Invivyd, Inc. (IVVD) Earnings Call Transcript & Summary

Welcome to the Invivyd conference call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand the conference over to Scott Young, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. A short while ago, we issued a press release announcing PEMGARDA launch updates and PEMGARDA net product revenue guidance for the full year 2024. That press release and the slides that are being used on today's webcast can be found in the Investors section of the Invivyd website under the Press Release and Events and Presentations sections, respectively. Today's discussion will be led by Dave Hering, Invivyd's Chief Executive Officer; and he's joined by Jeremy Gowler, Chief Operating and Commercial Officer; and Bill Duke, Chief Financial Officer. During today's discussion, we will be making forward-looking statements concerning, among other things, the emergency use authorization and commercialization plans for PEMGARDA, 2024 financial guidance and our future financial outlook, our business strategies and objectives our future prospects and other statements that are not historical fact. These forward-looking statements are covered within the meaning of the Private Securities Litigation Reform Act and are subject to various risks, assumptions and uncertainties that may change over time and cause our actual results to differ materially from those expressed or implied today. These forward-looking statements speak only as of the date of this call, and Invivyd assumes no duty to update such statements. Additional information on the risk factors that could affect Invivyd's business can be found in our filings made with the U.S. Securities and Exchange Commission including our most recent Form 10-K, which is also available on our website. I will now turn the call over to Dave.

Thanks, Scott, and thank you all for joining the call. Turning to Slide 4. Less than 2 weeks ago, we announced that the FDA granted emergency use authorization or EUA for PEMGARDA for the pre-exposure prophylaxis or prevention of COVID-19 in certain adults and adolescents with moderate to severe immunocompromise who are unlikely to mount an adequate immune response to COVID-19 vaccination. In that announcement, we stated that we expected to have commercial product available for purchase by health care professionals imminently. And today, we are very pleased to announce that product is now available in the channel. This milestone officially marks our transition from a development organization to a commercial stage company, and it serves as yet another example of our ability to execute on the plans we articulate. While we anticipated there would be pent-up demand for PEMGARDA, the early response of the EUA has been great to see. Even before product was available, we received unsolicited inquiries from health care providers, requesting information on how and when they could obtain PEMGARDA for potential use in their immunocompromised patients. Furthermore, we have received numerous requests from individuals who are eager to speak with their physicians about accessing PEMGARDA and we have been in active discussions with leading patient advocacy groups who serve as champions for the individuals they represent. We see this as favorable dynamics related to our initial strategy of targeting the estimated 485,000 highest-risk moderately to severely immunocompromised individuals in the U.S. While we expect it will take a few quarters for the utilization to fully ramp up and hit its full stride, it further bolsters our belief that PEMGARDA has the potential to become a very meaningful product and to have a very successful launch. Jeremy will provide an update on our launch activities and the reimbursement process in just a few minutes. But I will say that his team has conducted comprehensive prescriber and payer research, and based on the anticipated value of this compelling product profile for pre-exposure prophylaxis of COVID-19 for certain moderately to severely immune-compromised individuals and for health care systems, that care for these individuals as they undergo transplants or cancer treatment regimens, for example, we have set the wholesale acquisition cost or WAC for PEMGARDA at $5,775. Based on our deep understanding of the market, our ability to access it and the current absence of any comparable products on the market today, we announce that we anticipate full year 2024 net product revenue in the range of $150 million to $200 million. Factoring for this anticipated income and continued optimization of noncommercial operating expenses, we expect to end 2024 with at least $55 million in cash and cash equivalents. Important to note, cash collection is expected to lag sales by approximately 75 days. As such, cash collections related to 2024 net product revenue will extend into 2025. Bill will share more details about our financial outlook, but it is fair to say we feel very good about where we sit currently. While we believe our 2024 net product revenue guidance is very compelling in its own right, it is important to note that this represents only the beginning of where we believe we can take our COVID franchise over time as PEMGARDA gains anticipated penetration, and we seek to bring new COVID-19 mAbs to market if and when they are needed. For now, we are in the privileged position of bringing an important medicine to certain patients who are in urgent need of protection from COVID-19 and, in the process, working to generate real value for the shareholders who have enabled Invivyd to reach this critical point in our evolution as a company. Now I'll turn it over to Jeremy to provide an update on our commercial progress and plan.

Thanks, Dave. Moving to Slide 5. I would begin by echoing Dave's comments about the significant progress we've made since our EUA announcement conference call just a couple of weeks ago. As he mentioned, we have products in the channel and we have seen unsolicited interest and enthusiasm for PEMGARDA from several of the nation's most preeminent hospitals and health care systems. All of this happened before the mobilization of a single field sales rep referred to as key account managers or KAMs. That team is almost fully in place, and they are presently completing training and preparing to engage with health care institutions and professionals in 1 of 3 main regions across the nation within the next few weeks. While the deployment of the KAMs is a critical step, that is only one aspect of our commercial effort. Our strategy is built around 3 main phases: product availability; followed by securing reimbursement and access; and finally, the full implementation of our commercial operations with the aim to ramp sales meaningfully. Unlike traditional launches, where it can take several months or even quarters before product is available and reimbursement is set, we have already made outstanding progress in the first phase of our work. PEMGARDA is now listed in pricing compendia with a WAC price of $5,775 and it is available for purchase by prescription through a network of authorized specialty distributors, including major distributors such as Cardinal Health and McKesson. Moving to reimbursement for PEMGARDA. Our target population is split roughly 50-50 between CMS and commercial payers. With respect to CMS reimbursement, Medicare represents the largest portion, given the demographics of that population. As a physician administered buy-and-bill product, PEMGARDA falls under Medicare Part B, and it will be purchased and administered in infusion clinics affiliated with institutions, hospitals or physician known groups. Importantly, it is not an inpatient hospital product that would be governed by a diagnosis-related group or DRG. In the calendar year 2024, Physician Fee Schedule Final Rule, CMS confirmed that all COVID-19 monoclonal antibodies, products for pre-exposure prophylaxis of COVID-19 and the cost of their administration will be covered in the Part B vaccine benefit once authorized. While reimbursement will be covered, receiving a product-specific reimbursement code is an essential step in the process, and we expect PEMGARDA will receive a health care common procedure coding system, or HCPCS code very shortly. With respect to the prescriber reimbursement for PEMGARDA, the formula is defined under the Part B vaccine benefit. Currently, CMS reimburses at 95% of the average wholesale price or AWP, which is expected to be 120% of WAC. As such, we expect that the CMS payment limit for provider reimbursement will initially be $6,583.50. On the commercial payer front, our team of national account managers has been actively engaged in discussions with major payers for several weeks. While each of them has a different process and time line for introducing innovative new products, we believe that they will make coverage decisions for PEMGARDA in the coming weeks and months, and we would expect that the physician reimbursement rates provided by commercial payers will be in line with typical Medicare Part B products. As I mentioned on our last call, once fully trained and deployed in the field, the first priority for the KAMs is to engage with target institutions and where required, drive PEMGARDA's inclusion on their institutional formularies as needed. It is important to note that the time line for inclusion on these formularies can vary from a few days to several weeks or months. And once PEMGARDA is on formulary, our KAMs can then focus on communicating the product fact sheet to health care providers so they can determine the best populations to prescribe the product to in their respective institutions. Since this can take time, it is one of the reasons we believe that the significant majority of our 2024 sales will come in the latter part of the year. Finally, recognizing the importance of providing our stakeholders with additional visibility into our commercial progress beyond net product revenue I'd like to briefly walk through on Slide 6, some refinements and provide some further color on launch metrics that I referenced on our EUA announcement call. First, in the coming quarters, we will be reporting on the number of patient lives covered by both CMS and commercial payers. While CMS coverage often lags commercial coverage, in the case of PEMGARDA, we believe that a significant portion of our target population could be covered in the very near future. We have also had very encouraging discussions with major commercial insurers, and we anticipate some of them will implement coverage policies quickly. Others will take longer. However, based on our most recent discussions and payer pricing sensitivity analysis, we do not presently anticipate payers will be looking to implement more restrictive policies, which can affect uptake and adoption. Another key metric we'll share is our progress calling on our top 200 accounts. While our full target universe encompasses approximately 1,150 accounts, reporting our reach into the top 200 accounts will provide a more illustrative picture of our progress as the physicians at each of these hospitals and their affiliated infusion centers provide care for an estimated 40% of all cancer patients undergoing chemotherapy and almost 50% of the transplant patients we aim to reach. We will also provide updates on the total number of accounts that have ordered the product as well as the number of accounts placing reorders. While the former provides useful insight into the overall progress, the latter serves as a surrogate for broader adoption within an institution. Finally, we will provide information on the number of new accounts ordering PEMGARDA. Clearly, in the early stages of the launch, essentially, all orders will come from new accounts, but we believe that this metric will become more meaningful as we get deeper into the launch and will serve as an indicator of how effectively we are broadening our reach over time. As the launch advances over the coming quarters, we will continue to engage with and solicit feedback from both the buy and sell sides regarding these metrics, and we will look to refine and replace them as needed to ensure we are providing measures that present a useful picture of our progress. Thank you. With that, I'll turn it over to Bill.

Thank you, Jeremy. As mentioned, we anticipate 2024 net product revenue in the range of $150 million to $200 million. Factoring in our end of 2023 cash position of approximately $200 million as reported in our 2023 full year earnings, $40.5 million in gross proceeds raised through our ATM facility in February 2024, cash collections from anticipated product sales with 75-day payment terms, in various steps we are taking to optimize our operational expenses, we expect to end 2024 with at least $55 million in cash and cash equivalents. As Dave mentioned, given the payment terms, the cash collection from our 2024 net product revenue will extend into 2025. Our net product revenue will incorporate gross to net deductions, which may include items such as prompt pay discounts, distribution service fees, government rebates, co-pay program redemptions and product returns. While we are not providing specific details today, we will continue to optimize our operational spend this year. These efforts will not affect our commercial plans nor are they anticipated to affect our efforts to advance key pipeline programs, such as VYD2311. Beginning with our 2024 second quarter earnings update, we will -- we expect to report PEMGARDA net product revenue and the associated cost of goods sold, or COGS. Notably, in connection with the emergency use authorization from the FDA, we began capitalizing our inventory costs. Prior to the capitalization of our inventory costs, such costs were recorded as research and development expenses in the periods incurred. As a result, our initial gross margins will look anomalous. However, had our pre-EUA manufacturing costs been capitalized, our expected margins would be in line with other biologics products approaching 80%. Operator, please open the call for questions.

Our first question comes from the line of Maxwell Skor from Morgan Stanley.

So based on some rough math, I'm getting to -- that you're expecting approximately, let's say, 30,000 patients on therapy through 2024, give or take. But could you provide any additional color regarding how you're getting to this number? Is it on the conservative end? What could potentially inflect or beat these expectations? And also, do you expect to record revenue in the second quarter?

What I would say is this initial guidance isn't constrained by any inventory or aspiration. It really reflects a few elements, one of which is we'll be the first monoclonal antibody that will be going through more traditional commercial markets versus previously, they were all commercialized using Advance Purchase Agreements and the U.S. government was the prime purchaser. As such, we are aware of the general dynamics in the broader U.S. health care system and making sure that we move through all of those elements, some of which can be bureaucratic and have various elements that you need to overcome. And so that's really the main factor for this. And as Jeremy mentioned, we'll provide updates as we move through those in the early parts of the launch, and why we're currently expecting that the significant portion of this revenue would come later in the year. Yes. And on your sales in Q2, yes, we would expect sales in this quarter, and we would provide that update per our sort of normal earnings guidance -- sorry, our earnings updates for the quarter when we get there.

And our next question comes from the line of Patrick Trucchio from H.C. Wainright.

Congrats on the progress with the launch. Just first, I'm wondering if you can tell us what proportion of the relevant patient population are covered at the time of this initial launch, and your expectations for covered lives as the launch progresses in 2024 and 2025. Secondly, can you talk further about the relevance of the reimbursement code, the HCPCS code and when you would anticipate to obtain that code from CMS? And is the achievement of your guidance in 2024 dependent on obtaining this code within a certain time frame? And then just lastly, if you could talk a little bit more about the scale-up of production from the CMO, maybe around doses that are able to be delivered in 2024 or if there's flexibility and the ability to -- for the CMO to ramp up production and meet demand if it exceeds your expectations.

Yes. So for the first question, Jeremy, you can chat about the covered lives and sort of how we anticipate that and sort of what we're thinking about for codes and CMS, and I'll cover the one about the scale-up of production.

Sure. So good question. We believe that given the sort of pricing sensitivity analysis we did, that we are in a good spot with -- in terms of not creating barriers to access overall. So we believe that commercial payers and CMS will cover this, and it's on the sort of cycle in which they would list it on their payer formularies, et cetera. So we don't believe there's going to be much obstacle to the patient population that's outlined in the fact sheet for reimbursement. On the question of the HCPCS codes, we expect that in a relatively short order. We have been engaging with CMS, and they have indicated they are working to get us that as soon as possible. So we don't expect that to be any hindrance on the guidance that we put out today.

Yes, as I would say, Patrick, with what Jeremy said, it's baked into our guidance that we provided for today and also our commentary about the different stages of the launch and working on the market access piece upfront. As it relates to the scale-up of production, as we've previously communicated, we have built up inventory, which we had produced at risk as we were preparing for the potential of an EUA. We have released doses fully available here. Now they're sitting in distribution and warehouses here. We have also, along the way, as we saw the process unfold and when we had better visibility into a potential EUA, pulled the trigger on some additional supply that will come on throughout the year. So yes, we can continue to sort of modulate that, but we have a variety of supply both available now as well as additional supply coming to us throughout the rest of the year.

[Operator Instructions] Our next question comes from the line of Michael Yee from Jefferies.

This is Karl Yang for Michael Yee. Just a few from us. First question is, what is the assumption in terms of annual cost? How many, I guess, doses are you considering for -- are you assuming for each patient? The second question is, what is your assumption on OpEx? How do you expect R&D to decrease, I guess, in terms of the buildup of the inventory previously? And how do you expect SG&A to go up? And the third question is, how do you think about seasonality with the product, especially in the first half of the year?

Okay. I can take a few of these. Bill, I'll turn over to you on some of the OpEx and SG&A related ones. So the assumption on doses per patient. So what we've looked at currently is -- and what we've stated is the penetration is really focused on that initial $485,000. It's this initial element of sort of as Max had calculated, whether it's the initial 30,000 people. What we're just saying is -- and as you've seen from the product profile is that there is the availability and potential for redosing every 3 months. And so that's going to be one of the elements that we continue to monitor and look at as we look at adoption and penetration. So at this point, it could be 30,000 people that have gotten the product one time or it could be less people who have gotten more products, more doses throughout the year. I think it's going to be one of those elements that we're really interested to take a look at and see as this progresses. And so we've started from the overall number of units and then looked at a couple of different scenarios that could get us there. Seasonality related to that, certainly, we've seen different ebbs and flows of COVID-19 disease. While there is certainly some seasonality associated with COVID, in particular, for this patient population, what we have noted is that many of them have reached out to us and talked about their concern or fear being out in public sort of regardless of whether we're in what the broader population considers a surge or not. And so there might be more general visibility COVID-19 disease in the fall and winter, but for these individuals, we don't see that there will be a significant impact in terms of spring, summer here and utilization of the product. It's certainly at least from the initial upfront use of the product. Yes. Bill, do you want to handle the questions on OpEx?

Sure. So we are not providing guidance with regards to actual OpEx cost. But as we alluded to, we are obviously going to be -- take measures to optimize our operating expenses for the year. The way to think about OpEx from a G&A perspective is, obviously, we've built out the infrastructure to be a commercial company. And so we look to -- again, we feel like we're well prepared in that front for commercial launch. With regards to R&D, we are going to be following a similar path with regard to what we have done this past year for 222 PEMGARDA in terms of clinical trials as well as looking at beginning stages of manufacturing for clinical trials, but also ultimately for commercial launch materials for -- in readying ourselves to be able to be positioned to advance our pipeline on -- with regards to the 2311 asset as well.

And our next question comes from the line of Evan Wang from Guggenheim Securities.

Great to see the rapid launch readiness. A few questions from me. The first 2 on guidance. Does issuing this initial guidance imply that you're confident that VYD222 or PEMGARDA, [ bulwarks ] it's activity throughout the remainder of the year? And then secondly, does the guidance bake in any assumptions on a second entrant? And then third question unrelated to guidance and more on R&D. For VYD2311, I guess, how are you planning on additional development with that program?

Yes. So as we mentioned previously, we have a significant amount of internal work in our discovery group that is utilizing a set of predictive modeling tools and looking at viral evolution. And so we continue to monitor that. JN.1, in particular, as we've seen, has been the dominant variant. We have looked at some of the different offshoots of that. We remain optimistic about the activity of VYD222, which is now PEMGARDA. And what we have based in our guidance is, yes, that it would remain active through the end of the year. It does not contemplate a second entrant. As it relates to ongoing planning and clinical activities, as Bill mentioned, we do have, as a part of our strategy, this serial monotherapy or this just continuous flow of monoclonal antibodies. That is what Invivyd strategy is for dealing with ongoing viral evolution. And so the next antibody is already being worked on. It's in preclinical currently and is expected to go through a similar clinical development program as we did with 222 and look at that. And so that would then allow us to have the availability of another antibody in the 2025 time period.

Just 1 follow-up for me. Just with respect to some guidance assumptions, I meant, does it assume entrance of a competitor antibody?

I see, understand. Sorry. This expects, currently, with the status of where we are today, which is that we're a sole provider on the market.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dave Hering for any further remarks.

Yes. Thank you all for joining. As you can see, it's a very exciting time. And we continue to move very rapidly here at Invivyd. I look forward to keeping you all apprised of our progress as the launch of PEMGARDA advances, and we bring this important product to moderately to severely immunocompromised individuals, who are in urgent need of protection from COVID-19. Thank you so much for joining.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.