Camurus AB (publ) (CAMX) Earnings Call Transcript & Summary

Hello, and welcome to the Camurus 2019 Fourth Quarter and Full Year Report. Today, I'm pleased to present Fredrik Tiberg, CEO. [Operator Instructions] Please go ahead, sir.

Thank you. Good afternoon, everyone, and welcome to our first call this year. Before that, I will just alert you to our forward-looking statements. So Slide #3, I think it's -- today's agenda, it will include Q4 and full year overview and also an outlook, Buvidal progress in EU and Australia, U.S. approval and launch status, and then we will also talk about the R&D pipeline, some key takeaways and finish with a Q&A session. With me today is Eva Pinotti-Lindqvist, our Chief Financial Officer. So with that said, let's start with the Q4 and full year financial overview. We saw continued strong growth of revenues and Buvidal sales in our initial markets in EU and Australia in the fourth quarter. Product sales grew by 55% to the previous quarter to SEK 30.3 million in Q4, and ended up at SEK 72.1 million for the full year. Total revenues for the year increased by 114% to SEK 105.6 million total, and the results for the fourth quarter ended with a loss of SEK 88.4 million compared to SEK 103.2 million for the same quarter in 2018. Our cash position at the end of the period was SEK 358.7 million compared to SEK 134.4 million the previous year. And this was strengthened by SEK 300 million directed share issue in December. Overall, we are pleased with the first year financial performance as a commercial stage company, where we have clearly established the market potential of Buvidal and also built a solid foundation for the coming years. For 2020, our guidance is total revenues in the interval SEK 290 million to SEK 330 million, excluding Brixadi milestone payments. Of these, we expect Buvidal sales in the interval SEK 240 million to SEK 280 million. And the 2 operating expenses of between SEK 570 million and SEK 610 million. And the increase here is mainly due to the fact that we have a number of Phase III studies in progress, and also we'll be talking towards the end of the year. So with that financial review, let's turn to the operating highlights. That's Slide #5 here. And as you can see, I'm proud to say that we achieved our main goals for the year. And in the third -- fourth quarter, we got clarity about the U.S. approval of Brixadi once-monthly injection depot by the 1st of December 2020. We also were very happy to announce superior patient-reported outcomes for Buvidal versus standard of care from the randomized controlled DEBUT study that we were conducting in Australia. We submitted an NDA for Buvidal in New Zealand, and successfully completed a directed share issue, raising SEK 300 million as previously proposed. In proceeds for marketing preparations in chronic pain and Phase III development of CAM2029 in neuroendocrine tumors. We also, towards the end of the year, entered a strategic partnership with NewBridge Pharmaceuticals for Buvidal in 12 countries in the MENA region, that's Middle East and North Africa. And looking to 2020 and beyond, I think, as I said before, we have a strong foundation going forward. So let's look now at the status in our initial markets in EU and Australia. Slide 6. So as you know, we designed Buvidal weekly and monthly dosing regimens to fit with the current clinical practice across geographies, with the flexibility to meet individual patient needs, and address the key issues of current daily medication, including fluctuating plasma concentrations, burden, stigma associated with daily dosing. But also safeguarding against misuse and diversion. However, the most gratifying aspect of working with Buvidal, I mean, it's -- at least, at this stage, it's the very positive feedback we are continuously receiving from patients and HCP, so health care professionals. I think on this slide, you see, actually, one of our patients is Will. He is from Wales. He started with drugs when he was 17, and has been in and out of treatment for the last 6 years. Now become stabilized, stable on Buvidal treatment and actually at this event, when our photographer was over in Wales together with one of my colleagues, Will was on his way to his first job in the U.S. to getting his Buvidal injection. So this is 1 story, 1 example that a very common feedback that we are getting on the market. And I think it reminds us all of why we are doing what we are doing. Robin, on the left side there, is Will's key worker. And also for her, things have changed since he started treatment with Buvidal. So going more into the global picture on Slide 7, you can see where we are currently working and expanding. So as you know, we are -- we have launched Buvidal in EU and Australia. It's an area where we are doing all the commercialization ourselves. About 1.3 million high-risk opioid users in this region. And a peak market potential estimates for Buvidal of EUR 300 million. Looking over to North America, where our partner Braeburn is preparing for the launch of Brixadi, which is the name for Buvidal in the U.S., the situation is approximately 2 million diagnosed patients with opioid use disorder. And an out market estimate in the region between $0.6 billion and $1.2 billion based on external research as well as our internal estimates. In our most recent region, the Middle East and North Africa, we have partners with NewBridge and Medison. It's difficult to get exact figures, but the conservative figure is that there's approximately 300,000 patients with opioid dependence in this region. And we have estimated a big market potential of between 70 -- EUR 25 million and EUR 75 million. So all this -- you can see that there's clearly significant potential for Buvidal in our different markets and our partner market. With that, I just want to go in and talk more about the status and the actual launch progress in Europe as well as in Australia, where we set out a very clear strategy based on the timings of, first of all, regulatory approvals, but also pricing and reimbursement in each market. The launch in our Wave 1 markets is progressing well with a focus of establishing Buvidal as a new first-line treatment option in opioid dependence. In Q4, our patient numbers grew by approximately 60%. So we ended the year with 4,000 patients in treatment. While sales grew with 55% to SEK 30.2 million for the first quarter, and as we said before, SEK 72.2 million for the year. If you convert this to U.S. pricing and price per unit, that would amount approximately to -- between USD 25 million and USD 30 million, just to give a perspective on the amount of patients that we have in treatment. So I think there's a lot of progress in our markets. We are now the market leader in Finland with over 40% of buprenorphine share. And we are seeing similar strong uptakes in Norway and Australia after receiving reimbursement in Q3. The growth in other markets is accelerating as we are addressing access legislation and other momentary barriers. And then on top of this, of course, we have the continuous positive feedback that we are getting from patients, physicians, but also in our interactions with payers. And I think when you're looking at that, it's also interesting to see the very high retention we have, which is reflecting this positive feedback, where on most of our markets or on all of our markets, it is estimated to be over 80%, similar to what we have seen in the long term study. So looking at the next steps and more importantly, to the strategy for 2020. We will focus then on increasing our market shares and also the patient's access to treatment in our established markets, closing this gap between need and availability of treatment, and expanding to new markets and securing price and reimbursement and regulatory approvals, of course. Importantly, we're also, of course, working to establish Buvidal as the preferred evidence-based treatment globally. Going over to next slide, Slide 9, I'll just quickly update on the U.S. situation. As you know, this is a very important market for Camurus and following the revoking of the orphan designation for Sublocade, we are now looking forward to the approval and launch of Brixadi in December this year. Braeburn management, they have been preparing for this launch for more than 2 years. And we'll be coming to the market with a strong and competitive product for individualized treatment of opioid use disorder. We believe that they can enter the market from a position of strength. And also, we'll have the benefit of being able to follow or having been able to follow the progress of earlier launches in the area. The market dynamics in the U.S. continues to be very attractive, with a huge medical need, rapidly growing market, where we think that Brixadi weekly and monthly subcutaneous injections are well aligned with current practice and prescription patterns. I think this is a very important point here. Next slide, Slide #10. So this is just a brief update. We're continuing to build the evidence base for Buvidal with our KOLs, so key opinion leaders and clinical researchers. We have very strong relationships and built them across the world, from the U.S. to Europe and Australia. And as you can see, we have been quite active in publications and Congress presentations over the year. In 2020, we will continue this high level or actually increase it, presenting at all key meetings, including a number also submissions and publications. And we are also in the process of starting multiple investigator-led studies of Buvidal in the EU, Australia as well as the U.S. An example of these collaborations that we have completed was the successful performance of the DEBUT and UNLOCT clinical studies, which were completed clinically in 2019. The DEBUT study, which was sponsored by Camurus and conducted at 6 clinical sites in Australia, compared patient-reported outcomes between Buvidal, head-to-head against standard of care in 120 outpatients. This is the first ever study in a direct head-to-head study of patient reported outcomes of a long-acting buprenorphine injection versus standard of care. The reported superior outcomes for the primary end points of patient global satisfaction, and we also showed statistically improved results for several of the secondary outcome measures, like treatment burden and quality of life. And I think this was -- will be compelling evidence as we go further in presenting and publishing this data. Also, the core part of the UNLOCT study, which is a study in the prison setting was completed, and we got positive preliminary results presented at the Lisbon Addiction Meeting in October. And in addition to that, we have also had presentations in the fourth quarter at the AAAP in San Diego in December. With this, it's time to switch to presenting progress in our other pipeline programs. So let's switch to Slide #12, where we have our pipeline. As you know, we have a broad pipeline of drug candidates for treatment of chronic disorders, including pain, endocrinology, oncology and cardiovascular disease. Today, we will focus on our registration and Phase III-ready programs, that is CAM2038 for chronic pain as well as 2029 for treatment of acromegaly and neuroendocrine tumors. Slide 13. Regarding CAM2038, as you know, that's a long-acting buprenorphine product as well, being developed in chronic pain. We believe this represents an important opportunity as it addresses a significant unmet medical need in the management of chronic pain with oral opioid. This includes the need for treatment dosing, tolerance development, dependency, overdosing and risk for diversion, misuse and pediatric exposure, which are largely addressed by this dosing regimen and the formulation that we have developed. So Slide 14, CAM2038 provides long-acting, round-the-clock pain relief and has a relatively low-risk of respiratory depression, of course, or actually protected against respiratory depression but also buprenorphine shows less tolerance development than full agonist opioids. It also eliminates the risk of medication diversion and misuse that I referred to before. And our clinical data suggests that CAM2038 is efficacious and very well tolerable in the treatment of chronic pain. This is both supported by our Phase II data as well as previously announced. [indiscernible] Phase III result in opioid experienced patients with chronic low back pain. We have also, in this year, completed a long-term safety study and a broader population of chronic pain patients. Again, showing good tolerability and no adverse -- unexpected adverse events. All studies have so far met the key objectives, including primary and key secondary end points. Now we are currently now in the midst of a detailed market analysis to look at the product positioning and market access ahead of the planned market authorization application submission in Q2 or Q3 2020. So going to Slide 15 our Phase III program directed at patients with neuroendocrine and pituitary disorders. CAM2029 is our long-acting subcutaneous octreotide in developing these 2 indications. We go to Slide #16. You will see that there's approximately 67,000 acromegaly and NET patients in the U.S. and Europe. And CAM2029 is, through these 2 indications, addressing a $2.7 billion current market, which for the past 20 years, have been growing steadily at approximately 10% CAGR rate. The market is dominated by Somatuline Autogel, as you can see from Ipsen and somatostatin LAR by Novartis. And you see, it's a very healthy market despite some of the advanced limitations of these 2 products that are shown on the slide here. So if we go to the next slide, #17, you'll see that, I think, the important part of CAM2029 is that it addresses the key unmet need and could become the first product for simple self-administration by patients, which is leading to improved convenience and potential for significant cost savings. In addition to that, we are also exploiting the enhanced octreotide exposure with 2029, which could lead -- resulting efficacy improvements in both acromegaly and NET. And this is indeed, supported by a large and growing body of clinical evidence for octreotide and somatostatin-based product. So our strategy going forward is to position 2029 as a standard somatostatin treatment in acromegaly and NET, offering the most convenient and effective treatment option. Slide #18. We commissioned, I think we presented this briefly last time, a detailed market analysis of CAM2029 in acromegaly and NET and I just want to repeat this, we see that besides the market according to different target attributes of CAM2029. And as you can see, the opportunity remains or is very significant with the total potential of over $1 billion in peak sales. Going to Slide #19, just to update you on where we are with our programs. We have, as you can see, 2 ongoing acromegaly studies, 1 randomized, double-blind, placebo-controlled science study and the long-term safety study, which are both in the process of recruiting patients. We are targeting a total of 60 sites in Europe and the U.S. and we are expecting to complete enrollment of a total of 140 patients during 2020. Meanwhile, we have also completed the design of an autoinjector that we have been working on in the past years. That was done in Q4. And we are working now to progress to scale up. And we're also planning to a PK study to bridge between prefilled syringe configuration and the autoinjector format, and we plan to start this in Q2 2020, potentially late in that quarter. Following the successful direct share issue in December, we are now also financed to initiate the NET program, and that is currently being planned, and we are targeting an immediate start of the program towards the very end of 2020. As mentioned in the report, we also advanced -- are also advancing early pipeline programs with a clinical trial submission for our long-acting treprostinil study, which have been submitted and actually approved. And we are starting there, a pilot Phase II study in the second quarter. As we said last time, I mean, Camurus is not only what we are doing in the company on our own. We also have some very interesting partnerships. That are continuing with Rhythm Pharmaceuticals, where we are -- where they are in the final steps of the Phase IIa study of our weekly setmelanotide which today, have included more than 70 patients. So we are -- and Rhythm is expecting to present the data during this year from this development. We also started a collaboration with Ra Pharmaceuticals for a long-acting zilucoplan, where we are working with the preparations for a planned clinical start in the second half of the year. So with that, I think we are coming to the end of this presentation. I think we have had -- we are at Slide #21. We've had a very nice finish of the year. Buvidal was launched in 7 markets. We've delivered a strong double-digit growth and become market leader in Finland, and are progressing very strongly in other markets. We have shown very strong clinical data and our strategy for 2020 includes increasing patient share and base in our launched markets and expanding to new geographies. We're continuing to advance our pipeline and as a pub company, we have established a fully operational, commercial infrastructure in the EU and Australia. So if you want to see tentative operational highlights for 2020, we have them on Slide 22. I think, just want to summarize here that we have built a strong foundation this year, and we look forward to delivering positive results and strong growth in 2020. So thank you all for listening. And at this point, we would like to open up this call for questions, Q&A. Thank you.

[Operator Instructions] And the first question is from the line of Harry Sephton to Jefferies.

So 3 to start with, please. Firstly, are you finding that the DEBUT study results are helping you with the commercialization activities for Buvidal? And also, will you be able to use any of those? Or will your partner be able to use any of those superiority claims in the inclusion of its label in the U.S.? Second question, can you remind us of the time line for the chronic pain submission in Europe? And also when you expect your partner may be launching this indication in the U.S.? And to follow up from that, clearly, the pain market is vast. You mentioned that there are around 1 million patients on high dose morphine as a rough target market, but I was hoping we could potentially get some more detail on how you're thinking about the commercial opportunity there? Are there any other long-acting treatments that you can use as a benchmark? Or are you entering somewhat an unknown territory?

Thank you so much. So could you just remind me of the first question, Harry? Because...

Absolutely. So the first question was on the DEBUT study results?

Yes, yes, of course, yes. Yes, I mean, we are already using the DEBUT study results in our market access processes, not only in Australia -- not in Australia but in other territories. So -- and there is, of course, a large interest in this. Patient-reported outcomes are very important, of course, and the quality of life measures as well. As regards to the possibility of including this data in the U.S. label, I think that it's potentially challenging, but I cannot say definitely, no. I mean I should mention that we do have, through the tentative approval, there is a completed label for the product, at least a tentative label. So in terms of any updates, I would say that, that is maybe speculative. So when it comes to the pain indication, we are working for Europe and that's our first target. We are planning a submission, as I said, in Q2, towards the end of Q2. Potentially, it will drag into Q3 because we still have things that we are working through in terms of the profile, and as you very rightfully say, I mean, we are not targeting the complete pain market here. But we will be focusing on a niche segment of patients where we believe the unmet medical need is very significant. And where we believe that our product is very well positioned, which is also supported by our Phase III data and the inclusion criteria as well as exclusion criteria in the Phase III study. So I think, I mean certainly, this is a clear focus for us. In terms of the U.S., I will say that Braeburn is of course, very much focused at this stage on the upcoming approval and launch. And I will let them follow-up with more details on their plans for the NDA submission. But I know that there are -- even right now, there are activities ongoing in this area and that they have a large enthusiasm for the indication.

[Operator Instructions] We have a follow-up question, and that's back to the line of Harry Sephton at Jefferies.

Just a few follow-up questions on the financials, if I may. So I noticed on intangible CapEx, the spend was relatively high in 2019. Can you remind us what that related to? And your expectations for CapEx spend in 2020? Secondly, can you indicate the approximate growth in sales of episil in 2019? As that, I understand, is included in your product sales. Thirdly, your -- on your cost of goods sold. Can you indicate what sort of gross margin you're expecting to get from Buvidal sales going forward? I noticed that 78% margin was a little below what my expectations were.