Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good morning, and good afternoon. I'm James Gordon, JPMorgan European pharma and biotech analyst. And today, at the JPMorgan conference, I've got the pleasure of introducing the Idorsia presentation and Q&A. Exciting times with the recent daridorexant approval announcement and ready for launch. So Idorsia's CEO, Jean-Paul Clozel, will be joining us for 20 minutes presentation, and then we're going to go into 20 minutes of Q&A. And with that said, thanks a lot for joining us today, Jean-Paul. Looking forward to the presentation.

Thank you, James. So good morning and good afternoon to everybody. As James has mentioned, very exciting time. And for Idorsia -- and Idorsia has made huge progress in 4.5 years, and I'd like to discuss that today with you. Of course, we are going to make forward-looking statements, and I want to be -- you should be aware of the risk of investing into Idorsia. So I wanted to start by saying that our vision, which is our vision from the beginning, is the same. We want to create a sustainable midsized pharma company based on innovation. And when I mean -- what I mean by sustainable is a company which is based on innovation, and the innovation we got it because we had the chance to start after the Actelion acquisition to be able to keep some of the projects -- of the early project and to keep also the research team. And with this innovation we want to reach rapidly profitability because I think that's the goal of Idorsia. But of course, we know that as soon as we will become profitable, people will be looking at the third element, the third stage of the rocket, if you want, which is the growth. And today, we know -- and I know that with the approval of daridorexant we will grow for the next 13 or 14 years. This is at least our patent life, but we need to work and to think what -- how can we grow faster and can we grow, of course, longer. So from day 1, we had a very clear strategy. First, we said we are going in the 5 years to deliver at least 3 products to the market, to build a world-class commercial organization, to bring Idorsia to sustainable profitability. We are going to fuel our pipeline with new discoveries. And of course, we want to do better in Idorsia than what we did in Actelion, and really new state-of-the-art technologies to drive innovation. So first, let's look at our pipeline. As you've seen, daridorexant has been approved by the FDA. We are going this year to have the results, middle of the year of aprocitentan for resistant hypertension. Clazosentan is going to be approved -- or should be approved soon in Japan. And we've got results, I will come back to that on lucerastat, Phase III results. We got -- we started the Phase III, we said at the [indiscernible]. And with cenerimod, we got the Phase IIb data, and we are in preparation for Phase III. Interestingly, this year, we are also going to have the results of our selective orexin-1, receptor antagonist for binge eating. And we have a series of compounds. We have finished Phase III -- Phase I. And we are planning Phase II, and we are a little bit -- of course, the risk is higher for this early product, but they have a very interesting mechanism of action and they are very innovative. So the clinical pipeline is advancing. With lucerastat, we didn't reach the primary endpoint, which was neuropathic pain benefit. However, we have been able to see that we have interesting finding on the progression of the renal dysfunction in this patient. We have interesting cardiac findings. This is early stage because these need long-term observation periods. But we want to discuss since our study was very large, more than 100 patients, if the FDA would consider this data as they did with Fabrazyme, which has been approved based on the historical comparison. This is our strategy. Cenerimod, we got very interesting data. And with the Phase III, which was a huge Phase III for lupus is one of the biggest or not the biggest ever done. We have now been able to show that the 4-milligram has a very marked clinically relevant effect. And we have characterized the patient population, the dose, as mentioned, but also what should be the primary endpoint for Phase III, and we are going to discuss soon this proposal with the FDA. Aprocitentan is going to deliver results. All patients are recruited. We took margins. So we have more patients than what we were expecting in the trial, which increases the power of the study. And we are going to have the result on not only blood pressure, but also safety, and enough information to file this year to get approval in 2023. This drug will be marketed by Johnson & Johnson. Mentioned selatogrel, which has an SPA with the FDA is going to be -- is in Phase III, and also the [indiscernible], as you know, as I mentioned, we have results very soon. We have building -- and I think we are in a very good way, we are building a world-class commercial organizations. I have represented on this slide the General Manager, Patty Torr for the U.S.; Jean-Yves Chatelan for Europe; and Satoshi Tanaka for Japan. These are 3 very experienced. Satoshi was General Manager of Actelion, very successful. Patty was responsible of the XARELTO launch within Johnson & Johnson, and Jean-Yves was working in Celgene in the European region. So we have very experienced people who -- and we have already recruited for Europe the key general managers for the key countries. Third point, we want to reach profitability as soon as possible. And we are going to control the cost to do everything to reach this goal, which is very important to us. In contrast to so many, I would say, biotech companies will really try to delay the moment where they become profitable because we know very well that once you are profitable, you need to grow, and your profit is not only to reach it, but you need to grow. But I think we really can reach in a reasonable amount of time, profitability because we will have not only net sales and revenues from daridorexant from clazosentan in Japan, we will have also cenerimod, selatogrel revenues, but we have which we are going to have royalty stream coming from ponesimod, which is marketed by Johnson & Johnson in multiple sclerosis. As I mentioned, by aprocitentan; but also with a T-type calcium Channel blocker, which is developed by Neurocrine; for vamorolone, which is developed by Santhera. So we have this double source of revenue. And we want to really use to continue to innovate, and we are based on research on organic chemistry. I say more than ever because I think that we have the chance to have some of the best chemists in the world. And of course, the chemistry school in Zurich -- or is a fantastic source of the chemists. And the big advantage of small molecules is not only they are also suitable for acute, but also chronic conditions, but they are also overall for most of them, and they have a clear patent protection. We are not in the fight like in some like antibodies or CAR-T area as well where a lot of patents are interfering with each other. And finally, we want to use -- and we want to use new technologies for our drug discovery in high throughput screening, but also we want to use artificial and we are using artificial intelligence and computer modeling to discover new drugs. But this innovation should not only be focused on the drug discovery. It should also be applied to clinical development. This is what we do by working on the very innovative PRO, patient-reported outcome, to define creative new endpoints. And finally, in commercialization, we are using the new tools to reach patients but also reach doctors or prescribers, with digital and social media. And also, we want to follow our launch, especially for daridorexant with advanced analytics system. And 2021, that's been a fantastic year. And despite the COVID crisis, we have been able to raise money so that we will start 2022 with about the same amount of money at the beginning of 2021. We have filed daridorexant in U.S., EU, Canada and Switzerland. Johnson & Johnson received approval for ponesimod, which was discovered by our team, and developed by Actelion. We filed the clazosentan in Japan, which should be approved very soon. We have agreed for an SPA and started the Phase III for selatogrel. We got the result of lucerastat. We got the result of cenerimod. And finally, QUVIVIQ was approved in the U.S. So you see a fantastic year. And I think I said the team did a fantastic job despite the condition of the COVID which doesn't make our life, of course, easier. Now first launch, I think, or maybe just head-to-head with daridorexant is going to be clazosentan for cerebral vasospasm in Japan. Satoshi a very good general manager, very experienced, MD by background. And he's so excited because it's ready to launch a real innovation. And as we say, it's since 30 years, there have been no innovation in the really clinical events, which are associated with cerebral vasospasm. He is very well prepared for the launch in Japan, and he has deployed Medical Science Liaisons since 6 months about. He has taken contact with all the neurosurgeons. He has created this referral network. We are now training as a sales team. And we have been in contact, and we identified the 650 centers, which are responsible for 90% of the surgery or intervention for [indiscernible]. We are expecting any time the approval of clazosentan and the reimbursement should come at the end of Q1 so that we can launch in Q2 2022, clazosentan in Japan. Daridorexant, of course, is progressing and is on track to become a global product. It has been approved in the U.S. It is under review in Europe, in Canada, Japan. And very interestingly, in a few days, you will see the publication, which shows a fantastic result that we got with this product. What is our -- what is the big progress with daridorexant? So the night is not only a question of the -- sorry, insomnia is not only a question of the night, difficulty to sleep. It's a question that during the day, patients suffer of these consequences of this lack of sleep during night. And why did it took us 25 years because Martine started 25 years ago, this project. We synthesized with our chemist 20 -- 30,000 products. And we had 2 first attempt in clinics before being able to get to daridorexant because it is very specific to sleep. A drug for sleep just needs to work at night only. The benefit -- which is a benefit at night becomes a side effect during the day. I think it's the only example where benefit becomes a side effect, having the same mechanism. And of course, most of the companies, in order to prevent this somnolence or at least to try to decrease the rate, have decreased the dose and have therefore, obtain suboptimal efficacy. For 25 years, we have tried to find the optimal drug, and this has been so difficult. And now we see the result from our label. You see that with daridorexant, 50 milligrams, you have a better effect than 25 milligram, and of course, then placebo on total -- subjective total sleep time. This is what the patient feels. And first, you see that the effect increased with time. And this is where, because for most of the sleeping pills, the effect decreases with time, you have tachyphylaxis, but we can demonstrate and show to the doctors, to the prescribers that you should treat chronically the patient to get the best benefit. 50 milligram is in our mind, the optimal dose because you have a higher effect. But if we look at the side effect, you see that between 50 and 25 milligrams, it's the same rate of somnolence or fatigue, and very close 1% more than placebo. So why not to use 50 milligram? And we do not have a dose saturation in our label. We can use 50 milligram or recommend 50 milligrams unless there are some specific conditions like liver failure. Now QUVIVIQ is approved in the U.S., and we need to market it. We have announced a few hours ago that we have made a partnership with Jennifer Aniston because we know that she is going to have a major impact, and she can communicate and she can really engage patients. And we want to have this engagement of patients. Because we know that 25 million of patients suffer of insomnia in the U.S., only 12 million are treated because so many -- half of them are afraid of the existing drug. There is a high dissatisfaction with the treatment. And the cost of insomnia is more than 100 billions, when you see -- think of all the car accidents, the falls, the hip fractures due to some of the side effects of the existing drugs, there is a huge cost on the society. And this is the reason we think we are going to succeed in our launch in the U.S. because we have the right product, the right team and the right commercial approach. First of all, the right products. We have done a unique clinical trial Phase III because it has evaluated the sleep efficacy, how fast you sleep, how long. So next-day consequences, the safety has been evaluated not only at 1 dose, but at 3 doses. And clearly, we have shown that the mechanism -- the specific mechanism of action of orexin receptor antagonists gave some marked clinical differentiation compared to the benzodiazepine to that drug. So we have higher than -- they are fully running a fantastic team. I'm so proud of this team of very experienced people. This team, just as you have under your eyes, from regulatory offers to marketing to sales, these teams together has launched more than 70 drugs. We have a huge experience, and I am so proud that they have decided to join Idorsia. We are preparing a very complete program with first The Alliance for Sleep, this is the really top experts which are going to teach the non experts, what is sleep, what are the problem, what is the problem of insomnia. We have done a sleep survey to be able to discuss, especially with the payers, the financial consequences is millions of insomnia patients recall that we are putting together to evaluate the consequences of insomnia, the social consequences of insomnia. Then we have a [ health film ] to be put on all the social media, all the communication pathways about sleep, to explain what is the -- really what are the consequences of the sleep -- of insomnia, and the partnership with Jennifer Aniston. You will see the TV advertising. We really want to really underline that insomnia and this is unbranded. We want to make people understand that the consequences that when you have a bad night, you have a bad day. And I think that this is going to be a very strong message. Of course, we are going to communicate with Jennifer on many -- not only website, but you will see the Size the Night & Day, I invite you to look at this website. She is going to describe her personal fight with insomnia. And of course, we are going to use social media. After this engagement of the consumers of the patients we have to pull through to the clinician with the medical representative to the payers this information. And this is, of course, a job of our Medical Science Liaisons and our U.S. sales representatives. So I think that with Patty and I am fully confident that Patty -- because she thinks of course, she's very happy to have a differentiated product and label. She has a fantastic team, and I think that she is very confident that we are going to make really a very successful GP launch in the U.S. Now 2022, we see not only the launch in the U.S., but also the launch of QUVIVIQ in Europe. We issued the launch of clazosentan in Japan. And the -- and finally, maybe we have, at the end of this year, the first launch of QUVIVIQ in Europe. But as I said, it's not only the commercial changes, but we want to -- we have key clinical results with middle of the year is the result for aprocitentan, the result in binge eating and the result of the [indiscernible] the start of the Phase III with cenerimod. And maybe hopefully, the COVID is not too bad, the results of the REACT study for clazosentan in U.S. and Europe. So you will see 2022, it's going to be a transformative year. 2 launch in the 2 biggest pharma markets, Japan and U.S. We are going to become already in 2022, a fully fledged biopharmaceutical company and really, at the end of 2022, we are going to see really the moment where we are going to become sustainable, profitable. And so I think that I invite everybody to follow us because, as I've mentioned, many things will happen in 2022. Thank you.

Thanks a lot for the presentation, Jean-Paul, and we're now going to kick off the Q&A. And just to take -- do we have any other members of Idorsia management with us as well for the Q&A?

Yes, James. Hi, its's Simon. I'm here.

Thanks for joining. [Operator Instructions] But maybe I'll kick off one question to start with, which is -- and congrats on getting the daridorexant approval in the U.S. Can you talk about the label? Is it exactly in line with your expectations? Are there positives and negatives? And in particular, could you also talk about IDSIQ, which I think is a secondary endpoint from some of the studies that could have been an area of differentiation, but I don't believe it's in the label. So implications of that, if any, please.

I think that, first of all, I would say we have 80% of what we wanted in the label because we clearly are disappointed. And frankly, we disagree that the IDSIQ is not within the label. I will come back on that. But the most important for me was not IDSIQ, was really to be able to show that the 50 milligram is really the best dose, and we have the data on safety and on efficacy and the duration of action to show it. We have no warning for elderly, no dose titration. So it's such a simple drug to use. You should really go, unless you have some rare condition like liver failure, you should use 50 milligram and then you will get the maximum efficacy with no penalty, basically, on somnolence and fatigue and on most of the side effects. So we really wanted it for 1, because when you look at the other orexin antagonists, they have been penalized. So you have to start with suvorexant with 10 milligram, which doesn't give any subjective benefit. So the patient doesn't feel it. And so many patients stop to take the drug at this time. You have so huge incidents or you have quite a very high level of somnolence with lemborexant, which has 15 to 55 hours half-life. We have 8 hours. We have no accumulation. And now this is clearly in the label, and we can mention it. Now IDSIQ was a [indiscernible] endpoint, which is highly -- which was validated by the FDA. We -- it's a new PRO that we developed with them for 8 years. This is validated. The data with 50 milligrams are highly statistically significant, but it is not in the label, but it is highly consistent with the label. And there are guidelines by the FDA to use data which are consistent. And when we mean consistent, it is because it's the same dose, same patient population. These are not going to have a risk of harming the patient. So these are the criteria which [indiscernible] to use this information. And therefore, I think that this data will be available for the prescribers and for people who need it. So I think that with this clinical program, we have all what we need to have a very successful launch.

Thank you. And if I could just follow up on 1 point there. So I believe IDSIQ is not in the label, but could we see that included in the journal or any other area, any other sort of publications anytime soon? And when that happens, does that mean you will be able to refer to IDSIQ actually in the promotional activity?

Maybe, Simon, the publication is going to come any day. So...

So James, you should see the publication in a week or so. So the data will be made publicly available in the high-tier journal. And then to your point, because of the FDA-CFL guidance because we are I believe consistent with the label, those data will be available for us to use in our communication activities.

Thank you. Maybe another question related to -- I am still calling it daridorexant. What would just be the promotional spend of the plan there? So you have a celebrity endorsement. Is that a short-term thing to get things started or something that will continue for a prolonged period of time? And the awareness campaign, is that just an awareness campaign in the U.S.? Or will you be doing that in Europe as well?

Simon?

Yes. I'll take that. So the program we've announced and partnership we've announced with Jennifer Aniston today is an unbranded campaign. So we're obviously starting that 3 or 4 months before launch, so we can start to generate the prelaunch education of the market, and start to get the dynamics of the market moving. So when we come to the launch period we expect her and the unbranded campaigns continue after launch. Obviously, we will then also bring in our branded activity on top of that, but we will continue to expect a continuing branded activity after launch. The current campaign with Jennifer Aniston is U.S. only. It's not in Europe, but it's a U.S.-only event.

And would you also have, I don't know if the technical term is a brand ambassador, but something like that when branded launch occurs as well? Or this is just a concept for the -- of building awareness before the product launches?

Yes. We're looking at both. I mean you can expect that the right point of timing with the product, and then we've got the right level of awareness amongst the prescribers in the U.S. that we will then have branded advertising. Jennifer Aniston will remain unbranded, but I think that there's a very powerful opportunity for us to be able to use both the branded campaign and an unbranded campaign as we move things forward. But she will remain unbranded, but we will obviously look to bring branded DTC and branded promotion in the right time.

And in terms of what gating factors there are for the launch to actually occur? So for instance, being a scheduled product or securing reimbursement, what's still needs to happen before people start actually getting access to the product?

So the first step is DEA scheduling. Once the FDA have approved the drug, it goes to the DEA for scheduling, that's a 90-day process. So we won't formally be DEA-approved until, let's say, the 7th of April. And from that point, we then need a few weeks just to get the administration of that cleared, and then the stocking of the pipeline. So we're expecting to make product available, and start our branded promotional activities in earnest from the beginning of May. It actually does afford us quite an opportunity, though, in the first few months of the year because we have the FDA approval, we have the labeling, subject, of course, to scheduling, where we can now engage with payers, which we've already started. We've got outstanding account management team that's engaged with already 50 different meetings with our payers over the last few months. And over the next several months, we'll move into more detailed discussions about pricing and contracting. The sales force is recruited and are being trained as we speak. So this next few months, actually, although often people say, well, we have a delay because of scheduling. I think we look at this as a great opportunity in this period to make sure that we've got all of our prelaunch activity and our unbranded activity moving. We can start engaging with the payers. The sales force is all being put in place. So everything is all synced up very well actually.

And is this a product where we could think of it as being broadly a price parity with existing orexin inhibitors? And roughly what sort of pricing is that?

Yes. So we're working that through at the moment. We've not publicly said anything about pricing, but I think you can all expect that the start point is going to be suvorexant price because that's exactly where the payers will go to given the profile of the product, which we clearly see as being superior and differentiated than -- that may afford us some opportunity for the premium, and we'll certainly be looking to price for the value of the product that we believe we have.

And maybe just the final one. I will ask on the other pipeline as well. But in terms of how we might work for tiering, would the expectation be that someone who tried a generic [indiscernible] got something like that first, and then they might get access to this or could someone potentially get something like this when they first are diagnosed of insomnia.

So our base expectation, James, is that it would go through generics first. I think that it's pretty usual now when you bring a branded product into a generic market that you'll step through generics. That likely will place us into a Tier 3 and it'll step at it through generics. But honestly, we don't see that as being a particular problem because all of these patients are on generics. Most of them have cycled through several already and are desperate to move to something that works or doesn't have harm. So the step at it isn't a fear for us. And we also know that even a $30, $50 co-pay in Tier 3, if the product works, people are okay with that. I think where we had the problem, I think, with the [ pseudo ] launch is, it was Tier 3 and people paid $30, $50, but when you don't get a response, you don't get the feeling, then people walk away from it. And there's this misperception that it was all about coverage and payers. It wasn't. They've got 80%, 90% coverage. It was that the drug just didn't do the job that it was hoped for. But we certainly won't be using rebate dollars to try and buy a preferential position. We just need to get the right access point because we're confident that we can then drive the volume through the profile of the product and our commercial activity.

And in addition, James, I think it's -- ethically, I think, to push people to go for drugs which have a black box, which we know have a very high risk of addiction of -- we speak of the [ Z ] drug, benzazepine, of risk of falls and so many issues. When you have a drug like -- you have seen the safety profile that we have and the label that we have, I think that -- I think it's going to be interesting to see how the payers will react. Because frankly, to use trazodone a drug with some black box about suicide. What is really the interest of the patient there compared to a drug with the profile that we have in our label? So I think it's -- I think maybe one day things are going to change. Frankly, we really have -- I would say is the perfect drug to be able to discuss with the payers. Just the elderly, for example, you see no mention of specific risk for elderly. It's for Medicare. It's a huge importance. So there are a lot of differentiation with our drugs, which are very interesting.

Maybe a final question would be what might the cost be of this promotional campaign? And I know you were talking about profitability as well. For the overall group, it would depend what happens with other products. But at least for this product, when could -- if the product launches does pay your expectations, when could this be a profitable product? Or what sort of spending you have to put behind it?

Andre?

Well, James, I'm afraid you will have to be patient and wait for the full year results in year '22 guidance, but as you rightly said, coming to QUVIVIQ launching as GP drug will require some marketing and selling efforts. So as the OpEx, the SG&A will grow, obviously. We have also launched clazosentan in Japan, and prepare for [indiscernible] launches in Europe. So to your question with this increase is how much will be compensated? We see a gross profit generated by sales. Good news is that irrespective of what we will announce now in less in 1 month is as Jean-Paul had mentioned it, we will start 2022 with a stronger balance sheet, more or less slightly below CHF 1.2 billion. So this allows us to go through the cash runway of 2022.

I was just going to say, maybe just before you're going to move on to the pipeline. But I think last year, I remember we were talking about this with such a strong consumer focus and consumer activation. And I think, hopefully now, people are starting to see with the announcement today, and some of the things you'll see in the next few months that we're absolutely putting the consumer at the center of this. And with the sort of activities you're seeing with Jennifer Aniston and some of...

I think also, James, I think that people are underestimating the importance of Europe. I think that we see with the regulators that they are really -- there's been no innovation for 30 years in Europe for sleep. And I think that they are very concerned about the benzo. In France, for example, it's considered as addictive, and they're really limited to 2 weeks or 10 days, maximum treatment, and they're really eager to get a new drug for sleep because it's a social -- it's a society problem.

And James, just to add on Europe, as you know the other 2 dual orexin receptor antagonists have not been approved.

Thank you. Just we just follow up on, while we've got you Andre and while we're talking about the balance sheet. So you've now secured daridorexant approved in the U.S. and you talk about doing Europe yourself, [indiscernible] in Japan. But in terms of sources of generating more cash, would you consider partnering in any other geographies? And could that be a source of milestone upfront income or anything like that? Or is the plan very much everywhere else to do it yourself?

We have a clear priority in the U.S. and Europe sales. As you know, we have already announced a few years ago, where a collaboration -- co-marketing with Mochida Pharmaceutical in Japan. And so it's one big territory, which is China, where we can't see a review as the possible option. It's more likely that we will do a [ foreign out ] license, straight out licensing in [indiscernible], but provided that we find the right partner at the right terms.

Thank you very much. We're very nearly out of time. But I'll try to squeeze in the last question, which is just lucerastat. When do you think we might hear more about the path forward for that product?

I think, hopefully, maybe Q2, Q3 this year, we -- but I think that we must not -- what we are going to ask the FDA is to be able, and if they agree with the strategy, to look at the patients for 2 years or 1.5 years of treatment in most of the patients and then show them the results because we want the results to be very solid. So our question is really to see if they agree with -- if we can use our data, like Fabrazyme has used their data, which means to compare to a historical group, which we want to do.

Great. Thank you very much. I'm being told that we're now out of time. So I'd like to thank everyone from Idorsia for joining us today. Congrats on the approval, and looking forward to seeing the launch.

Yes.

Thank you, James.

Thank you.