Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good afternoon. I'm James Gordon, JPMorgan European pharma and biotech analyst. And today, I've got the pleasure of introducing the Idorsia presentation. So you're going to hear from Idorsia CEO, Jean-Paul Clozel, and we have about a 20-minute presentation, and then we'll have 15, 20 minutes for your questions, which we're going to take in the same room. So with that said, thanks very much for joining us today, Jean-Paul, looking forward to the presentation.

Thank you. You just have swallowed 30 seconds from the presentation. Okay. So good afternoon, everybody. I think Idorsia -- for Idorsia, the year 2023 is going to be really very interesting. And this is really because of all the work, and after this disclaimer, because of all the work that we did in 2022. And in this 2022 year, we achieved a lot. We achieved a lot because we became a commercial company. Idorsia launched QUVIVIQ, our insomnia drug in the U.S. We launched PIVLAZ in Japan. We have launched QUVIVIQ in Germany, in Italy. And not only we got -- we became a commercial company, but also, we had very good clinical results. We got positive aprocitentan results in resistant hypertension. We got positive daridorexant results in Japan. And we also got the results, but also we could discuss with the FDA a Phase III program for cenerimod in lupus. And finally, just before Christmas as the last present of the year, we filed aprocitentan in resistant hypertension in the U.S. So let's start by QUVIVIQ. So I know everybody is sleeping well, maybe here, despite the jetlag, I don't know. But I tell you that insomnia is a huge medical problem in the world. And QUVIVIQ has been launched in the U.S. just 6 or 7 months ago basically, and we have had very good success with this drug, because this drug is quite unique. If you look at the benefit of this drug in terms of sleep but also in terms of daytime performance, it's quite impressive. It's also very impressive if you look at the side effects, the tolerability. Now just after a few months, I can tell you, if we ask the doctors, which is a drug which has given the best results and higher satisfaction in new patients, they will say QUVIVIQ. And this is just after a few months of launch, after launch. Of course, we have faced a problem, which is the reimbursement and the access, the commercial access. And we -- I have to say we have underestimated this issue, but we are correcting it. And you have seen that we got a deal with Express Scripts. And now in a few days, the NDC block will be withdrawn from Express Scripts. So we are going to get also reimbursement from -- about -- it's about 30 million of insured lives in the U.S. Of course, there is still big work to do, but we are discussing with CVS. We are discussing with other payers. And I'm quite confident that during the year 2023, we will have coverage for a majority of the patient with insomnia. So just after a few months, I wanted to show the data. The awareness of QUVIVIQ is very good. It's nearly not as good, of course, as Belsomra, which is on the market since 7 years. It's not as good as Dayvigo, which is on the market since 2.5 years. But when you consider, for example, aided awareness, we are not so far from Dayvigo. And I think we are going to reach the level of Belsomra very soon. And of course, this is translating in an increasing and fastly increasing demand. You see here on the right the number of prescriptions, and you see on the left, what is very important for me, is the distribution between the dose of 50 milligram, where 72% -- 70% of the prescription, basically, are with 50 milligram and 30% with 25 milligram. This is quite an unexpected result because, really, I was afraid that people, like usual, would tend to give -- to start with a low dose and continue with a high dose and the high dose give a much better effect without paying any price when you look at the safety. Now we continue to grow our writer base and most of the writers are general practitioners. And as you see, we are -- if we consider a new-to-brand prescription, we are close or we are at the same level as Belsomra, 6 or 7 months rather than 7 years. We are there. And what is very important for me, the refill rate and the number of refills is increasing, which means that, really, patients like the drug and continue to take it. Now QUVIVIQ is going to become a global brand. And we -- as you say, we have launched in Germany and Italy, but we will launch in many other European countries. In Canada, we should get the approval in the middle of this year. And we got, in Japan, Phase III successful clinical results, and we should file this year in Japan. In Switzerland, our home country, the drug has been approved, and we should launch it in the middle of the year. So Germany, and this is something unexpected. People say, forget Europe. Merck didn't go to Europe. Eisai didn't go to Europe. There is a reason. In fact, you see, after a few weeks, we have more than 600 prescriptions per week in Germany. And this is clear. There has been no innovation in the sleep market since 30 years in Europe, and all the doctors are very eager, and the governments and the public administration is very conscious that this drug should change the treatment of insomnia patients. And as you know, in Europe, people are very afraid of benzo or Z-drugs. Now our second drug, which we launched last year is PIVLAZ, is in the treatment of cerebral hemorrhage followed by surgery or angiographic therapy, coiling. Now after a few months, it was launched in April. We see a fantastic engagement of the expert, and they are very committed to use PIVLAZ. More than 95% of the accounts that we are targeting are prescribing already PIVLAZ after a few months. And we can see it -- consider that after -- from April after 7 months, basically -- or 8 months, 25% of the patients who have a subarachnoid hemorrhage and who are treated by surgery or coiling are treated with PIVLAZ. So as I mentioned, there was also very good, not only we made progress on the marketing commercial front, but we progressed in our pipeline. And people must not forget one thing. Idorsia is a 5-year-old company, but it's a 20-year-old research. QUVIVIQ was discovered and the work was started by Martine, who is here, more than 25 years ago. The clazosentan, it's nearly older. It's a nearly 30 years old project. It takes a lot of time to bring innovation to the market, and this is why we have a fantastic success now with many projects. I will mention some of them. This is due to these long-lived projects where we are correcting, where we are improving our products, we are also improving our development. And this is leading to, really, very spectacular progress into the pipeline development. So first drug, and this is fashionable because today, you have seen that CinCor, with aldosterone synthase inhibitor, was bought for $1.8 billion. This is a Phase II program. We are in Phase III. We have the results of Phase III. And this Phase III was designed with the FDA. In fact, it was an FDA proposal where you can see that we have 2 II-Phase in the development beginning, which is 4 weeks double-blind. And you can see that the drug really reduced the blood pressure from 155 to 142. The 2 doses were not -- were difficult to differentiate in terms of efficacy because of a quite high placebo effect. The effect, as you see, is very highly significant. But this first phase, which is done with a measurement within the doctor or in the office, had a higher placebo effect. I will show you that we could really have a much better evaluation of the effect of aprocitentan in the double-blind randomized phase, which has been after 30 weeks of treatment. As you see then, the placebo, when you stop to give aprocitentan, the placebo increase -- blood pressure increases by 5 or 6 millimeters, and the treatment under aprocitentan, which is continuous stays constant. It's a much more precise way in my mind because you do not have the placebo beginning or the white coat effect that you can have at the beginning. You don't have in this double-blind randomized period. If you look at what was a secondary endpoint of the study, which is an ambulatory blood pressure where we measure every 10 minutes blood pressure for 24 hours, you see that the placebo effect is about 2 millimeters. It's much lower and that you see that you can appreciate the very strong effect of aprocitentan during the day and during the night. During the night, you go to minus 10 millimeters with the 25-milligram dose, which I think has never been seen. When you consider, it's on top of 3 for 50% or 3 -- I think it's 60% of the patients got 4 drugs. So not only -- it was not only 3 drugs as a background, but for most of them, it was 4 and even some at 5 or 6 drugs. And despite that, on top of these drugs, we could show 10-millimeter blood pressure during night, which is absolutely outstanding. So aprocitentan, the file -- the NDA has been filed. We are going to -- in the U.S. We are going to file in Europe very soon. And as you know, Janssen will commercialize this drug, and we will get tiered royalties. Now we are progressing also in other drugs. Selatogrel is a really -- I think it's going to be a game changer. And I'm very confident this drug is going to work. First of all, selatogrel, as a drug, is more or less the ideal drug. It's very fast onset. It works in a few minutes. It has -- it is very selective for the P2Y12 inhibitor, so it's devoid of some effects, which are off-target effect of some P2Y12. We know that some P2Y12, other antagonists can have some side effects, which we can avoid by having a very selective product. It's short direction of action. It's basically 4 to 6 hours, and I will tell you why it's important. And then it's suitable and it's stable enough that it can be used in an auto-injector for subcutaneous injection. So why is it going to be a game-changer? Because I think, in the future, when patients who had an MI or who had a very high risk of an MI will have this terrible pain, which means that they get or they might have a second infarct, they will start by injecting, because they will carry with them this auto-injector. They will auto-inject themselves. Then they will call the hospital, and then they will call the emergency. They will get to the ambulance and then they will be treated into the hospital. By doing that, we are going to save a window of opportunity of, let's say, 3 to 4 hours, because the average of patients between the time where they have the pain and they are really treated, for example, by angioplasty is about 4 hours. But if you're in the middle of Oklahoma or -- you can imagine that it can be 12 hours. And if -- so this auto-injector is made by Antares, which has been bought by Halozyme. It's the EpiPen system. It's more or less the EpiPen system, which was used by Pfizer. So it's a very robust system, which can be used in emergency situation. Now we also progress with cenerimod. Lupus is always very difficult. So we have done a very big Phase II, which is called CARE in order to find the dose. And we know the dose is 4 milligrams. And this dose is very effective. We see that the treatment really increases with time. You can see on our website all the results. And what is very interesting in patients with a high interference in nature, there is a much stronger effect and the safety is very good. And we showed these results to the FDA, and they have agreed that we can do a program with 2 Phase III, where we have, for each Phase III, it's 2 groups of 210 patients treated for 1 year with 4 milligrams with a follow-up of 6 more months, which is an open-label extension. And this program has been agreed with the FDA and has started already in December. Now you have seen that we are becoming a commercial company. We have our pipeline moving on. But our goal as a company is to become profitable in 2025. I think we want to have revenues of above 1 billion, and I think this is perfectly possible in 2025, but we are going to control the cost. We are going to control our OpEx in order to become profitable. And of course, 2023, and this is how I started, is going to be a very exciting year, because we are going to see broader payer coverage. I really think I can announce the CVS deal and some other deals. We are going to have, in a few weeks, the results of clazosentan. The aprocitentan will be submitted in Europe. We are going to get QUVIVIQ regulatory decision in Canada. We are going to discuss with the regulatory authorities. We have very interesting results we have with lucerastat. And QUVIVIQ will be launched in Switzerland, hopefully launch in the U.K., and will be -- the NDA will be submitted in Japan for QUVIVIQ. Just before the end of the year, we should have the decision for aprocitentan NDA in the U.S. So you see a very exciting year. And at the end of 2023, we'll be a really very different company. Thank you very much. Yes, maybe Simon and André and Martine, we can have one more chair. No, we can -- they can answer from here.

This is -- thank you very much for the presentation, and we are now moving to the Q&A portion. So does anyone have any questions they'd like to kick off with? In that case, you'll get a question from me, which was you mentioned that treatment-resistant hypertension is now in fashion. But how do you think aprocitentan compares to what we've seen so far to the CinCor asset? Astra, obviously, talking up their asset and saying some positives about it, but how do you think the 2 agents compare?

First, I much prefer to be at the end of Phase III than beginning the Phase III. That's -- in my life, I have seen surprises in Phase III. I'm very happy to be at the end of Phase III when I know the safety. I know the efficacy. I know what happens in patients with renal impairment. I know what happens in patients with heart failure. I know what happens in patients with diabetes. I think that there is a lot to learn about this aldosterone synthase inhibitor. The other thing, which I learned, is that -- and this is absolutely a rule for me since 20 or since 30 years. If you want to really make improvement into a complex disease, resistant hypertension, if patients are resistant to ACE inhibitor, to calcium channel blocker, to diuretics, it's because it's a very complex disease. And if you try to address this disease with a mechanism, which is already involved in the previous treatment, it's much more difficult than to go with a completely new mechanism. Endothelin blockade is completely new in resistant hypertension. These patients have never seen an endothelin blocker all their life. You will see that aldosterone synthase is part of the renin-angiotensin system. In fact, one of the main goals of -- targets of angiotensin is the -- increasing aldosterone. And therefore, if you address the same system by 3 different approaches, it can be difficult to get the efficacy, but then the safety is a major problem. And people should remember, is what I say, when Novartis -- I'm sorry, but I have to quote them -- wanted to combine [indiscernible] with valsartan, it came to a catastrophe. And you remember the patients, the renal failures, the death and the thing. It's because they were blocking this renin-angio system to the end. And I think it's extremely -- to my mind, it's extremely dangerous to do that. This is why it's much better to have another mechanism of action. But that's my point of view, and I've been very wrong many times. So clearly, AstraZeneca doesn't have the same opinion. But I can tell you, it's going to be very, very difficult in patients, especially with renal impairment to deal with a complete blockade or people will have to avoid angiotensin II receptor blocker. I don't know how they are going to be able to do it.

And then aprocitentan, there was a write-up in the Lancet and the editorial could be read as a little bit cautious in terms of the question exactly, what's clinically meaningful. Do you think that the write-up in the Lancet was an accurate description of the product?

No, no, no. See, you didn't look at the paper, sorry. You look at the ambulatory effect. You cannot have only one aspect of -- you cannot -- when you look at the results, you look at everything. You look at the efficacy on the -- in-office blood pressure, in ambulatory. You look at the effect after 1 month, after 3 months, after 8 months. You don't isolate one thing, which is 4 weeks. The only reason why we did it at 4 weeks is the FDA said we don't want to have more placebo. We don't want to have more placebo longer than for 1 month because, for the patient, we know it's a risk. And this is why we look at 1 month, but you see the blood pressure reduction was continuing. And you see that after 8 or 9 months, when you make the randomized withdrawal, the effect is much nicer. So if you only take one part of the study, you are really always not seeing the big picture. The big picture is that there is a fantastic effect, that the effect is observed in African American, in patients with renal impairment. It is observed in nearly -- there is no one subgroup, which is not -- where the drug doesn't work. And that's fantastic. And what is the price to pay? We have seen that there is a few edemas, leg edemas, but there is no really side effect like, for example, hyperkalemia that you're going to see with synthase inhibitor. And you know what means hyperkalemia in a patient with diabetes with renal failure. It's a huge risk of death -- of certain death. Hyperkalemia is something which is -- which we looked at in our studies very carefully because that's a big risk. So there is -- maybe this drug is going to be given at a dose which doesn't give this problem. But if you ask me as a cardiologist, I would be very, very careful before prescribing an aldosterone synthase inhibitor to a patient with resistant hypertension. But let's look at the data.

And will there be further publications of your data and further cuts of the data or other studies still to report that we should look out for?

No. Martine, there are many studies with many papers, which are in preparation, no?

So they reached, these are a lot of subgroups we see -- we know, for example, that I can mention it's obviously difficult to treat in African, Americans patients, that said also in dialysis patients, all these patients, and we have all of that this state. So we [indiscernible]

And are you still talking to third parties about potentially divesting some or all of aprocitentan economic growth?

Exactly. I think it's not me, but it's André doing the job. Maybe, André can describe it.

Yes, anticipating your next question because I said are you also confident to get a deal before year-end 2022 in all honesty? And we did not achieve it. But as your question is we could have achieved a royalty monetization for a portion of the royalty entitlement from Janssen on aprocitentan by the end of the year but at a price that we were not ready to pay. And now it's the right time because, as Jean-Paul said, see, a drug has been -- see, a filing has been done with the FDA. So they had access -- all potential investors had access to a [ VDR ], having seen a summary of efficacy, safety, clinical study report, all interaction with the FDA, which makes them more confident that the drug will be approved and as an after launch by Janssen. So we are now in a better position to extract more value from a royalty monetization deal. It's not yet done. But I'm more confident that we should get a deal in the coming weeks or months.

Maybe while you've got the microphone, André, who is the CFO of Idorsia, are you also considering any other activities to generate cash? Is it very much a focus on apro? Or are you also in parallel looking at doing any other things?

Yes. No, we have different irons in the fire. Clearly, we will not be funded to a breakeven with a deal that is a royalty monetization deal. We have some ongoing discussion for out-licensing deals. You've seen the pipeline is rich and liable to get some deals here. Again, we want to have some cash, not to be against the world. So the first objective is to ink a deal on a royalty monetization. And then after, we'll see if we get the right terms for an out-licensing deal, and we could enter into such a deal. But it's like M&A. By essence, you cannot predict it. You need [ mature ] parties.

Yes. And I think what you have to see and what we see very clearly is that if people are ready to pay $1.5 billion or $1.8 billion for CinCor, which, I think, for AstraZeneca, I'm sure they have good reasons to do that. And I think that they know cardiovascular very well. I think it means that products have a huge value. It's very difficult. Not only I think products have a big value -- have a large value. And also, people want to get out of the -- all the oncology, very specialized, because it's becoming so competitive than to be in the field where basically, maybe CinCor is at least there is -- on aprocitentan. There are not 20 products in development. If you take QUVIVIQ, there is basically nobody developing any sleep drug in the future. If you look at an auto-injector in -- for myocardial infarction, there is nobody else is doing this job. And it means that maybe people are starting to be interested in areas where there is maybe less competition, where it's tougher, where the price are not higher and not as high as in an orphan disease. But there is a lot of value in this type of products. And this is why, personally, I think we have to be extremely careful before making a deal because our products, to have the best product in lupus, has a huge value for us. To get a drug where everybody with an MI will want to inject himself before going to the hospital, it has a huge value for us. So we have to be extremely careful. We can really do a royalty deal. But before the licensing out our products, I really want to get, really, a fair deal and a good value for this product, which are difficult to find.

And I think there was a press release this morning where you -- if I remember correctly, the words were to the effect that you were considering or looking for nondilutive financing. So could you also consider something like...

Nonequity.

So nonequity dilutive, sorry.

Everything is dilutive.

Everything is. So could you also consider some sort of bond or convertible debt secured on something? Is that under consideration?

As said so, equity or equity-linked. We strongly believe, as you've heard from Jean-Paul, we are quite excited. 2022 was, for us, very frustrating, but we believe that 2023, we'll see all the efforts. Also, we should see an increase in our stock price. So we aim to remain nimble if we believe we have the right price for an equity deal or issuance of a new convertible bond. There's one maturing mid-July 2024. Yes, of course, we'll do it. But right now, as I told you, first thing is to get this royalty monetization deal. Look, if we get the right terms for out-licensing and as said, we'll see it and we'll take it from there.

Maybe shifting gears, we've got Chief Commercial Officer, Simon Jose, as well. QUVIVIQ, you've got coverage.