Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Idorsia session of the 2025 JPMorgan Healthcare Conference. I'm Sophia Graeff, a member of the European Pharma team. And today, it's my pleasure to introduce Andre Muller, CEO of Idorsia. Before handing over to Andre, just a reminder, Andre, we've been plenty of these sessions already so far. [Operator Instructions]. Over to you, Andre.

Thank you. And thank you for hosting us this year once again. And I hope, of course, to be here with you next year. Yes. Thanks for all of you attending here and those in Europe, who stood awake very late. You've seen the recent news. And as you can imagine, we are fighting to create value for all stakeholders. So I will give you some color on what needs to be done in the immediate future and also give you the view that we believe we can achieve midterm. I will speak of the immediate short-term and midterm future. So we'll make some forward-looking statements. So with this disclaimer, you're properly warned on the risk and opportunities to invest in Idorsia stock. So first, that's really the short term prerequisite for us to continue our operation are the force that you can see here. And it's a comprehensive plan that we believe can be achieved. First, we need to get a aprocitentan deal. We need to complete the operational restructuring, which is almost done. We'll need a balance sheet restructuring. And you may have seen the recent announcement that we convened a bondholder meeting to amend and extend the terms of the 2025 bond, which would mature by the end of this week. And we would need additional funding to remain going concern. So first, speaking of the aprocitentan deals that we try to strike. As you know, aprocitentan the third drug we got approved in the last 3 years. '22, we had QUVIVIQ, '23, clazosentan in Japan. And 2024, aprocitentan. So the aprocitentan is an endothelin receptor antagonist, well known actually by the team previously with Actelion and now with Idorsia with actually aprocitentan being the fourth ERA to be approved. We had first TRICARE, bosentan, then Opsumit with macitentan, then clazosentan, which has been approved in Japan. And now we have aprocitentan. So aprocitentan is approved in the U.S. under the brand name TRYVIO and in Europe under the brand name JERAYGO. You have seen the news by the end of November, we announced that we entered into exclusive negotiation with an undisclosed party for the global rights of aprocitentan. And this undisclosed party paid an exclusivity fee of USD 35 million. As you can imagine, this partner does not take such a decision lightly. We agreed on terms. We agreed on the time lines. And for different reasons, which are not within our control, company has told us that they are still interested in aprocitentan and getting this deal over the finish line, but it's -- I believe we'll not be able to achieve it in the next few weeks, possibly next few months. So that's where we are. And of course, we were really counting on the upfront that we would have received in connection with this deal. It's a good deal for us. Yes, and you will see it a little later. In my view, we would have preferred to a more front-load deal. But globally, should we be able to strike this deal, it's a good deal for Idorsia. Unfortunately, given -- and we are planning for the future, and we are planning for success, but we had to reduce by the end of 2024, our cost base. So this came after a significant restructuring already in 2023, where more or less 50% of our R&D organization was cut, and we had to further reduce by the end of '24 mainly in drug discovery and clinical development plus some support functions. So we have roughly cut 250 positions globally, mainly at headquarter in Switzerland in order to keep a small and nimble R&D approach. And beyond the 250 positions that we had to cut, we hope that some of the employees could actually join the partner for aprocitentan should we be able to close the deal in the coming weeks or months. And now with this reduced R&D organization, we also had to reduce the number of projects that we have in our portfolio. And that's why we really prioritize preclinical and early-stage clinical assets with the objective to go to see a proof of concept and see then whether we should partner the compounds or should we bring them to the next stage. Third part is the balance sheet of this prerequisite short-term priorities is the balance sheet restructuring. As I alluded to it, we have CHF 200 million bond, which was already extended from July with a maturity in July 2024 to January 2025, because we strongly believe that the 6 months would have been enough for us to get the deal with the undisclosed party regarding aprocitentan. And we have also another bond outstanding of CHF 600 million, where we call it bond '28, but the investors are likely to request the redemption in 2026, August 2026. So in any case, beyond the extension of the CB 2025, we need to restructure both bonds, so the CHF 200 million and CHF 600 million bond. And as I told you, we need a bridge to fund the company in the near term. And we'll show you where we land in terms of cash by the end of 2024 and what does it mean in terms of cash runway. And we would need also because should we close the deal with aprocitentan, based on the terms negotiated with the undisclosed party, we would need to raise additional cash. And given the time frame, we believe this will be most likely with incumbent stakeholders who have a vested interest today in Idorsia, potentially with third parties. Coming from Switzerland, we have a lot of mountains, as you know. And if you climb as many as Swiss do, usually the view from the top is really nice. Here at Idorsia, don't need to go too much outside to climb mountains because I have a mountain to climb here with my colleagues, of course. And -- but I want to share with you what could be the view from the top, should we be able to reach the top. And in our view, and I hope you will share our excitement to see a view would be quite amazing. Key strengths. First, we have an approved drug, QUVIVIQ. It's a different kind of insomnia treatment. There is a dire need for innovative treatment for chronic insomnia, and I will come back to it in a few slides. We have already partnered some of the assets, including QUVIVIQ. We have strong alliances that will allow us to maximize the value of our portfolio. We have, as I mentioned, a pipeline even prioritized, but with promising in-house assets, most of them fully unencumbered. We have -- despite the restructuring, we had to enter into first by the end of 2023 and recently in November, December 2024, we have a specialized drug discovery engine. And we have also the people, highly qualified professionals. I'm sure you've heard it from many biotech companies. I would say, on top of being highly professional, they are highly dedicated, and they have shown resilience in a context which is not easy. Moving forward. So we need to [indiscernible] a prerequisite, sets our mountain to a climb. If we go there, we have this dual model. On one hand, we have the Idorsia-led business, mainly today with QUVIVIQ, potentially moving forward with additional drugs that we would keep and commercialize around the globe. And today, with QUVIVIQ, midterm, we have a plan to achieve sustainable profitability, not only commercial profitability, but with the reduced cost base, overall profitability. On the other hand, we have the partner-led business. And with this, we should be able to accelerate overall profitability through the milestone we would be entitled to. And we see tiered royalties, we would get and we would piggyback on the success of our partners. So now we have reset, I would say, the strategic priorities at Idorsia, and I will go through these 5 key priorities in the next few slides. First one is QUVIVIQ. Drug is approved. Drug is approved in the U.S. Drug is approved in Europe. Drug has been recently approved in Japan. Drug will be soon approved in China. So we have a drug which is approved in the U.S., unfortunately, with a Schedule IV. And we believe that we launched a citizen petition in order to get the scheduling, not only of daridorexant, but of the full DORA class, so dual orexin receptor antagonist. And we are making a good progress. If you have questions, Tosh, our President and General Manager for the U.S. will be happy to take any questions. And looking at the performance in -- over the past quarters, you see that we have been able to maintain the sales at a steady state of USD 758 million, so CHF 7 million over the last few quarters, including 2024. Despite reducing significantly the marketing and selling efforts. First, we see a field force. You see that we have reduced the field force to what is now 91 reps in the field. We have also switched from TV ads campaigns because it's a primary care drug, and it's driven by prescription with the GPs to digital marketing, which is quite successful. So you see that we are able now to maintain this sales level around, give or take, CHF 30 million despite reduced OpEx. Europe is completely different. And within Europe and Canada, we call it EUCAN, we have in each and every country, a different status. You have right now 4 countries where we are reimbursed, Germany, U.K., France. In Canada, we have private access coverage, which covers more or less 55% of the Canadian lives, and we applied for reimbursement in the public space. All other countries are out of pocket, but we are making good progress, notably in Spain, big country where we aim to get reimbursement in the course of 2025. And you see here the acceleration. Look at Q4 compared to Q3, mainly driven by 2 countries, Germany, reimbursed, and France. Stellar launch in France, which was accelerated because we have only field force for the specialty or psychiatrists and neurologists, but we partnered for -- in a co-promotion deal with Menarini, which has a huge GP and sales force. And we have seen the acceleration the week after Menarini was calling on doctors. We aim to repeat this type of collaboration in most of the European countries in order to really leverage the potential with the GPs. And you will see the guidance for 2025. You will see that we continue. We are very bullish, notably in Europe on the potential of QUVIVIQ. In addition to unlock value, we want also to bring some Phase IV studies for all HCPs that are -- have to treat insomnia and comorbid diseases. You may have seen and we'll publish soon the result of a Phase IV study in nocturia, which is really impressive. impressive outcome. And we have other Phase IV, which provided that we would get funding, we would launch, plus the Phase II in pediatric where we expect results in the second half of 2025. And showing also the need of the physicians community, we have many, many investigator-initiated studies ongoing or in preparation. And you see here the list, and we strongly believe that daridorexant can address some of the unmet medical needs in Alzheimer's, in PTSD and in drug abuse or smoking withdrawal, for women with menopause-related insomnia or patients in OSA, obstructive sleep apnea. So a lot going on, which is, again, investigator initiated showing the interest of the physicians community for QUVIVIQ. Now speaking of the existing alliances. First, we have QUVIVIQ with Nxera. And as I told you, just launched with their local partner, Shionogi daridorexant in Japan. We have also Simcere in China. They conducted a bridging study, which was really successful. We had no doubt that we would be able to repeat with this bridging study, the stunning results that we have seen in the pivotal trial, global pivotal trial. Simcere expect to get an approval by the end of 2025 and launch right after. And we have also inked a deal with Viatris back in by the end of Q1 2024 for 2 promising Phase III assets, Selatogrel, we call it our cardiopen for suspected AMI -- so it's auto-injector and Cenerimod, which is currently investigated in SLE. Both trials are recruiting fast, thanks to the expertise and the financial muscle of Viatris. And again, we have a vested interest in the success with the milestone, regulatory sales milestone and royalties. Speaking of the late-stage pipeline, one which is with a Phase III, unfortunately, that could not meet the primary endpoint on neuropathic pain was lucerastat for Fabry patients. But what we have seen is unique and marked reduction in the kidney function, i.e., the decline in -- or see a slowdown or a decline in the eGFR slope. And to this extent, we had 118 patients in the Phase III. Most of them to the request of the physician entered in an open-label extension. And if you're looking at the wealth of data that we gathered, we had now, as you can see, 60 -- more than 60 patients which have been treated for at least 2 years, more than 30 patients treated for more than 4 years and even some patients for up to 6 years. So if we can confirm the reduction in the kidney function decline with this open label, this would open up, of course, a discussion with the FDA. Also we're in connection with the kidney biopsies where we expect to get the results early Q2 2025. So this is still ongoing, and this would be the fourth drug, hopefully, that would be approved in Fabry. Speaking of the early stage, not going too much in detail here. With me, I have Martine Clozel, our Chief Scientific Officer, who will be able to take any of your questions. We have 3 antagonists where we believe we have a unique or first-in-class potential, one called CXCR7 or ACKR3, which could be investigated in progressive multiple sclerosis. And here in MS, the holy grail is not only to decrease the inflammation, it's also to have remyelination. And we have shown in animal models that we could have this unique combination of remyelination and anti-inflammatory effect. We have CXCR3, which we could investigate in vitiligo, but could be investigated in many other immunodermatology and autoimmune disorders. And we have CCR6, which is -- could be also -- Phase I is ongoing. We are waiting for results of this Phase I, but could be, again, investigated in immunodermatology or autoimmune diseases. And lastly, we have never disclosed much about our preclinical pipeline. So I will conscious of time not go in each and every compound. But again, we believe that for each of them, we have a potential best-in-class for these compounds. So if anyone is interested, please come and see us. The only thing that would -- which cannot be a partner is the CFTR because we are under exclusive discussion for this CFTR corrector in cystic fibrosis. Lastly, we have also synthetic glycan vaccine platform that we developed with the Max Planck Institute. We have an ongoing Phase I in clostridium difficile. And we have also in preclinical pentavalent klebsiella pneumonia vaccine. So as I said, because of the restructuring, you see that we drastically reduced the number of preclinical projects. We went from 16 to 8. Most of them were presented to you, at least for the 4 and plus 1 for the vaccine, the 2 also include what I just mentioned regarding C difficile. And the last point, which is, of course, critical is to make the money last. We ended 2024 with cash above CHF 100 million. With this cash, we extend the cash runway until the end of Q1 2025, because the lasting effect of the restructuring will only kick in early April because mainly the a notice period of our employees. Here, I can tell you, we confirm the guidance we gave with the half year results, resulting in CHF 330 million non-GAAP EBIT, excluding D&A, stock-based compensation and one-off deals. You see here the CHF 125 million. This was in connection with the deal with Viatris for Selatogrel and Cenerimod earlier this year in 2024. And moving forward for 2025, of course, here, you have a big caveat, excluding unforeseen events and provided that we can address the short-term funding. We would significantly increase the revenue. You see here, we would go from CHF 55 million to CHF 110 million next year. And that's to be clear, Idorsia-led business, it's only QUVIVIQ. So QUVIVIQ in Europe and Canada for approximately CHF 80 million and CHF 30 million that we believe we can maintain in the U.S. So you see over time, with all the efforts that we have done, we reduced markedly our operating loss, roughly CHF 600 million in 2023, CHF 350 million in 2024 and going to CHF 200 million, slightly above in 2025. So as you can see, we are fighting to create value for all stakeholders. Thank you for your attention, and we are happy to take any calls -- any questions, sorry. Coming next to you, Sophia.

Thank you for the presentation. Are there any questions in the room? If not, maybe could we start with beyond aprocitentan and the discussions you're currently engaged in as well as the earlier-stage assets which you've highlighted, could a further partnership for QUVIVIQ in another region be a consideration you would enter into?

Yes. If we find the right partner, recognizing the value that we have created over the last few years, yes, clearly, we would be ready to do so.

And maybe if we could just talk about the progress then of QUVIVIQ in some of those regions. Could you elaborate on some of the reimbursement discussions that you're having currently within Europe?

As I mentioned, drug is reimbursed in Germany, in France, in U.K. We manage -- it's quite unique. First, in Europe, it's quite unique because the other DORA, be it Dayvigo or Belsomra are not approved. So we are the unique treatment, the only alternative to treatment we know, notably the drugs or benzos, which have some significant safety issues. So now that we have secured reimbursement in these countries, we are looking to expand the field force by having co-promotion agreements with selected partners in each and every of these countries. As I said, Italy, we manage -- we have not been successful to get reimbursement in Italy, but at least we managed to get access to be granted by IFA access not only to the specialists, psyches on neuros, but also to the GPs. So we are looking with who could be the best partner to help us to call on the GPs in Italy. Spain will be more or less what we have experienced in Germany and France. We should get reimbursement second half of 2025. And we are also actively looking for a partner that could leverage -- where we could leverage their footprint in the GP space.

Maybe could you talk a little bit about the typical profile you're seeing for QUVIVIQ user? And does that vary between either geographically or in reimbursed or out-of-pocket markets?

Well, if you are out of pocket today, yes, of course, it comes with a cost. So it's a combination of cost burden for the patient, especially for chronic users, not only entirely because of us. If I look at the cost for patient in Italy, it's EUR 3 and -- but it's EUR 2 net selling price for us. And a combination of awareness of a new medicine, which can really address the chronic insomnia of some patients severely impaired. And so it's a combination of both. But what we aim as if this is possible, and we believe we can achieve reimbursement in Spain and other countries like Switzerland, like Austria, like Sweden and where we have affiliates and also in Canada because we filed for reimbursement in Canada as well.

What are you seeing in terms of adherence rates now from patients? When patients do discontinue, what are the factors that are driving that?

Well, we see -- it's different between U.S. and Europe. And Tosh, I will defer to you to explain where we are in the U.S. For those patients that are initiated on 50 milligrams, we have shown in the pivotal trial that you have better efficacy, and it did not come at the detriment of safety, okay? So with 50 milligram, we see a much better adherence to the treatment. So if you get it reimbursed, you see -- you've seen the volumes going up and that should continue to go up moving forward. In the U.S., we see a similar pattern, except that the treatment pattern from a physician start low and increase the dose. And actually, what we are pushing, but with limited field force now is to say, no, look at the data. We had 1,800 patients with efficacy and over 6 months safety over more than 12 months, look at the data. You should start them with 50 milligrams. And in the U.S., we see a refill rate, which is 3x higher with 50 milligrams compared to 25.

Interesting. You've also touched upon the reduction in field force that you've seen, but balancing that with continuing to drive growth in QUVIVIQ. Could you elaborate a bit more? I know you mentioned the digital element, but how you've changed the approach to scaling the product and reaching your target audience?

Tosh, maybe you can take this one. I don't know if we have a mic or you come here and -- there's a mic there. Maybe take a mic from this gentleman.

Thank you. What we've had to do through necessity, as Andre has described, due to the financial circumstances we're under, we've had to take some pretty tough decisions on resourcing of QUVIVIQ in the U.S. We've taken those decisions. You've seen the dramatic reduction in the field force size. And you've seen us really take a lot of the learnings over the last 2 years with our digital online spending. We've really refined our search. We've really refined the positioning of our online ads. And you can see that it's managed to sustain that launch momentum, which we're really happy about. And we're also pleased to see the question around adherence and refill rates. Our refill rates have also been continuing to improve since we've launched. And that's a function of more -- as we call on more and more doctors, as we call on them more frequently, the message is landing that if you start on 50 milligram, they'll get a better night sleep. They're less likely to feel tired and groggy the next day, which leads to greater patient satisfaction and ergo, they start to fill their prescription more often, as Andre said, between 2 to 3x the rate we're seeing if they initiate patients on a 25 milligram. So we've just really taken all the learnings in the last 2.5 years and really applying the money in a very, very focused manner, and it's allowing us to sustain our business.

And just one final question, if there are none in the room. How do you now see the peak sales potential of a product like QUVIVIQ?

It will depend. If you take U.S., it's a primary care drug. So we would need to put resources behind. As I said, when we see today inertia in the market, we believe that the scheduling will be a big inflection point, because today, we have some step edits with other drugs, including sometimes Z drugs or benzos and even including trazodone, which is an antidepressant, not even indicated for sleep disorders. So this would be removed if we have the scheduling. And -- but it will require -- it will, in any case, require marketing and selling efforts to properly call on doctors. So -- we see if it's better for us to do it alone, provided we would have the funding because the expertise is available and -- or if we would do it with a partner. And here, we remain very nimble, and we'll see what is best for QUVIVIQ in the U.S.

Great. Thank you very much for your time.