Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good morning, good afternoon. I'm James Gordon, JPMorgan European Pharma and Biotech analyst. And today, at the JPMorgan Healthcare Conference, it's my pleasure to introduce the Idorsia session with Idorsia's CEO, Jean-Paul Clozel. And today, we're going to have a 20-minute presentation with Jean-Paul, and then we're going to have 20 minutes for questions. And you can immediately start registering your questions. The way you do that is with the Q&A function associated with this presentation that's on the conference website, and then I'll be reading questions from there. And with that said, I'd like to welcome Jean-Paul to the conference and looking forward to the presentation.

Thank you, James. I suppose that I see my slides or at least some slides. No, they weren't telling me. Okay. So -- sorry. So thank you very much, James, and thank you for JPMorgan for the invitation. It's nice to be back. It's really nice to be back at JPMorgan, even if we are not in this wonderful San Francis hotel. But at this time, it's not anymore to present to you Actelion, but to present Idorsia. So if sometimes, I make a mistake and I say Actelion, we have to correct for Idorsia by yourself. So Idorsia is really -- and has a single vision, and we can go to Slide 3, and I would like to explain this vision, which is really to have one really -- the vision is really to create a midsized company based on innovation. That's what we want to do. And just to remember, for those who do not really know the origin of Idorsia, you can go to Slide 5, and I would explain that Actelion was bought by Johnson & Johnson. And then we had a very good and constructive discussion with Johnson & Johnson, and we decided that Johnson & Johnson would acquire the late products, products which were in Phase III, products on the market and basically the whole pulmonary hypertension franchise while Idorsia would be created and would get the research project and the early compounds. So as you will see, we will hear a lot of our products have been discovered within Actelion, but we had the chance. Thanks to this very innovative model, we had the chance to continue to do the research and to develop this project and this program. So in fact, Idorsia is a 3 year-old biotech with a 20 years heritage. So if we go to Slide 7, this summarize a little bit our thinking. We know that to create a midsized pharma company, we need innovation and basically a drug discovery engine. We need a rich pipeline. We need a global commercial organization. And of course, we need strong liquidity. That's the main components in order to be able to build such a company, and we want to do that in a short amount of time. So let's go. I think that in 2020, we have been able really to progress on the front of all the elements that I have mentioned. And let's start on Slide 9 by the drug discovery engine. So today, within Idorsia, we have 380 researcher. They are working with mainly organic chemistry as a way to discover this drug. And with this organization, we basically can select for development, for further development 2 or 3 products, which go to toxicology to drug really development. And from these 2 to 3 products, basically, each year, we can have 1 to 2 new products entering into clinical development. And that explains how rich is our pipeline. Because, of course, after 15 years, as I mentioned, of research within Actelion, we have been able, and you see the pipeline on Slide 10, we, today, have 12 products within clinical development. And of course, this is not counting on ponesimod, which was developed by Actelion nearly up to the end, and which now belongs to Johnson & Johnson. And we will have, I think, the PDUFA for ponesimod is in March of this year. So we have 12 -- for Idorsia, we have 12 compounds. And you see, it's very calibrated. We have 4 Phase III basically product. One is -- has been filed. As you have heard, this daridorexant has been filed last Friday. Three products are continuing the development, but we're nearly at the end of equipment for 2 of these 3; a third one, we should finish this year. So basically, in 2022, we'll have finished these 4 Phase III programs. We have also 3 Phase II, 4 Phase I. That show that we have really a very calibrated pipeline with project at a very different level. So let's first speak about daridorexant. So if you see on Slide 12, we wanted to remember because a lot of people have forgotten -- are forgetting because there has been no really new big products, or I think, big launches in the field of sleep for a long time. And I wanted to remember you a few key figures if you think of insomnia. First, that just if we see the U.S. market, and let's focus on the U.S. market, about 10% of the U.S. citizens suffer from insomnia, one way or another. 16 million of Americans are treated for insomnia. And many of them are not treated despite their insomnia because they are afraid of the existing drugs. The cost of insomnia in United States is estimated to be around [ $200 billion ] (sic) [ USD 200 billion ]. That counts all, for example, the [ falls ] due to the drugs or which produce falls like benzodiazepine, like that drugs, but also all the cost to the employers of people who do not really can work in a normal fashion because of insomnia. You also know that insomnia is related to depression, to many other diseases. And it's favoring, for example, basically, it's favoring a lot of other disease. So the total cost is about USD 200 billion. Another very important figure is the fact that if you take 5% of the market today, which exists today, and you put the price of suvorexant, which was an orexin receptor antagonist developed by Merck, you go to a sales figures of USD 1.5 billion. So 5% of the market, USD 1.5 billion. What I want to say there, that the market basically is all generic, I would say. And really, it's a very highly unsatisfied market. And one good proof is the fact that we see more and more use today of trazodone, which is used off label. It's an antidepressant with a black box for suicidal ideation. But despite that, this black box, this is used at low dose, people profit of a side effect and view that for patients with insomnia. Despite that, it has, of course, no label for insomnia. What is also very important to remember, that we have at least 14 years of patent life left with daridorexant. It's a very brand-new product. We have gone very fast for development. And we basically have the maximum, nearly the maximum legal amount of time for the patent, which is 15 years. So we really want to grow this compound for all this time, and we are going to do everything in order to preserve the future potential of daridorexant. Now if we look at the main characteristic, why we do believe that daridorexant is going to be a success. It's a drug which works on, and you can see on Slide 13. It's a drug which work on sleep onset, on sleep maintenance, on total sleep time, but a very important thing, we have been able to demonstrate without any doubt that this drug improve the daytime functioning. And that really -- this improvement is dose-dependent and is much more marked with the highest dose, the highest dose, which is not associated with a worst safety profile. So we have a unique drug, which cannot only improve sleep but the daytime functioning. And if you look at Slide 14, this is not by chance. This drug was designed not to have a short half-life, not to accumulate, as you can see, on this pharmacokinetic curve with repeated administration, there is no accumulation in contrast to the existing orexin receptor antagonist. And as you see on page -- on Slide 15, this drug has the ideal half-life between the suvorexant, on lemborexant with much longer half-life and seltorexant, which has too short half-life to be able to cover the whole night. So it's exactly -- it's been designed to be able to cover the night, but that the people in the morning are feeling well. So we had 2 positive Phase IIIs, so the 2 pivotal studies were positive. And on Slide 16, you see the summary of the clinical program. The long-term efficacy and safety have been confirmed. We had a very large clinical pharmacology program looking at some special patients, patient populations, like patients with sleep apnea, elderly, renal failure patients, liver failure patients, drug interactions. The Phase III has been also initiated with Mochida in Japan. And the NDA, as I mentioned, has been filed last Friday, and frankly, we are going to start the prelaunch activities in the first half of this year. And of course, we also plan, within the first half of this year, to submit the European MAA. So that's the one drug. Now we saw and very nice result, and this is a very long going project with clazosentan. And you can see that clazosentan is a drug for a very specific use, which is really to prevent spasm in patients who have had a subarachnoid hemorrhage. You see, this subarachnoid hemorrhage is usually due to the rupture of an aneurysm. And for this patient, what happens is that, of course, the blood is going within the -- around the brain, if you want, and produced in 50% or 60% of the patients with this severe form of hemorrhage, a spasm, a spasm which occurs, after 4 to 14 days after this hemorrhage. So the patients are treated either with surgery, clipping or with neuroradiology which is coiling. And -- but despite this treatment, since you cannot take away all the blood, there is a spasm. And we have done a specific program in Japan because in Japan, this disease is much more frequent than in the rest of the world. And you -- we have announced, I think it was in December, that -- and we have not shown, but you can see now the results on Slide 20 of the 2 Japanese registration studies, showing a very nice effect on the primary endpoint, which is the incidence of vasospasm-related mobility and all-cause mortality. And you see that you have a major reduction, which is basically the same in patients with coiling or with clipping. This is Slide 20. Now this is not a big surprise because we have done a coiling study with a dose, which is more or less equivalent to the Japanese study. And as you can see on Slide 21, the 10 -- 15-milligram dose, which is more or less equivalent to the 10-milligram dose of Japanese who have a much lower body weight, you see a similar reduction on mobility mortality in this patient. So again, confirmation of these findings. And of course, we are continuing in Europe and United States, another study, REACT, which will be used for the finding in U.S. and in Europe. Now let's go to selatogrel. This is an ultra-short acting, I would say, [ anti-aggregate ], a P2Y12 antagonist. And we have developed, as you can see on Slide 23, we have developed an auto-injector. So in basically, patients who had an myocardial infarctions, who again have another pain, will be able to inject themselves, and they will have 4 hours to call the doctors, to call the ambulance and to be hospitalized to be able to deal with their new heart attack, if you want. And we are going -- we have an SPA, so we have an agreement with the FDA. We are going to start the Phase III in the middle of this year. This Phase III should recruit 14,000 patients. And you can see on the Slide 24 why it's such a unique drug, because it works in a few minutes. You see complete platelet aggregation inhibition and then slow return -- a return within 4 hours to levels of platelet aggregations, which allow to do all what is needed to be done in the hospital. So this is the progress of our major progress in 2020 of our pipeline. But I would like also to mention other progress in the other Phase III program. The lucerastat, which is a Fabry disease study and the study called MODIFY is the biggest, largest study in Fabry disease ever done. The recruitment is completed. We'll get the result in second half of this year. The REACT study in clazosentan I've mentioned, the recruitment is half completed. We would have finished, but the COVID is really delaying it because this study is performed within intensive care. And of course, there is competition with COVID patients. PRECISION is for our aprocitentan study. It's patients with resistant hypertension. We have finalized or it's any days we have finalized the recruitment, and we will get the results first half of 2022. And cenerimod, we have finished the first recruitment of the first pivotal trial of about 350 patients, and we get the results second half of this year. So you see all the projects are moving forward. So as you can see on Slide 26, we will have many catalysts in '21 and '22, with, of course, now we have seen the filing of daridorexant; the filing soon of clazosentan in Japan; the initiation of selatogrel Phase III study; the results of the lucerastat study, MODIFY; the result of the cenerimod, that's for 2021; and 2022, we'll get the daridorexant approval, hopefully, with the launch; aprocitentan, end of Phase III data; clazosentan, approval in Japan; and the results of the REACT study and that's for 2022. And maybe we get a result of another Phase II, which we have initiated with selective orexin-1 antagonist. So on -- what is also important, as I've mentioned from the beginning, we need to build a commercial organization. This is done under the leadership of Simon Jose. And we have recruited, basically the whole management team. We have recruited the U.S. team. And we are ready to start the premarketing this year. And of course, we are going to get ready for the launch in 2022. So as I've mentioned, 2021 will be a key year for Idorsia. 2021, we entered this year with a very strong balance sheet since -- thanks to liquidity and a raise -- capital raise -- we did 2 capital raise last year. We have also a credit facility from Johnson & Johnson of $240 million. And we have also, as you say, we have filed daridorexant. We will file -- we have filed in U.S., we will file in Europe. The PDUFA of ponesimod is going to come this spring. The filing of clazosentan will also come soon. And we will start the Phase III for selatogrel. We get the result of lucerastat. And the Phase IIb results will be at the end of this year for cenerimod. What is on Slide 29? What is also very important is to realize that the revenue model of Idorsia is very interesting because on one side, we count on the royalty stream coming from ponesimod, aprocitentan, where we get from 20% to 30% royalty from Johnson & Johnson; T-type, the calcium channel blocker, also we are getting royalties from Neurocrine, if the study, of course, are positive. So on one side, significant royalty stream. And on the other side, revenues coming from our own product, our own commercial organization. And this commercial organization have GP product, but also orphan drug products like lucerastat and clazosentan, but also specialty products like cenerimod and selatogrel. So very diverse source of revenues, which should ensure quite a good margin for the company. So as you -- I hope I have been able to explain to you, 2021 is going to be a key year. You have seen so many things will appear. And I think really that it's a corner. It's -- I would say it's really the year where we are going to make a difference. And this is the year where we are going to be really transformed in a real biopharmaceutical company, with a whole commercial organization, a fantastic pipeline, a research engine. So that's going to be very interesting. Thank you.

Thank you very much. Thanks for the presentation. So we'll now kick off the Q&A portion of the session. I believe we're also going to be joined by a couple of other people from Idorsia. So do we have André Muller, CFO; Simon Jose, Chief Commercial Officer; and Andrew Weiss, Head of IR with us as well.

We are here, James.

Yes, we're here.

Lovely. Maybe a question to start, daridorexant. So timely, you announced on Monday morning, you've actually had the U.S. filings taking place. When do you think you're going to hear about the acceptance? And also, have you had any interactions with the FDA already about the novel endpoints? And you talked in the presentation about the IDSIQ endpoint, and this would be a key differentiator. Have you had any opportunity to talk about the endpoint with regulators already?

We've spoken for 8 years. We may be had 12 meetings with this PRO, just based on this PRO. It's -- we -- each word has been discussed with the FDA of this PRO. We had to change -- on the 14 questions, if I think at one stage, that was the last interaction, they were not happy with a question, and we had to change, and we improved this question. Everything has been discussed. And this has taken many, many years. We had to do studies that were a request. So this is a complete discussion. And of course, we now -- they want to see the results, But the discussion was about the techniques and the technology, which is now published on the program, which has led to this patient-reported outcome has now been described in a scientific paper. But this has been done with the FDA, basically. And it's very -- there is a special division for PRO, and they are very specialized, and they are very competent. And of course -- in fact, this was -- they have given us very good advice how to really optimize. And frankly, this PRO is so powerful and so well designed. It's very impressive. I cannot discuss it, but I looked with Guy Braunstein, our Head of Clinical and the team. I have looked at -- the power of this PRO, which is very, very impressive.

And what about other regulators in other geographies? This is -- is this like an -- it's an FDA agreed endpoint. But have you had any feedback from other agencies about whether they are going to look at it in the same way?

Yes. Of course, the European are very happy. You know that Europe is always much more patient-centric. You know that, for example, Europe is not taking care so much of electroencephalogram measurements. They want subjective measurements. And I think that the Europeans are much more in favor of this type of PRO. But I have to say that the U.S. have -- the regulators have special groups for PROs. So they are very well equipped. And therefore, the interaction was more with the U.S. because they can -- you can work with them. In Europe, usually, they can give you advice. And I have to say, I think that Europe is very interested, especially because no orexin receptor antagonist has been filed in Europe. And therefore, they're really -- all specialists are begging for a new drug in Europe.

And so you derisked from the clinical side, and you've got your application in. But what about the commercial challenges? I think you've announced a promotional plan in the U.S., including using a partner, Syneos Health. So could you talk about how you're going to go about doing the U.S. promotion for the product, assuming approval? And what sort of promotional force you'll have behind it?

I will give it the answer to Simon. But before giving the word to Simon, I want to explain in one sentence the philosophy of this launch. This is going to be -- we are going to considering daridorexant as a consumer product which needs a prescription though we believe that the consumer really are going to drive the demand. And of course, the doctors will need to know about the drug and -- but I think that because of the quality of the drug, because of the effect, and I think the satisfaction of the patients who take this drug, it's going to be the consumer driving, and we need to have a completely different way to launch a drug using -- with the importance of social media, feedback, word of mouth, familiar input. And maybe Simon can explain to you what we are doing.

Yes, sure, James. And in answer to your question, as Jean-Paul said, we have established the U.S. affiliate, the team is in place. Our partners are in place with Syneos but also Omnicom and [indiscernible]. But our philosophy essentially is that we will build the core capabilities that we require ourselves of marketing, access, pricing, medical affairs, that we've partnered with Syneos so that we have a partner that can stand up the sales force quickly. They've got a much greater capability of doing that than we have, and it gives us the flexibility to sort of taper that up and down as we need to. But we will absolutely own and control the strategy of the product and those core commercial capabilities, as I've described. And we just see an enormous opportunity. I mean, very rarely do you have a market that is so big in terms of patient numbers. And although everyone rightly says, well, it's genericized. But it's genericized and all the products have got baggage, and people are really quite fearful of them, whether that's the physicians or the patients. So I think it's just waiting for the right product. And as Jean-Paul has shown in the data, we believe, with the optimized PK profile and the data we've generated in the Phase III program, we have that product. There's nothing else that's got the daytime performance benefit and the AE profile and the lack of somnolence that we've seen in our Phase III. So we're very excited to be moving forward with this now.

And you mentioned -- or Jean-Paul mentioned, it's a bit like a consumer product where you need a prescription. But I know for consumer products, advertising is a big feature. So is this going to be a sort of product that needs a very big direct-to-consumer advertising push? And what's the cost of doing that?

Not necessarily. Because I think nowadays, there's so many other channels that aren't necessarily big budget television adverts. I think we're getting an awful lot more sophisticated with all the different digital channels that we can use in terms of mobiles and web. Social media is a big thing because we know from our research that patients are influenced very heavily by family and friends and the environment around them. They're in and out of pharmacy. They're flipping between prescriptions and OTC products. So there's a lot of intervention points that we can use without having to be spending an awful lot of money on television. And some of this is really a mindset. It's -- you can -- you're either a prescription drug where you're allowed to sort of go on TV or in our way, it's a mindset that we're trying to really think about engaging with the consumer, absolutely, obviously, realizing that this has, in the end, to go to adopt and get a prescription. But we believe that they will be mobilized quite readily because the unmet need is so huge.

And is it the case that get approved and then you immediately launch? Or is there going to be done and downplay? At least there's been quite a lot of other work in terms of, say, getting it to be paid for by payers, getting on the right place in formularies and things like that. Is it sort of straight off the bat you start launching? Or could there be a bit of a pause where you get some of that stuff sorted out?

We will need to get -- we'll launch immediately, of course, but you're absolutely right. There is always that period of 6, 9 months where you're having to work through the payer access. And that's something that we're very sensitive to because, as Jean-Paul said, we've got 14, 15 years of patent life. And with the patient population, this could grow to be a very large product. We don't want to give away the farm for a few months at the beginning and then lose a lot of the long-term value. So we're going to be quite thoughtful about how we do that. But we will absolutely need to take that first 6, 9, in some cases, even 12 months to make sure we've got the right position in the formulary.

And maybe one more to the daridorexant product, which should be competition. So I know J&J have got seltorexant, which they've been quite positive about. But I believe they're developing for a slightly different indication as people who got -- or both were suffering from depression and insomnia. So how do you think the product stacks up against seltorexant? And for instance, the score where you've got this differentiation, might that product show a similar profile, if it was tested on that same metric?

I mean, seltorexant, it's being developed for MDD and the endpoints are MDD. So although patients in their study may well suffer from insomnia, I think it's really got MDD endpoints, and I think will likely be developed for that as opposed to insomnia. So I think we see quite a lot of separation there in terms of insomnia versus MDD.

And also, I would like to add that it's an orexin-2. It doesn't really block the orexin-1 receptor. And I think it gives it a different profile. And we do believe that for insomnia, we should block both receptor. We might, frankly, let's see the results and -- but this is not really an insomnia program. But I do believe that, that you need to block both receptor in insomnia. That's very important for us. Let's see the result, it will come in many years. What is also not to forget is that we had decided and we had the many discussion with the FDA, and the FDA was very reluctant to say, or we are going to give you an indication of insomnia and depression. Because if you want to have insomnia and depression, you need really to show an antidepressant effect, not only an insomnia effect. If it's insomnia and depression, we are, with daridorexant, we have this indication. It's all type of insomnia. It's -- we are not going to be excluding and making a diagnosis for each insomnia patients. So I think that -- I think it's -- the design of our study really allows us to really cover basically the whole world of insomnia, and to really to -- and in Phase IV, in a later stage, we are going to go to sub class of patients, like patients with sleep apnea, patients with very specific disease and to show the benefit -- specific benefits. I'm not sure it's going to be a registration study, but it's going to be scientific demonstration of the benefit in other subtypes of patients and including depression.

Okay. Makes sense. I realize there's not much time. I should allow time to talk about some of the other products that are going on as well. So you mentioned clazosentan, where we have the positive data in Japan recently. To what extent can we read that to the western studies, which is still to report? Does that increase the chance that the western studies are successful?

I'm -- I don't want to be -- I'm like every scientist, I'm a little bit superstitious. So when I see this data, I would say it's done. It's really -- it's very good for REACT. I really think that we have been able to show -- you've seen such a significant effect, P 0.0001 with 220 patients, the study is going to be twice as big in Europe in more severe patients. And the endpoint is not so different. And if you look at the data, that's the first thing we look. If we look at the data I Japan and try to extrapolate to Europe, it would have been very positive if we would have the same finding in Europe. So I think that, as I have said, and I have to be very clear, I think that I have a good chance. I see a good chance of REACT to be positive. The discussion will be with the FDA. It's not completely agreed. Some people of the FDA, we will need to discuss. They want to see the results. They want to see the whole data package. And I think that we have a big chance that it goes to a public hearing in order to get approved, I think, in the U.S. But with the data, the quality of the data, which we show -- because what you have not seen is that today, the change of the treatment of clazosentan patients -- sorry, of subarachnoid hemorrhage, the doctors use less volume filling of the patients, and we see much better safety profile than we used to see before. Therefore, I think that the FDA -- I'm quite confident that the FDA will like our data and that we will see. But I think it will come to a public hearing because it will be the first drug for spasm. It will be the first drug of this class, intravenous. And I think it will be interesting for scientifically to discuss altogether this data.

Maybe one other question would be lucerastat. So I believe we're going to get the Phase III data by the end of this year. So actually 2 questions there. So you showed strong data Phase Ib, but that was looking at a different endpoint where we're actually going to get at the end of this year. So you've shown you reduced Gb3. But just -- say, just, but you -- does a benefit there necessarily mean that you're going to manage to translate into reduced pain? What do you see about the risk there? And also, just briefly, how does this product stack up against other products like Amicus' Galafold?

Yes. So you are absolutely right. This is one of the Phase III program, the only one, because I think aprocitentan, where we have not evaluated the endpoint in Phase II before because it's -- it needs too many patients for pain. And you are right, there is a question mark here. And therefore, yes, I want to see the data. It's not in contrast to aprocitentan where I really believe it's going to work. And again, clazosentan, when we had done the study or daridorexant where we have seen the data. Here, there is still a question mark. What is interesting is that I can tell you, it's the biggest Fabry disease study ever done. More than 100 patients, we might finish at 110, something like that. And 110 patients first line, without any background treatment and treated for 6 months. But because of COVID, it has delayed. So we have patients treated for 2 years now, where we can follow not only the pain, the chronic pain, but also the effect on the heart, the effect on the kidneys, the effect on the gastrointestinal symptom. So it's going to be a huge study, giving all the information that you want. And this might be the only study, if it works, and you're right. Let's see the data. If it works, it will be the only drug where you have a clinical endpoint, which would be in the label. Because it's, again, a PRO discussed with the FDA in length to assess the pain because we didn't take any type of pain questionnaire. We designed a pain questionnaire for Fabry patients. Because the pain in Fabry is very specific, and you don't want to discuss about migraine with these patients. So we have designed such a PRO. And if it's positive, let me tell you, this will be the drug that every Fabry patient should receive. There is no genetic genotyping to do, no discussion, is it a patient, which should fulfill. It's every Fabry patients. It's helping the patients with their symptoms. It's helping the disease with its progression. So frankly, we have a major drug in Fabry. And I don't see why it will not be used in first line to everybody. And we will have a very long study and the biggest ever. So it's very -- it's going to be very interesting to see the results middle of this year.

Okay. Like I said, I think we're just about out of time. So thank you very much for taking part in the presentation today and for the Q&A, and enjoy the rest of the conference.

Thank you very much.

Thank you very much.

Thank you for the invitation.

Thank you, James.

Thank you, James.