Ipsen S.A. (IPN) Earnings Call Transcript & Summary

Hello, and welcome to Ipsen's conference call and webcast on year-to-date 2024 sales. I'll now hand you over to David Loew, Ipsen's CEO.

Good afternoon or good morning, everyone. Welcome to Ipsen's year-to-date and third quarter sales update call. As you just heard, I'm David Loew, Chief Executive Officer of Ipsen. And it's a pleasure to take you through the progress we are making this year. Please note that our presentation is available on ipsen.com. Please turn to Slide 2. Before we begin, here is our safe harbor statement, which outlines the routine risks and uncertainties contained within this presentation. Also any commentary on growth you'll hear today will be based on constant exchange rates unless stated otherwise. Please turn to Slide 3. I'm going to take you through our brief presentation and then our CFO, Aymeric Le Chatelier; and our Head of Research and Development, Christelle Huguet will join me to answer your questions. Let's begin by taking a look at today's highlights, please turn to Slide 4. The highlights today center on strong growth momentum and further pipeline progress. Total sales grew by 8.6% in Q3, and by 9.2% in the first 9 months with notable performances that include Dysport and Bylvay. Our 2 biggest launches of the year, IQIRVO and ONIVYDE are also on track. Turning to the pipeline. We're happy to achieve 2 European Union approvals on the same day last month, namely IQIRVO in second-line PBC and Kayfanda in Alagille syndrome. We also filed Cabometyx in the European Union for the second line plus treatment of neuroendocrine tumors following the publication of excellent results from the Phase III CABINET trial. Please turn to Slide 5. Looking further at our sales performance, the growth of rare disease stands out driven by the continued success of Bylvay as well as the first-time contribution of IQIRVO. Neuroscience dominated by Dysport delivered a strong performance, while oncology has also been performing nicely this year, partially reflecting the growth of Cabometyx. I now turn to oncology in more detail. Please turn to Slide 6. Starting with Somatuline, sales were up by 5% in the third quarter. In the U.S., adverse pricing has persisted, though demand remains stable with the effect of a loss of share offset by robust market growth. The anticipated penetration of the U.S. generic has been more limited than expected and that may continue for the rest of the year. In Europe, we again took advantage of the generic supply issues. Cabometyx sales were up by 11% in Q3 with a strong volume performance in both first and second-line renal cell carcinoma. Rest of World represents around 1/3 of Cabometyx sales, and that region grew by 18% in the quarter with a particularly good performance in Latin America. The competitive sales were down by 5% in Q3 as we are seeing increased competition and pricing pressure in Europe, while in China, the market remains challenging. We continue to see underlying global volume growth, however, and we are anticipating more favorable conditions next year. Finally, Tazverik sales rose by 19% despite a competitive environment in the third line indication, which is expected to identify. To complete the focus on oncology, I'd now like to turn to the launch of ONIVYDE in first-line pancreatic cancer. Please turn to Slide 7. The launch of Onivyde in first-line pancreatic cancer is on track, and we are making good progress with U.S. sales up by 26% in Q3. We're clear about the significant potential of Onivyde over time with Nalirifox having a favorable profile in comparison to the 2 other regimens being used. We have seen in many other cancer types that this needs time to play through. But we are encouraged to see that we have already performed well, especially in the top centers. Weekly demand has been growing, as you can see. And by the end of July, Onivyde's share of new patient starts in first line had already reached 7%. Indeed, nearly 300 U.S. physicians have initiated patient treatment with Nalirifox in 2024, while we have delivered 24% sales growth in the top 25 accounts since launch. We believe the innovation this regimen brings to patients based on results from the first positive first-line metastatic pancreatic Phase III trial in over a decade, differentiates it from other first-line treatments. It's also worth noting that real-world overall survival data will likely read out in early 2027. Now let's turn to the performance in rare disease, please turn to Slide 8. Bylvay continues to grow nicely with sales in Q3 of EUR 37 million. In the PFIC indication, we have expanded the patient population in the U.S. and achieved more reimbursement in other markets, most recently in Korea. The uptake in Alagille syndrome continues to grow in the U.S., and over time, we anticipate sales in Europe following the recent approval of Kayfanda in the European Union. Sales of Sohonos have proved more challenging and amounted to only EUR 3 million in the quarter. There have been a number of adverse factors affecting the low patient uptake, including the impact of recruitment into other trials. The limited label and the lack of ex U.S. approval also continue to affect the level of sales. I'd now like to complete that rare disease performance have moved to the launch of IQIRVO. Please turn to Slide 9. The launch of IQIRVO is on track. Following U.S. approval in June, we delivered EUR 8 million of sales, and we have consistently grown the number of reimbursed U.S. patients on therapy. Strong awareness is being generated through different channels and initial feedback from doctors and patients have been very positive. In a market driven by efficacy, IQIRVO's excellent results of patients achieving a biochemical medical response versus UDCA alone has been impactful on the growth of prescriptions. We're achieving an excellent sales mix with the vast majority of IQIRVO patients being second-line treatment naive with a large reservoir of patients still being uncontrolled on UDCA and eligible for IQIRVO treatment. Also, we're already seeing 17% of IQIRVO patients being treated at initiation between 100 and 170 ALP, which points to an attractive market opportunity. Encouragingly, more than 50% of commercial lives are already covered in the U.S. And following the recent European Union and U.K. regulatory approvals, IQIRVO has already been launched in Europe with reimbursement and sales in Germany recorded this month. Let's now complete the sales review with a focus on this Dysport. Please turn to Slide 10. The growth of Dysport is unrelenting with sales up by 11% in the third quarter. Aesthetics is performing well, with sales up by 18%, and we have seen continued growth in most territories, augmented by share gains in countries such as the U.S. and Brazil despite an element of market softening in the U.S. European markets have remained robust with a good performance. In therapeutics, sales declined by 1% in Q3, primarily reflecting unfavorable phasing and inventory. Underlying dynamics remain attractive, however, with share gains in spasticity driving continued growth in most markets. Indeed, we are delighted with how well Dysport has performed overall this year, and we look forward to another year of growth in -- that concludes the review of sales. Let's now turn to the pipeline. Please turn to Slide 11. You can see a well-balanced portfolio across the therapy areas and phases of clinical development. In addition, we anticipate a number of our preclinical assets entering Phase I in the coming months. I will now pick out some highlights from the clinical pipeline. In oncology, we have 5 major ongoing clinical trials, with tovorafenib recently added to the pipeline in both first- and second-line pediatric low-grade glioma. In rare disease, we have trials across liver disease and FOP, while in neuroscience, we look forward to aesthetic long-acting neurotoxin Phase II data next year. Please turn to Slide 12. The next 2 years will see a number of key data readouts. In 2025, we anticipate filing the tovorafenib FIREFLY-1 data, while we expect the readout from the pivotal FALKON Phase II trial of fidrisertib in FOP. 2026 will be a very busy year for the pipeline with several anticipated Phase III data readouts, including for Tazverik, IQIRVO and Bylvay as well as migraine trial read outs for Dysport. Please turn to Slide 13. Turning to financials. And based on the performance in the first 9 months of the year, we are today pleased to increase our full year guidance further. We now expect total sales to grow by more than 8% at constant exchange rates as compared to our previous guidance of growth above 7%. Furthermore, we now anticipate a margin of more than 31% of total sales. Please turn to Slide 14. In conclusion, our strategic success continues to deliver, and we are set for strong financial and pipeline results this year. Our attractive top line continues to grow, driven by the powerful combination of our therapy areas as well as the contribution from the recent launches. Our R&D organization is advancing the early and late-stage pipeline well, and we look forward to many milestones to come, particularly in 2026. And finally, we have increased our full year guidance again driven by real momentum in our strategic progress. Please turn to Slide 15. So Christelle, Aymeric and I now have the time for your questions. Operator, over to you.

And your first question today comes from the line of Florent Cespedes from Bernstein.

Florent Cespedes from Bernstein. One quick question on 2025. As this year, your performance is a little bit better than expected and driven by the better resilience of your key products. I was just wondering how do you see the dynamic there with the new products growing? And also how -- if you could give us a little bit of color how do you see the impact on the operating margin and more pressure from generics and the launch of -- the recent launch of products.

Thank you, Florent. I mean, as you know, we are not giving 2025 guidance yet. So you have to be a bit patient on this one. Clearly, as you have seen, we have updated our guidance on 2024, which is indeed better. Your question regarding the new products. As we laid out to you in the slides that I have just gone through, we are fully on track on Onivyde, on IQIRVO. I think the feedback that we're getting from the market is positive. So we are also positive for 2025, where this dynamic is going to continue. Depending also on what happens a bit on Ocaliva, where you have seen that the FDA has taken a bit more time to come back on the Advisory Committee, and wherein the Europe, Advanz has started the litigation against [ AMR ] regarding the withdrawal of Ocaliva, it depends a bit what's going to happen there as well if that curve is actually going to accelerate if Ocaliva will be withdrawn. Or if Ocaliva does not get withdrawn or there will be a compassionate use, we would be on the pickup that we see now. In terms of operating margins regarding generics, I can have Aymeric answer to you this question.

Yes. So thank you, David. So we're not going to provide 2025 guidance ahead of February. As you know, in December last year, we guided for a progressive margin enhancements, which will be driven by all the new products and our ability to overcome the progressive [ erosion ] of Somatuline. I think you should expect that in 2021, we're going to continue to invest in the pipeline and you've seen the presentation from David on the pipeline. And we're going to also continue to support the launches, which are also a very important part of the midterm future for Ipsen.

And your next question comes from the line of Shan Hama from Jefferies.

Just 2 from me, please. So how do you expect the generics landscape just matching to develop going into 4Q, and then during 2025, assuming that it's very unlikely that the beat will continue to be driven by lower-than-expected erosion? And then just a second question, please. Given the recent weak consumer demand with particular relevance to the U.S., how are you viewing the aesthetics market for Dysport, especially with your partner?

Thank you, Shan. On the generics on Somatuline, I just would like to come back to what we said actually in our Capital Markets Day in 2020. It is a very difficult to produce product. And this is basically what we are observing now where we have seen Advanz not being able to supply correctly the European markets, and where Cipla is also struggling now. We have to keep in mind that both of them are sourcing from Pharmathen. Pharmathen also is going to start producing octreotide generic, which has been approved in the U.S. for Teva. So it's all coming from the same producer. But it's very hard for us to tell you with precision are they going to be able to fix those underlying problems, et cetera. I think that's a question you would have to ask to Pharmathen. Of course, for us, we are ready to supply Somatuline, we have added shifts. We see good demand. So that's the current situation, but we have to anticipate that at one point, they're going to potentially figure out how to improve their production. And as we have communicated in the past, we also anticipate a scenic -- second generic entrant probably mid next year, probably with Sun Pharma launching potentially in Europe and eventually also in the U.S. So that is included in our guidance. Now, of course, we have seen a better performance because we have seen the stock [ out ] problems. On the consumer demand, what we see with Dysport in aesthetic is that Galderma is gaining market share in the U.S. while the market has softened a bit. But -- so we see good growth on this market for Dysport, and we are very pleased with it. Thank you, Shan. Next question, operator.

Your next question comes from the line of John Priestner from JPMorgan.

John Priestner from JPMorgan. So 2 for me, please. The first one on IQIRVO sales. So they were slightly behind consensus estimates for Q3, and they continue to be broadly in line with the prescription trends. So is this a good metric that we can forecast off going forward? And how do you really see that launch trajectory developing next year? And then maybe another one on IQIRVO. So you said that you've got about 50% of U.S. lives covered now. So how do you really see the reimbursement landscape playing out in the U.S.? Do you expect insurance lines to cover both IQIRVO and [ iliad delsey ]? Or could it be that one product may get a preferred status. And I guess, it would be useful to hear any kind of initial feedback you have from the insurers.