market, again, with a restriction to specialists, psychs and neurologists, which accounts for roughly 20% of the insomnia market. So the reimbursement dossier, but also the request for the expansion of the prescriber base to GPs have been also submitted in Italy. Austria, we very recently launched in the self-paying market, and our reimbursement dossier has also been recently submitted. In Spain, we launched in September 2023. Demand is high. Reimbursement dossier has just been submitted last week. And finally, for now, We are also discussing in Sweden where our dossier has been submitted in May of this year. And with that, I will hand over to our new CFO, Arno, to take you through the numbers. He may be new to the position, but we've been working together for 10 years. And I can assure you that CF Finance are in very capable hands with Arno.

So Arno, the floor is yours. Thank you, André. Good morning, good afternoon to everyone following on the call. It's my pleasure to be speaking to you as CFO of Eidosia. Let's start by looking at the operating results. As you know, Eidosia sold its APEC business to Nexera, formerly named Sosai, in July 2023. Therefore, we show you half year 2023 as reported in green and Proforma excluding APEC business in pink for a better comparison. Compared to half year 2023, Proforma, the revenue increased to 26 million, mainly due to an increase in QVIVX sales from 12 to 24 million. The R&D costs were reduced by almost 85 million to 61 million. which is primarily due to a cost-saving initiative that we implemented at the end of 2023, and the Viatris deal. The first half of 2023 also included about 30 million of R&D costs related to the Phase 3 programs of Solatogrel and Scenarimod, which are now borne by Viatris. SG&A costs were also reduced by about 82 million, primarily due to a reduction in sales and marketing costs in the U.S. and HQ. This results in a non-GAAP operating loss of $170 million, which is a reduction of more than 50% compared to the first half of 2023. Next slide, please. On this slide, we provide you with a split of IDORSIA and partnered business. The partners business includes gains and contract revenues from partners. The US GAAP EBIT of 64 million mainly includes the non-GAAP EBIT of 170 million, 8 million depreciation and amortization, 10 million stock-based compensation, and 125 million gain resulting from the Viatress deal. Next slide, please. We started the year with approximately 145 million in cash. Net cash outflows from operations were 170 million, and 8 million working capital and other movements, which are mainly below EBIT. We received a US dollar 350 million cash inflow from the Viatris deal, which is 308 million Swiss francs, of which 200 million dollars are committed to fund the ongoing phase three trials of Zlatogrel and Scenarimod in the next three years. In the first half of this year, we paid 36 million Swiss francs for these programs. This results in a cash balance of 237 million as of June 30. Next slide, please. We tightly controlled our expenses in the first half, which enabled us to slightly reduce the R&D OPEX guidance, improving the overall outlook for 2024. We now expect the U.S. gap operating loss to reach 320 million which includes a one-off benefit of 125 million from the Viatress deal, and a non-GAAP operating loss of around 400 million, excluding contract revenues and a one-off benefit from the Viatress deal. And it's all unforeseen events excluded. And now I'll hand over to Andrew to open the lines for the Q&A. Next slide, please.

Thank you, Arno. Thank you both for your prepared remarks, and now we have time to address your questions. As mentioned at the beginning, we will now be joined by our president of the U.S. organization, TORSPAT, and by our president of the UCAN region, Benjamin Limal. Welcome. Knowing that today is a rather busy day in terms of healthcare reporting, let's see how many questions we're going to be getting. Operator, please open the lines.

Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again. Please stand by, we'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question. And it comes from the line of Cecilia Hernandez from Van Lanshot Campen. Your line is open. Please ask your question.

Yes, thank you for taking my questions. I have a few if I may. What kind of field force do you expect to need for acquisitions done in the U.S.? And also, what kind of data will help pay your discussions in the U.S. for acquisitions done? And also, what would you consider the optimal deal for acquisitions done in Europe?

Thank you, Cecilia. So, on the field force, Tosh, do you want to, do you care to already give some granularity at this point in time?

Yes, thank you for the question. Yes, I don't want to share the exact full sizes that we're planning at this stage because that's still subject to ongoing discussion based on how much of the market we want to cover. But what I can tell you, yes, we continue to do a thorough in-depth analysis of all the prescribers for uncontrolled resistant hypertension patients who are taking one, two, three or more antihypertensives of different classes, and his blood pressure remains uncontrolled. And we will be sharing details about our field force makeup and field force size closer towards the actual commercial launch. But we will have a field force that adequately covers the high-prescribing cardiologists, high-prescribing nephrologists, and where appropriate, high-prescribing primary care physicians. Thank you, Tosh.

André, do you care to speculate on any kind of APRO terms at this point in time?

No, never speculate on terms. That's the best way not to be disappointed. Shashila, your question was, what is the ideal deal? I would say... Rather than trying to get an ideal deal, we'll try to get the best possible deal. And at hindsight, it was good to restructure the convertible bond, which would have matured mid-July, because this would have forced us to take a certainly suboptimal deal with potential partners. So best possible to your ideal slash best possible is first to select the right partner and get the right structure. And if we have the right partner with the right structure, we should be able to get good terms. But only the future will tell. And I hope I will be able to update you in the coming months. with an announcement regarding this APRO-C1010 deal.

Thank you, André. Operator, next question, please.

Yes, of course. And now we're going to take our next question. And the question comes from the line of Joris Zimmermann from Octavian. Your line is open. Please ask your question.

Yeah, thank you. Thank you for taking the question. So I have a first question as a follow-up on the question on APRO-C1010. And here, just to clarify and verify, so the U.S. launch, it's definite that you're going to commercialize in the U.S. yourself. That would be on that one. And then maybe on the pipeline or the IdoraCellette pipeline, you've mentioned that new or the asset that has newly entered into clinical phase. It's a synthetic glycan vaccine. So maybe you can share a bit more details here on the asset itself, but also on the medical need in that patient population, and if possible already, about the market potential that you see. Thank you.

Thank you, Joris. Andre, do you want to add some granularity on how we're looking at APRO and launching and how that pans into potential partnership discussions?

Yeah, no, I understand it sounds a little contradictory to say we're looking for collaboration and prepare for CLO. But based on the discussion that we have, collaboration does not necessarily mean out licensing. We have other structures which could be possible. Call it SPV, joint venture profit sharing. And in order to do so, we need also to make sure that we do not delay the availability of the drug to a patient. Because there's a huge need. There are a lot of truly resistant hypertensive patients in the U.S. So that's what we are doing in the U.S., In Europe, as you know, the approval was a little more recent. We do not plan to launch. Our commercial teams are fully dedicated to QERIC and there's a lot on their plate in each and every European and Canadian countries. So here, either we have a global deal with partners that have a global organization or we would go for a regional regional deal and here again for europe we have we have engaged with some potential partners for a regional deal hope this answers your question thank you andre um otherwise i'll take i'll have a shot at the back salon if

The vaccine question. So the vaccine comes from a acquisition that stems back from the early days in Actillion and has moved on to Idorsia and comes from Vaxalon. The technology behind that is something that comes out of the Max Planck Institute up in Berlin. And it basically, in a simple term, you use a scaffold in the form of a sugar chain to and you strap on the epitopes onto that for the immune-specific expression that you want to generate the immune response such as you have in a vaccine. The target here is C. diff, so Clostridium difficile, a very specific bacterial environment that resides in our gut and that helps us in our digestive process, and if going out of control will lead to some severe ramifications. So there is a huge medical need both from a therapeutical side as well as from a vaccine's immunological point of view. And this is what is moving forward here. Once we do have more results, then we'll try to flesh out in more detail than the science behind it. Thank you, Iris.

Thank you.

Operator, next question, please.

Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. And now we're going to take another question. And the question comes from . Your line is open. Please ask your question.

Yes, thank you. Just a follow-up question on your R&D strategy, seeing the move of the vaccine into phase one. Will you continue to add earlier stage assets to your pipeline while outlining or looking for a partner for later phase assets? Could you please elaborate on that? Thank you.

As I understood the question, you want to have some granularity as to what we're doing with our earlier stage pipeline. Are we looking for partners in this field, or are we doing all on our own? André, do you care to share some granularity as to how we think about it, not where we are at this point in time exactly?

You know, as I told you, the portfolio review that we are conducting now will give us the R&D priorities, but this is also depending on our funding situation. So we need to be very nimble here. And we'll tell you more as we advance in the second half of 2024. If we want to secure the long-term future of Eidosia and set the year objectives, the board, starting of course with Jean-Paul, is fully aligned with this long-term objective. We need to be able to get other drugs approved and that we would be in a capacity to launch. And as you know, the IP of QHERIC goes slightly beyond 20 or 35, so we have time to do so. And in order to do so, that's why we kept despite the significant downsizing of the drug discovery and clinical team, we kept an R&D organization for this purpose, i.e. being able to discover, develop, and, with the approval, commercialize additional assets by ourselves. So that's the objective. At the end, you know, I would not say this asset is core. This other one is liable to be partnered. What is core is to extend the cash runway and to remain independent. And all the rest will be adjusted to this core strategic priority. Thank you, André.

Operator, next question, please.

Thank you. And now we're going to take the next question. And it comes from the line of Joris Zimmermann from Octavian. Your line is open. Please ask a question.

Yeah, thank you. Thank you for taking some more questions. And if we can maybe just stay a little bit with the pipeline for a moment. Andre, if I understand you correctly, what you're saying is that this portfolio review will also affect the current kind of clinical pipeline. So it might be a bit difficult for you but can you share like high level timelines on next inflection points in that regard and then a second question maybe that's for Benjamin Limal on the UMNOC like the second round of UMNOC procedure and discussions I think you said you mentioned Q125 as the next round where you get or point in time where you get feedback do you expect any further repayments that might be due to the discussions

To your first question on the pipeline, should we keep it? Should we partner some of the assets? I would say we receive for some of the assets some inbound calls from large reputable pharmaceutical companies. And of course, we are open to discussion with such potential partners. But as I told you, your main driver now, yes, we have earmarked 200 million US dollars, of which 36 million Swiss francs have been already paid in connection with Viatris, a deal for Selatogel and Seneribot. We will have a few inflection points on the other compounds, be it Lucerastat, be it CXCR7, be it CXCR3, be it all the others. And we need to make sure that we can dedicate the operating and financial resources with the most promising assets to see a next inflection point or next milestone. So that's an exercise which is ongoing. As you understand, it's really depending on the resources that we will manage to get from the approach to the 10-10 deal. because all the others would not move the needle significantly. Benjamin, you take the question regarding Germany?

Sure.

And Amnog, too, after our meeting with the German team, I think it was two weeks ago, together?

Yeah, exactly. Thank you, André. As mentioned, Qvevic is now in Germany the only insomnia treatment that does not have the four-week limitation. So that's why we have submitted another AMNOG dossier, so the AMNOG-1, and the first negotiation which ended in December 2023. We have submitted our new dossier, AMNOG-2, so-called, in March. So the negotiation will end in March 2025. In this second round of negotiation, Qubic will be compared to best supportive care because there is no other drug that is approved beyond four weeks. And so we will know about the benefit rating in September, and then we start the six months of negotiation. We are confident that we can keep the price at current level in Germany.

Thank you, Benjamin. Operator, are there any more questions?

Your Honor, for the questions, I would now like to hand the conference over to your speakers for any closing remarks.

Thank you, Naida. Well, if this is the case, then this concludes our call for today. Thank you for your ongoing interest in Eidosia, and we look forward to speaking to you again latest at our next scheduled event, the nine-month results 2024 that are forecast to be on the 29th of October. Operator, please close down the lines.

Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.