Good day, and thank you for standing by. Welcome to the full year financial results 2021 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 via the audio, you will need to press star one on your telephone.
Thank you, Heidi. Good morning, good morning, good afternoon, everyone. My name is Andrew Weiss. I'm the head of Investor Relations and Corporate Communications here at Idorsia. With me on the call today to discuss our full year results and our outlook for the future are our CEO, Jean-Paul Clozel, our CFO, André Muller, and our Chief Commercial Officer, Simon Jones.
Thank you, Andrew, and I'm very happy to really discuss what we have achieved in 2021 and how is the outlook for 2022 and the years to come. First, the big picture. In Idorsia we have a common vision. The management and the collaborators want to create a sustainable mid-size pharma company which is based on innovation.
We entered and closed 2021 with a strong balance sheet, thanks to a money raise that we could achieve, and André will discuss this fact. We filed daridorexant in different countries in the world. Johnson & Johnson received approval for ponesimod, an S1P1 drug that was discovered in Actelion and which was developed by our team for the larger part. We filed clazosentan in Japan, that was all at the beginning of the year. We started phase III of selatogrel.
At the end of the year, we got the results for lucerastat, for cenerimod, and last but not least, this year and the beginning of this year, thanks to all this work, we got PIVLAZ approved in Japan, clazosentan approved in Japan, and QUVIVIQ approved in the United States.
Of course, we were disappointed by the fact that we could not show an effect on neuropathic pain. We have seen very interesting other efficacy signal, which really encourage us to continue the open label phase of this study and to discuss with the authorities in view of the very strong effect, for example, on biochemical markers and on some function of the patients, like the renal function.
Therefore, we are advancing cenerimod in phase III, and we are discussing the program with the regulatory authorities, especially the FDA. For aprocitentan, patients are all recruited. We are performing the study. We should have the results in the middle of this year. I'm really very optimistic for this drug since the safety looks really good and we have a clear, I think, signal also of efficacy.
Of course, daridorexant has been the big news beginning of this year, and it's really going to be a global product. It has been approved in the U.S. We have five-year market authorization in Canada, and we are waiting, I would say, any months or weeks the authorization by the European Medicines Agency.
Because not only the drug was working to really improve or decrease the time to fall asleep, but also to stay asleep. The WASO, which is the time that people are waking up after falling asleep during the night. This is the time that you want to decrease, which is increased in insomniacs. As you can see, you have a very nice dose-response effect on WASO. Next slide. Also on time to fall asleep, which is called the latency to persistent sleep. You sleep faster, you sleep longer. Next slide.
If you ask, which is quite unique, I have to say, if you ask the patients how long they are feeling they have slept, you see also that subjectively they feel that they have slept longer. This is highly statistically significant, especially with the high dose.
You can see the question was how, you know, the four main questions of this domain was asking the patients how they feel energetic, mentally tired, physically tired, or sleepy during the day. You can see you have an improvement, which means a decrease of this domain score, and especially with the 50 mg, you have a very significant, the p-value is, as you say, is very low, a very significant effect on this sleepiness domain with daridorexant.
You could really, and that was the big question, with such a fantastic effect during the night and during the day, is there a side effect which prevent, especially with the 50 milligram, the use of this higher dose? As you can see, that has been really, and this is absolutely unique to this product.
Patient can be treated by 50, and should be treated by 50 milligrams, unless there is a special case like, for example, a liver problem where then the 25 milligram in this specific patient should be given. A very good safety profile.
Thank you, Jean-Paul, and good morning and good afternoon, everyone. Next slide, please. Obviously, as has been said, our second strategic imperative is to build a world-class commercial organization, and we're focused on two priorities to achieve this.
As the metaphor goes, we really have truly been building the plane as we've been flying it, and it's an exciting time for us now as we start to execute our plans. I'm confident that we're very well prepared to deliver successful launches that will exceed expectations.
Simply too many patients are currently cycling through prescription medicines, over-the-counter treatments without finding the solutions that they need. Obviously, in addition to the impact on patients' lives, insomnia has a significant economic burden in the U.S., which is estimated to cost more than $100 billion a year.
Obviously, as you're all well aware, we received FDA approval for QUVIVIQ on January the seventh. We're planning to launch in early May after the DEA scheduling process is completed.
This, of course, is really the entry ticket in this market. In addition to this, QUVIVIQ 50-milligram, which was evaluated in one of the two pivotal trials, demonstrated a significant improvement in daytime performance with the validated IDSIQ patient-reported outcome instrument, as Jean-Paul has just shown you.
Based on the efficacy and safety profile demonstrated in our pivotal program, we believe that 50 milligram will be the right dose for most patients. Next slide, please. I'm in the U.S. at the moment with our team and continue to be impressed with the caliber of talent we have recruited into the organization.
Turning to the commercial approach and our go-to-market strategy, we've developed a highly consumer-centric strategy to launch QUVIVIQ in the U.S. By that, I mean that we're putting the consumer and consumer activation at the center of what we're doing.
This education and awareness campaign highlights the need for the night and the day impact of insomnia on patients and their families. We're thrilled to be collaborating with Jennifer Aniston on this unique consumer-focused campaign.
The U.S. sales force has now been recruited and is currently being trained. To support the sales team, we have invested in advanced analytics to enable precise customer targeting and engagement.
Finally, for the past year, the medical team has been engaging with insomnia experts across the country. In summary, I'm confident that with our differentiated product, a talented and focused team, and our innovative go-to-market approach, we are well-positioned to transform the insomnia market and successfully launch QUVIVIQ in the U.S.
The incidence of aneurysmal subarachnoid hemorrhage or ASAH in Japan is three times higher than it is in the rest of the world, with an estimated 30,000 cases per year in Japan. There is a high degree of anticipation amongst neurosurgeons for the launch of PIVLAZ.
While this is a very different go-to-market model than QUVIVIQ in the US, being a highly specialized product in hospitals, I believe we have the same three key ingredients for success, an innovative product, a highly experienced team, and the right focused launch plan.
In closing, we are absolutely ready for the immense opportunity we have in front of us to launch two innovative products in two of the world's biggest markets within what could be weeks of each other. We're fully focused on making both these launches successful and fueling the growth of Idorsia for many years to come. With that, I'd like to thank you, and I'll hand over to André.
Thanks, Simon. Hi, everyone. Greetings from Matterhorn. Not the famous mountain in the Swiss Alps, but a meeting room here in Radnor at our U.S. headquarters. As Simon just said, it's good to meet with our U.S. colleagues face to face and getting fully energized by your senior team.
Soon coming in Europe and hopefully, depending on the result of the ongoing phase III trial in Japan, adding Japan. We have, of course, clazosentan in Japan, and we may add clazosentan in other territories, depending on the result of the REACT trial.
Most of you may have seen in a business update last year, I think it was in November, that aprocitentan was one of the 14 compounds where J&J sees a blockbuster potential. We have also the T-type calcium channel blocker outlicensed to Neurocrine, and we could get some positive news, hopefully positive news from two ongoing phase II, one in essential tremor and the second one in some rare form of epilepsy with children.
This is relating to collaboration entered into in previous years. The non-GAAP operating expenses at CHF 612 million, as expected, are in line with the Q3 guidance, which was slightly below 620, leading to a non-GAAP operating result of -576.
With this, we closed the 2021 financial year with a net loss US GAAP of CHF 635 million. Next slide, please. If we have a closer look at the non-GAAP operating expenses, you see an increase in development, excluding the inventory build.
Not so much on the clinical development side, but also with work relating to a drug substance and a drug product. We also invested more in the early-stage pipeline because this one is also advancing relatively fast.
We had also a slight increase in the G&A with CHF 77 million compared to CHF 63 million in the previous year. With all these numbers, we ended up with non-GAAP operating expenses of CHF 612 million. Next slide, please.
That's mainly due to the issuance of a convertible bond in July 2021 for net amount of CHF 595 million, which fundamentally offsets the non-GAAP operating expenses. Next slide, please. Here is the guidance for 2022.
That's the cost to launch a drug in a primary care setting. R&D would be more or less stable with CHF 400 million. We would have an operating loss, non-GAAP operating loss, around CHF 785 million for the full year 2022.
Just to give you some context here with this goal. This is only based with the portfolio, which is approved, so daridorexant in the U.S., or on the verge to be approved in Europe, Canada, and Switzerland, where we are highly confident to get market approval.
We are really counting on the existing scope and anything that would come on top and above. We mentioned, of course, aprocitentan with the tier royalty we would be entitled to in connection with the launch by JNJ or any milestone coming from Neurocrine or from Mochida in connection with the positive result of a phase III in Japan or even Santhera is not in scope. With this, I pass the baton to Jean-Paul, who will tell you more about the fourth and fifth pillars of our strategic priorities. Jean-Paul?
Yes. Thank you, André, thank you very much for this clear outlook and towards profitability. Of course, to reach profitability is important. It was also important for us to continue to build the pipeline because, as you know, a company only can survive if it can really launch new products, because after 14, 15 years, compounds become generic.
The advantage of these small molecules is that of course you do not have a technical risk like you have for some new technologies like gene therapy, like, gene editing, where you still have a significant risk, technological risk.
The pillar number five was really not to do the same thing as we were doing in Actelion, but really to utilize the state-of-the-art technologies to drive innovation, which means, in our mind, to really continuing to implement this new technology, not only for drug discovery, I've mentioned artificial intelligence, computer modeling, but also in clinical development, where we are working, you know, with technologies also with artificial intelligence, federated learning and so on, but also for commercialization.
2022 will be the year where we are going to become, Idorsia is going to become a commercial company. After the approval of QUVIVIQ in Japan and U.S., and hopefully soon in Europe, we are going to launch in Q2, beginning of Q2 2020 clazosentan in Japan and in May QUVIVIQ in U.S.
Cenerimod will start the phase III in lupus and we very hopefully, and I think there are good chances that we conclude the phase III study REACT of clazosentan if there is not another COVID major crisis, which I think seems unlikely.
Frankly, if you would have asked me when we started Idorsia that within five years you could launch two products in the main countries, becoming a fully fledged biopharmaceutical company, including presence in Japan, in Europe, in U.S., and with a clear view of when we can reach profitability, I think I would have told you, "You know, I'm ready to sign," because that's not that have very few precedents in the bio-
Technology world, with such a rapid growth and establishment of a new company. Thank you very much. That's, you know, we can finish on this profitability goal. I think that Andrew, I leave the floor to you.
Thank you, Jean-Paul. Next slide, please. With that, we've come to the end of our prepared remarks, and are ready to take your questions at this point in time. We've got two formats, oral as well as written format, so I'll let the operator open up the question rosters now.
Thank you. As a reminder to ask a question via the audio, please press star one on your telephone. To withdraw your question, please press the hash key. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link. Your first question comes from the line of Peter Welford from Citi. Please ask your question.
Thank you. Peter Welford, Citi. 3 quick questions, please. Firstly, for Jean-Paul and André, share price reaction today seems to signal expectations that Idorsia will tap the market again this year. Just wanted to hear your thoughts there versus monetizing the Ponvory or potential Apro royalty streams.
Lastly, Simon, on QUVIVIQ, you probably don't wanna go here, but I'll try anyway. Any ballpark quantification of the U.S. price point that you'll be seeking, how aggressive or not you intend to be with couponing, and the size of your commercial team with respect to the sales force at launch? Thank you.
hank you, Peter. Yeah, you've addressed the questions directly. I would suggest the capital markets question to André. What are your thoughts right now on our liquidity? On the edema, I would give this directly to Jean-Paul. Pricing or more, where are we right now with our negotiation strategies with the different payer accounts to Simon.
Yeah, Peter, I can start. Yeah, I can start with your first question. You mentioned equity raise. I would say without any cash raise, we would end 2022 with approximately CHF 400 million. This could be acceptable.
We are much more inclined to explore potential avenues with royalty monetization deals. You mentioned Ponvory. We could also add aprocitentan. The best to monetize aprocitentan is to get the results.
Thank you, André. Jean-Paul, on edema and your thoughts for aprocitentan.
I think that you have to know that you know daridorexant. I'm sorry to start with daridorexant. Daridorexant was the ultimate orexin receptor mixed antagonist. It took us 25 years to really discover this drug, and it was a very, very big effort.
It is really the ideal drug for resistant hypertension, and it should be having much less edema than other selective, you know, blocking only ETA receptor antagonist, which, most of the time, have been tested in clinical trials. First, there is a rationale why you should have an edema. Now, we have treated,
More than 800 patients for nearly a year or 9 or 8 months for most of them. We have 7 DSMB which have not mentioned any issue. We have not seen a very clinically, I would say, significant edema problem.
I just cannot wait to see the result of this study because I think people are going to be surprised by the efficacy in resistant patients. This is very severe patients. You are going to see not only a very good safety, but a fantastic efficacy.
That was clear, Jean-Paul. Simon, do you want to take the question on daridorexant and where we are with QUVIVIQ and negotiations?
Sure. I'll take the three questions in turn. In terms of price, I mean, the payers we know will start with the BELSOMRA price as their starting point. But given the profile of our product, we're looking at a premium to that.
I think for people to be able to use it and have used it for an extended period through a coupon and a script will be very beneficial to them and to continued use. In terms of sales force, we're gonna be in the sort of 400-500 range, just to give you sort of guidance on that.
Thanks. All very helpful. Thank you.
Thank you, Peter. Operator, next question, please.
Thank you. Your next question comes from the line of Sachin Jain from Bank of America. Please ask your question.
Hi there, team. Sachin Jain here. Just, I'll take a couple on daridorexant and then a couple on financials, if I may. So firstly, on daridorexant, just a couple of commercial questions. How does being a scheduled drug impact your consumer-driven focus of your marketing strategy and focus on PCPs versus specialists?
Just wanting to make sure I interpreted that correctly. Last question on financing, just wanted to clarify comments. You noted the lack of equity was really a function of the share price. If the share price responds to a successful daridorexant launch, would equity be back on the table? Or are you totally ruling that out? Just as you think about royalty or out-licensing, what timing are we thinking to? It sounds like 2H. Thank you.
Thank you, Sachin. I'll probably give the first question to Simon, second question, André. Third question.
I'll take the first couple. Sachin, I don't think we see scheduling as being a particular issue or barrier to our DTC activities. We obviously have to be clear in all of our promotion, whether it's to healthcare professionals or to patients, that it's scheduled for, which is what we expect.
I think we're competing in the full prescription market, and which is, you know, in the U.S. alone 75 million prescriptions. CBT is variably effective and certainly is not widely accessible. Even though there obviously is a bit of momentum at the moment with CBT and apps and digital and so on and so forth, and it may grow some, I don't think we see it necessarily as anything that we would compete with.
We're not intending to really reference or go after CBT. It's all in the post-CBT prescription market. For many people, they don't get to go through CBT anyway because it's just not accessible or in some cases not recommended. Great. Thank you, Simon. André?
Hi, Sachin. Regarding your second question regarding funding, you know, never say never. Would not rule it out to adopt equity capital markets, but that's, I would say, unlikely for the time being. Again, we are not against the wall, we'll still closely monitor the equity or equity-linked capital markets.
We need a little more time to see the uptake here in the U.S., get also the pricing in Japan for clazosentan, get also the pricing in the European countries. As you know, it's a whole race to launch a drug in Europe following EMA approval.
They know we grant them all the financial means in order to meet their objectives. They know that there's only one way, i.e., succeed, as Simon said. It will be really an exercise depending on the ability to grow ourself and to adjust accordingly, but having a better profitability the OpEx.
Okay, thank you.
Thank you, André. Operator, next question, please.
Your next question comes from the line of Jo Walton from Credit Suisse. Please ask your question.
Thank you. I'm afraid I'm going back to QUVIVIQ, and the U.S. and a little bit on Europe. Can you tell us how important the elderly market is to the overall demand, and what your latest thoughts are on when you might be able to get Medicare coverage?
I wonder if you can tell us a little bit about the EU negotiations that you must presumably be starting, and how we should think about Europe as an opportunity on top of the U.S. Many thanks.
Thank you, Jo.
Shall I dive in, Andrew?
I think that's clear.
Yeah. The elderly is a very significant population for us on several counts. One is the prevalence of insomnia in the elderly is high. Actually, the plus 65s account for a significant part of the market. Actually, they are the ones that are most underserved because the Z's and the benzos are really not used well in that population.
I mean, you look at the somnolence rate in the over 65s, and you can see it in the Lancet supplement. Our somnolence rate in the over 65s on the 50-milligram dose is 0.8%. We've got a very differentiated profile within the elderly population. We see a big opportunity in the over 65s.
We don't know how that will work out, so we would hope that we can get a product added off cycle and earlier than January 2024, but that's yet to be confirmed or determined, obviously. In terms of BELSOMRA and ramp, first of all, BELSOMRA didn't have a bad start. Actually, if you look at the ramp of BELSOMRA for the first 4-6 months, it was actually quite good.
Because ultimately, that's what's gonna drive the long-term value if we actually get patients on the product. They like it, they respond well, they want to stay on it, and then that's really, as I say, what will drive the long-term.
We're gonna come in with an indication, of course, that is chronic use based on our 3-month data and our 12-month extension. We're the only DORA that will enter the European market. We're gonna stand alone in a market where there's no other product that can be used for long-term use.
Thank you very much, Simon. Very clear. On that note, I did get a question through the webcast that was very Gary-focused, so I thought I would slip this one in. It concerns the couponing. André, if you could provide some clarity as to how couponing is gonna be accounted for in terms of revenues. How does that function? A very detailed question, but I think it fits in nicely here.
No, the couponing cost is in the deduction between gross to net sales. The CHF 120 million net sales that we guided for 2022 includes the couponing.
Okay, very clear. The 120 basically already takes that into account, that is already deducted for. Okay. Operator, next question, please.
Your next question comes from the line of James Gordon from JP Morgan. Please ask your question.
Hello. James Gordon, J.P. Morgan. Two questions, please. One was about revenues and the guidance for this year. The CHF 120 million in sales, is that including a double-digit revenue contribution from PIVLAZ, or is the vast majority of the 120 gonna be QUVIVIQ?
How much of that is because you still see significant risk around it versus the chances of them being divested? How confident are you in the two things on a relative basis?
Thank you, James. I think André, on both accounts, you probably know best how those numbers kind of came about.
Yeah. James, we are, you know, we don't want to disclose a breakdown between our QUVIVIQ, mainly U.S., you know, where because it will be really launched in the late Q4 in Germany and Italy, so almost no sales in Europe.
If you look at the phasing as you understand the speed of uptake, you won't see, especially with the copay and the couponing, in order to gain this early adoption, as Simon mentioned, much sales reported in Q2, but increasing over time, Q3 and of course Q4.
The CHF 1 billion, again, as said, we hope that we'll be able to beat these expectations. It will be mainly daridorexant, mainly U.S., but Europe, depending also on the price that we'll be able to negotiate, could be quite significant by 2025.
By all the analysts, I hope we will be able to positively surprise with the sales of clazosentan in Japan.
Thank you, André. Can I just very quickly follow up? The 145, does that include any kind of stocking?
CHF 145, you mean CHF 120 for the net sales plus the 25-
Exactly.
from deferred revenue. Yeah. It includes the normal stocking, obviously. But it's a low proportion, especially for Japan and, of course, slightly higher for daridorexant in the U.S.
Okay. Jean-Paul Clozel, do you wanna give another outlook on how bullish you believe aprocitentan is gonna come through, as James Gordon put out the question whether that was one of the reasons why it's not included in the numbers?
I think you can never be 100% sure, but you know, this program has been based on the FDA recommendation. It's nearly the FDA would design with us, and they told us we want this program for resistant hypertension, so I don't think there is, if the study is positive, a regulatory risk. The results, as I said, looks outstanding. I think there is a very low chance of failure at the stage we are now with this program.
Okay. Thank you, Jean-Paul. I'm aware that we are already 10 minutes after the hour. We're gonna let this continue to run. Operator, are there more questions?
There is. Your next question comes from the line of Lucy Codrington from Jefferies. Please ask your question.
Hi. Just a few left for me, thanks. Just if you could, what would be a kind of reasonable price per patient for us to consider for clazosentan in Japan? Then finally, just on your marketing strategy for daridorexant, how the roles are kind of split between yourself and Syneos, and what proportion of patients are seen outside of the primary care setting? Thank you.
Thank you, Lucy. Simon, do you care to take both of those?
I'll take those. We're not in a position to disclose price on clazosentan in Japan at the moment. We're in the negotiations with the authorities. You should see that in April when we conclude.
We have done that in a creative way with a revenue option for them where they can gain some upside if they perform well. But essentially, the costs all run through the OpEx. It's a contract sales force, but we've done it in a way that we allow them to have a performance benefit if we overachieve. Essentially, they are the sales force, but we're in control and drive all of the strategy and the strategic elements of the product.
Thank you, Simon. I've got another question coming in through the webcast, asking. This is one for Jean-Paul. We've got so many milestones coming through, the share price doesn't seem to wanna always react to them. What are your thoughts on how the share price decoupling is from all of our milestones?
I think, thank you, Andrew, because this is a very often question asked. I think that we have at Idorsia with the board and with the management, we have decided, and this was very clearly explained by André, we are guiding on basically the base case, which we have described, which is daridorexant in U.S., Europe, and Canada, and clazosentan in Japan. That's it.
It's very different when we make a base case like we do, and that has the disadvantage of maybe people who are not really thinking in this way to value us, just the value on this base case, and they don't give much value for the upside.
Excellent. Thank you, Jean-Paul. Operator, do we still have questions in the queue?
Yes. Your final question from the audio comes from the line of Miriam Kappeler from Finanz und Wirtschaft. Please ask your question.
Hi. Thank you for taking my questions. I have two questions. Can you tell me something about your expectations regarding the peak sales of daridorexant? My other question is that, the equity ratio dropped from 41% to 7%. Does that concern you? Thank you.
Okay. I think on expectations, Jean-Paul, I think best is if you give us an outlook of what you believe. On the equity metrics, André, maybe you wanna take or tackle that.
You know, I think that the drug, you know, daridorexant has 14 years of patent life, or at least. I think what is going to be the sales in 14 years, I cannot predict. I think that I can predict it will grow for the next 14 years because we don't have much competition. Frankly, the Z-drug, Ambien. I just forgot the generic name, but.
Ambien.
Yeah, it was selling for $4 billion 15 years ago, when it was not before becoming generic. I think that, you know, under these numbers, I would be very disappointed in the future. That is the other question. Sorry, I forgot.
The other one's for André on the equity ratio dropping from 41% to 7% as we basically have a reflection of the convertible bond portion on our balance sheet. Does that concern you, André?
Not at all. Just to give a straight answer. You know, that's also taking the metrics from the U.S. GAAP accounts, where, for instance, we know the convertible bond of J&J will ultimately convert into a new share. But according to U.S. GAAP, there's a conversion feature leading to this accounting treatment. Again, we're not funded to breakeven. We have various ways to fund the company. This should at one stage be reflected in the equity.
Excellent, André. Thank you. We did get two more questions on housekeeping and pipeline, on the web from, in written format. On both selatogrel and lucerastat, Jean-Paul, where are we right now with those two compounds?
Selatogrel, phase III, fully ongoing, starting. We are really starting to include patients. We are opening centers by hundreds, you know, it's several hundreds of centers. We are going to really get the pressure rising now this year, in terms of, you know, getting more and more patients recruited.
I would say also on the cardiac, we see some very interesting observations on the cardiac echocardiogram. Now, we are continuing to observe these patients in order to get a large number of patients treated for two years with lucerastat. We will discuss with the regulatory authorities if we can use this data by comparing them with an artificial or historical, if you want, control group, like it was done with Fabrazyme from Genzyme. This was the way they got full approval.
We are going to discuss with the FDA, but some other countries have very different requests in terms of what is needed to approve such a drug in an orphan disease. We are discussing with other regulatory authorities also. I think at the end, I'm very hopeful that this drug can be approved in as many a country as we can.
Thank you, Jean-Paul. One more for André regarding flexibility of the commercial costs in 2022. How much wiggle room is in that cost block that we are guiding for 2022, if the commercial ramp-up were to be slower?
Well, for 2022, not much. Because, you know, we need to really properly launch the drug here in the U.S. You launch only once, so you need to succeed. It's really more stop and go, depending on the uptake, moving forward 2023, 2024, and beyond.
Excellent, André. We've exhausted all the questions. We've come to the end of this call. We've passed over the hour significantly. Thank you very much all for your ongoing interest in Idorsia and wanting to know how this story is gonna evolve over the next few years. It is very exciting. Stay tuned. Operators, please close down the lines.
That does conclude our conference for today. Thank you for participating. You may all disconnect.