Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good morning. I'm James Gordon, JPMorgan European Pharma Biotech analyst. And so I have got the pleasure of introducing the Idorsia presentation, and we're going to hear from Idorsia's CEO, Jean-Paul Clozel. Thanks very much for joining us today, and I look forward to the presentation. Thank you.

Thank you. So the sound is okay? Good. Okay. So after the -- I just would like to explain the situation of Idorsia today because I have been in the business for quite a long time, but this is a situation where on one side, we have very fantastic products, very innovative, on the market or close to be on the market. And on the other side, we have limited financing. And what I'm trying to explain to you is how we are going to do in order to solve this issue. So what we really want is to create a sustainable company, which means a company with a marketing organization, with a research organization, with a pipeline and frankly, a company based on innovation. So first thing is that last year, we -- when we were at JPMorgan, we were just starting the launch of QUVIVIQ in insomnia. And QUVIVIQ, I have to say, is the ideal drug for insomnia, because of its pharmacokinetic, not only the drug is very -- is absorbed very fast. So you really can improve the time to sleep, but also it has a short half-life, and it does not accumulate. And you can see on this slide, this absence of accumulation, which is very important. But it is long enough, and that was why we spent so many years in order to discover this drug. It was long enough to be able to work during the second part of the night. It is after 3 or 4 hours in the morning, when people wake up and when they start not to be able to sleep again. And as you can see, for example, if you compare, this was a Phase II, zolpidem in green, you see that zolpidem, you have a better sleep or less awakening at the beginning of the night but in the second half of the night, you see that it doesn't work anymore. In contrast, in blue, you see that QUVIVIQ continue to work, and despite this very, I would say, reasonable duration of action, you do not have sleepiness in the morning. This has been -- this combination of this property has been the key for QUVIVIQ. And now we have launched in many countries, not only the U.S. but also in Europe, in Italy. And here, you see a study in real life in patients, in Italy. And you see that what we have seen last year, I showed you the IDSIQ results, which were a peer or patient-reported outcome study, showing that not only you improve the insomnia symptom, but also the depression syndromes, the maniac syndrome and the anxiety symptoms that you can see in this patient. And this is a real-life study performed in patients from a psychiatrist in Italy. So now where is the U.S. launch? Where is -- we have treated now more than 125,000 patients, 300,000 prescriptions that have been dispensed. And we have really reached 35,000 prescribers. So the start of the launch, this is where we were last year, was really a DTC campaign because our strategy was to really create a brand, which we did with DTC, with many activities, which have created a recognition of QUVIVIQ as a brand. But the problem has been, and that's something which we maybe did not anticipate as we should have done. But the market access was tougher that we were thinking, but during the year, we have been able to improve this market access. And starting from basically 1 year, 0 market access, we now have in the commercial sector about 62% market access. And we start now to Medicare, to have a 10% to 20% market access. So that's very important because at the beginning, we were dispensing drugs, but we were -- the patients were not reimbursed. And we had to compensate for that. So at the beginning, and then you can see most of the prescriptions were for free, but now that's November data, I do not have here the December data, more than 60% of the prescription are paid prescription. So we still lose some prescription because the payers for prior heart and -- are still creating some obstacles, but we have a much better payer performance. And one of the -- really what we have underestimated also was the importance of the scheduling. I think especially after the -- after the opioid crisis, scheduling has had a bigger impact than we thought and really creating some obstacle for the doctors. In some, we cannot sample as there are a lot of rules related to scheduling. And of course, also the payers have used this scheduling, which is the same as a very addictive drugs such as benzodiazepine, this has been used by some payers for prior authorization that you -- some payers are asking that patients are put under benzodiazepine before they use our drug. So getting an addictive drug before getting a nonaddictive drug. This is why we have made a citizen petition. And this citizen petitions should lead to the de-scheduling and we are really very confident that at one time point, QUVIVIQ will be de-scheduled. The other thing that we did, and I am very happy that Tosh is here, we have changed the management. And we have really brought in Tosh with the idea of creating a different culture, which is to really achieve same or better results but with less cost, with less financial constraint. Now of course, the situation in Europe is quite different. In Europe, there is no other orexin receptor antagonist than QUVIVIQ. And in Europe, we had -- everybody was thinking was telling us, you will never get reimbursed, it will never get a price. And in fact, what we have seen is, for example, in Germany is a change of law. The government has changed a law, which was restricting reimbursement of any sleep drug for 4 weeks. And what we have seen that they have changed the law now. QUVIVIQ is the only drug reimbursed chronically for insomnia. There is no other one. In U.K., even if NICE is known to be quite tough, we got a good price, we get reimbursement. In France, also, we got with a good ASMR, medical service, we got a good reimbursement, a good price, and we are going to launch very soon in France. We just have launched at the end of the year in U.K. In Italy, no drug is reimbursed, has ever been reimbursed for sleep, but we are in discussions, and I think that the Italian government is also ready to consider reimbursement of QUVIVIQ, knowing the advantages and the lack of addiction. In Switzerland and in Spain, we have launched by self-pay and with very good results. In Switzerland, we had many patients now are treated chronically with QUVIVIQ. And in Canada, also, for the moment, it is a private market, which is addressed. And we have been able, in Europe, to really discuss and show the results through the experts. And now QUVIVIQ has a very key position into the European guidelines for insomnia, which is also very helpful and it's also helpful in our discussion with the payers in the countries. So now we have been able to distribute 11 million tablets. This is just a start. We have a long patent life, long, and it's always too short. But still, we have about 13 to 14 years of patent life. And really, we are going to be able not only to see an increase of the sales numbers, but we are considering line extension activities. We are doing a pediatric program. We are doing studies in patients with nocturia. So there are a lot of news, which are going to come in the next years. So that was QUVIVIQ, now aprocitentan. You know that aprocitentan is -- has been tested and the clinical trials were done in resistant hypertension. And it's going to be -- and hopefully, the drug is going to be approved soon. It's going to be the first new mechanism of action in hypertension for 30 years. It's unbelievable, but it's like that. Since 30 years, there was no research on a new mechanism of dealing with severe patients or even less severe patients. These are the result of the -- this is the main, the primary endpoint. So there were 2 parts of the study. First part is 4 weeks with 2 doses, while we see a big -- a 15 millimeters pressure decrease, but the placebo effect that you can see, when it's office based. It was when the patient was measured, his blood pressure, in the doctor office. You see the same -- you see that this placebo effect is much less, of course, in the second part of the study, which was after 8 months, we do the randomized withdrawal to show -- and this was discussed with the FDA to show that the drug was still active. If you now use a much more precise method, which is ambulatory, at home measurements with automatic measurement system, which measures every 10 minutes, I think, the blood pressure. You see that there is a major blood pressure effect. This confirms the primary endpoint. And this is even very marked during the night. And you know that the best predictor for morbidity, mortality is the night-time blood pressure measurements by -- measured by ambulatory blood pressure monitoring. The side effects were really very -- I would say, really nothing worrying. The only real side effect is really, I would say, leg edema, edema that we can observe. And what is very interesting is that this edema first can be reduced if you make a dose titration, if you start, in blue, 12.5 milligram and you go to 25, you have half of this edema because the body has time to really adapt. And as you can see, the incidence of this edema is only there during the first 2 months. After 2 or 3 months, there is no more, I would say, new edema. And frankly, for the patient really for life doesn't have more edema than in the baseline because these patients, we must not forget, are very severe patients with renal failure, with heart failure. So you can see that if you look at the prevalence of this edema, you can see this is higher with 25, starting 25 in red compared to blue directly. But after these first 2 months, this is basically as much as the baseline levels, which is shown in gray at the right, which is basically the baseline in these patient because they are treated with drug like amlodipine, high dose of amlodipine, which is by itself inducing really edema and leg edema. Now what is really fantastic, and it's very impressive. If you look at patients with chronic kidney disease, you see that the blood pressure effect, especially during the night, is major, 12 millimeters of mercury. And here, the placebo effect is much smaller. If you look to a very severe patient, and we can treat severe patients because there is no hyperkalemia that you can have with aldosterone centers or aldosterone receptor antagonists. We do not see hyperkalemia as a problem. You see minus 15-millimeter blood pressure effect, major effect in chronic kidney disease. Now let's go to another very innovative product, selatogrel. As you know, today, when you have an acute myocardial infraction, and you really have a big risk to have a second one. And what I have observed as myself, as when I used to see patients with infarctions is that since ever, patients who have a second myocardial infarction really lose many hours in order to be treated because they are at home, they need to call the doctor. It depends on the systems, but I know that in many countries like in the U.S., you do not have doctors within the ambulance, sometimes you have it in some countries like France. But basically, the average time is 3 to 4 hours where you get your infarction, the second infarction and you are not treated until you go to the hospital. I said if we could find a drug which would really be able to be given in this patient and could act immediately, if they can be auto injected by the patient by themselves, we will save 3 or 4 hours of treatment time. And this is during the first hours that the heart is damaged. After 3 or 4 hours, you can put tPA, you can do many things, but you are not going to save myocardium. And we have had this auto injector, which has been developed in -- with Halozyme. And now the treatment, which we think will be the future treatment of this patient is that they get a second -- they get pain like they have had the first time they get their myocardial infarction. They inject themselves with selatogrel than the call the ambulance or the doctors and they go to the hospital. But during all this time, until they are in the angioplasty room, or within the ICU bed, they have been under treatment of a high dose of antiaggregant, antiplatelet agent. And we choose selatogrel as a very safe very -- so it's a different antiaggregant which works very quickly, subcutaneously, as you can see here, very fast platelet aggregation inhibition. And then it starts to recover. So that after 4, 6 hours, basically, there is no more risk of being able to combine it with any -- to other treatment or to make an angioplasty. You do not have this risk of bleeding. And I can tell you that we have treated more than 5,000 patients without any sign of side effects or bleeding. Now the big question I had is that are the patients going to really inject themselves. Will they do it for the right things or -- and will they do it quickly because if they wait for 2 hours, before they inject themselves, we have really no interest of this type of treatment. And I can tell you that I was very surprised, but the patients do it really for the good reasons. It's not if they have a migraine. They are not going to inject themselves, for most of the patients, and they do it very quickly within 15 minutes on average. So really, I think we are going to see a major effect. And we are going to save life. I really think so, we are going to prevent a lot of heart failure and cost for society. Just -- I mentioned that. Now we have cenerimod. And cenerimod, the very interesting thing with cenerimod, this is S1P, a sort of a very interesting molecule. But when you think of the mechanism of lupus and how cenerimod works, you realize that cenerimod is the ideal treatment for lupus because it prevents the migration of the T cells and B cells into the joint, into the target organ, but it also prevents the exposure of these target organs to lymphocyte presenting the antigen. This is what we have seen. So really, we are dealing, and we are also preventing the formation and the synthesis of cytokines, which are also playing -- like interferon playing a key role. So we have 3 mechanism of action, which really are explaining why we have seen, especially with the dose, where all these effects can be observed, 4 milligrams, a very marked effect on disease activity, as they die here. And this effect is really increased in severe patients and severities can be measured by complement measurements or anti-DNA measurements. And you see that the more severe the patient, the bigger the effect. And really, what you see is that the effect is building with time. So it's not a placebo effect way. You have parallel curves here, you see that the effect builds months after months. So that was Cenerimod. I don't have time to go to the rest of our portfolio. We are now, in fact, selecting the most important because we had the chance, and it's even more frustrating because of our financial situation. But we have many more products, and we are -- especially we found new vaccines, and -- but we are looking for partnering most of these earlier assets and maybe keep 1 or 2 assets for the future. So that was the assets, now the financial situation, we are in a difficult situation. We have money, let's be clear, until beginning of April. And we have done many things to solve this issue. First, we have really sold to -- so say, the Japan and South Korea organization. We have reduced the number of people, the workforce. We have adapted the portfolio. And we are looking for partnership in order to really decrease on one side our research -- R&D cost, but also find financing for the future, and I'm quite confident that we are going to achieve that. So really, I hope I can explain to you what we are trying to do is really to fund the company without selling everything but retaining shareholder value within the company. It's not easy, but we are going to do that in 2024. Thank you very much.

And with the presentation done. We're now open for Q&A. Does that anyone in the room have a question that they'd like asking? In that case, I'll start us off with a question, which would be of the different funding options, in terms of the assets that you might divest, which do you see as most likely?

I have the CFO here, Andre. And so maybe you can answer.

Yes. Well, we made it publicly several times, we have several balls in the air. So we'll capture, hopefully, one or a string of deals in the next few months. As Jean-Paul said, with the Sosei deal, mid-July last year, we [ sense ] a cash runway until early April. So we need to get the deal done in the meantime. Beauty of having this rich pipeline, mainly fully and, I would say, almost fully unencumbered is that we have different ways to different assets to partner and trying to maximize value for these partners. It doesn't mean that we would exclude the equity or equity-linked route. As you know, we have some debt on our balance sheet, notably with 2 convertibles, 1 of CHF 200 million maturing in July 2024. The other one is further out, 2028, even if the investors have a put option in 2026. So any equity would need to be combined with the restructuring also of the convertible. But the real inflection point and the real source of immediate funding, unfortunately, because the stock price is so low. And I'm not speaking even of a dilution. You would not have any investors willing to inject money, if it's to repay some bondholders. So we need to have one or string of BD deals with that front, also [ releasing ] some [ rain ] on the cash flow with potential clinical assets. And then think more broadly in order to be funded beyond -- extend significantly the cash runway. Many balls in the air, we need to catch one or a few of these to extend the cash runway.

And if I could ask a follow-up question on that, perhaps which would be for aprocitentan since you got the rights returned to you, have you had new discussions with anyone? And -- is that potentially divestable or partnerable before the approval decision? Or would you probably need to wait to see the approval decision?

In my experience, it's very difficult for any partner to partner a few days before an approval because you -- why not to wait 1 or 2 more weeks and to have clarity on everything. So it's -- I would say it's not so easy to make a deal, but the question is more what are we going to do because we want to retain some -- also some products, some chance to really see our sales increasing, becoming profitable and becoming sustainable. So do we do it on our own? Do we do it with a partner? Do we share, for example, the efforts? So this is what we are evaluating. We have the chance to have Tosh, who is now the General Manager or President in the U.S. organization. He has had a very large experience in cardiovascular within AstraZeneca, and he has launched many drugs. He was, I think, in myocardia as a -- so, he knows exactly. And what I said, the most important thing is to really create a culture of having a start-up to do a lot of things without spending and without cost. So I think that we are evaluating it. We just bought it back from September from Johnson & Johnson. So we were not allowed, we did not had the possibility to discuss with potential partners before Johnson & Johnson releases. And I think that there are many options. What is sure is that aprocitentan has no competitor, it is the first drug for difficult-to-treat hypertension. I don't think they will be a competitor for 3 or 4 years. We are going to be in a very -- fulfilling a very big medical need because, frankly, here and the WHO and the FDA recognized it hypertension, resistant hypertension is the #1 addressable cause or burn of -- a medical burden. And one of the priority for the WHO in order to prevent what is happening and which we didn't have 20 years ago. You never saw a young woman with stroke. And today, this resistant hypertension, this very severe hypertension, which is associated with diabetes, with obesity, with hypercholesterolemia. This is a killer. And I am very proud that within Idorsia, we brought a product to address this medical need.

And on apro, are you preparing to do a launch yourself? So if you were able to fund -- solve the funding problems by other assets, would you potentially do the launch yourself?