Pharming Group N.V. Q1 FY2024 Earnings Call

Good day, and thank you for standing by. Welcome to the Pharming Group N.V. Q1 2024 Results Conference Call and Webcast. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sijmen de Vries.

Thank you very much and welcome, ladies and gentlemen, to our first quarter results conference. I'm here with my three colleagues, in order of speaking, Stephen Toor, our Chief Commercial Officer, who is joining us from our New Jersey office; Dr. Anurag Relan, our Chief Medical Officer, joining us from our U.S. office; and Jeroen Wakkerman, our Chief Financial Officer, who's based with me here in Leiden. Before I begin, I would like to point out our forward-looking statement slide, which outlines that we will be making forward-looking statements today based on our current plans and insights regarding the current market circumstances. Actual results may differ, so please do not rely solely on these statements. Now, moving to the presentation, we are building a leading global rare disease biopharma company based on three pillars. First, our product RUCONEST, which has been on the U.S. market for nearly 10 years and had an 8% growth this quarter compared to last year. We continue to see increasing numbers of prescribers and patients, and we expect this trend to continue. Next, Joenja, the product we in-licensed from Novartis, has had a successful launch in the U.S., generating $9.6 million in sales this quarter, with a total of $28 million in its first 12 months. We're also pleased to have received our second approval in Israel recently. Lastly, we are looking into developing additional indications for leniolisib. The total revenue guidance for this year is between $280 million and $295 million, driven by Joenja and supported significantly by RUCONEST.

Thank you, Sijmen. If you could go to the next slide, please. RUCONEST's unique product features and exceptional customer service have helped maintain its strong position despite an evolving treatment landscape. In 2023, we experienced solid growth in prescribers, new patients, and sales, overcoming reimbursement related challenges in Q1 due to lower patient out-of-pocket costs. We ended Q1 on track to achieve the revenue guidance for RUCONEST, which projects low to mid-single-digit growth this year. In addition, the launch of Joenja has been robust; we now have 83 patients fully reimbursed, with more in process and over 50 additional patients being worked on. Joenja is set to have additional growth potential as we expand our efforts internationally and continue our patient-finding strategy. We expect to see sustained momentum as we convert diagnosed patients into treatment. Our continued focus on patient education and outreach internationally means that we are prepared for future launches and are optimistic about the mid- to long-term opportunities.

Thanks, Steve. Moving to the next slide. We are excited about the strong launch of Joenja in the U.S., reflecting an unmet need for patients with APDS. Joenja is approved for adult and pediatric patients aged 12 years and older, based on data from a successful randomized placebo-controlled study. Safety information shows Joenja has been well tolerated. We are also committed to addressing the long diagnostic journey that many patients experience. Our initiatives include enhancing medical education about APDS, making genetic testing available at no cost, and working closely with patients and their doctors to streamline diagnosis. Additionally, we are focused on characterizing variants of uncertain significance and will launch programs to assist with functional testing. As a result of these efforts, we have seen positive trends in ongoing international and pediatric studies, with a number of regulatory reviews pending.

Thank you, Anurag. For Q1 2024, revenues increased by 31% to $55.6 million, driven by the U.S. launch of Joenja and growth from RUCONEST, which saw revenues increase by 8% to $46 million. Joenja revenues reached $9.6 million, representing a 21% increase versus Q4 last year. We expect to achieve our total revenue guidance for 2024, while gross profit also increased in line with sales. Our operating expenses increased as planned to support the launch of Joenja, although we anticipate stable OpEx levels going forward as we balance investments in growth and preparation for future launches. Our overall cash position decreased slightly to $203.5 million, accounting for negative cash flow primarily from operating activities.

Thanks, Jeroen. To summarize, we maintain our revenue guidance of $280 million to $295 million for the year, driven by the ongoing efforts to find more APDS patients both in the U.S. and abroad. We expect significant advancements from the MAVE experiment by year-end, leading to a bolus of new patients eligible for therapy next year. Clinical trials are progressing well, especially in pediatric studies, and we anticipate upcoming regulatory actions in various countries outside the U.S. Lastly, our active search for in-licensing opportunities in clinical stage rare disease products will continue. Thank you for your time, and we look forward to updating you in our next call in August.

Thank you. We will now take the first question from the line of Christian Glennie from Stifel. Please go ahead.

Thank you and thanks, guys for taking the question. Three questions, please. The first one would be on Joenja in the U.S. Just to understand a bit better the sort of potential moving parts here in terms of patient numbers. You talked about 83 being on treated therapy as of March 31, but that compares to 81 at the end of December. So, just a net two additional, but maybe there's some additional patients that have come on, but then some have dropped off and then maybe some come in around the duration of treatment that you've seen so far, given that you will now have some patients potentially who've been on this since they've launched 12 months ago. So, just a better understanding of the patient dynamics there, and what to expect through the rest of the year?

Steve, would you be so kind?

Sure. Thanks, Christian. So, we actually had 81, added four new patients in the quarter but two dropped out—one was post-transplant and unfortunately passed away unrelated to Joenja, and the other was due to an unknown adverse event. So, the net of that is 83. We also diagnosed or have diagnosed 15 more patients during that quarter who are currently being processed for therapy. So, as it stands right now, we're on track to meet our goals by year-end.

Thanks, Steve. I think as with all these ultra-rare therapies, you will see some lumpiness in the sales, hence the quarterly fluctuations.

Have you got— I mean, is the working assumption that the majority of patients continue to be on therapy or if you've got an average duration of treatment that you can quote at the moment?

People stopping therapy are few and far between based on what we see.

We see continued very high compliance with the product. We've seen that throughout the clinical development program and we see infrequent discontinuation.

Then the second one would be on leniolisib in Europe, flagging ongoing review with the AMA and obviously expecting a CHMP opinion. Just wanted to try and understand a little bit as much as you can tell what some of these issues could be or relate to? Do you have any outstanding issues there? And when you say you expect to be on the agenda for May is that's not necessarily the same thing as being up for an opinion in May. I just want to clarify what your expectation is for the May Committee?

Anurag, would you be happy to answer that question?

Sure. We do expect to be on the CHMP agenda for their meeting at the end of May for the MAA. That's our expectation, but we will wait for the CHMP feedback to confirm that.

So, we should be expecting Joenja— that's your expectation, Joenja will be up for an opinion in May?

That's correct.

And then, just finally on the named patient rollout, obviously, 1.1 million. You said that will continue to grow. Can you give us a sense for the growth there through the rest of the year? And also, the sort of the prices that you're getting for these patients? Thank you.

Steve, would you like to comment on that?

The prices are generally in line with the U.S. price, sometimes with a slight discount. As for numbers, we don't necessarily forecast NPP as that is driven heavily by discussions between the physician and the local authorities. However, we expect that as the product becomes better known and its impacts are understood, more patients will benefit while we await approvals. But there's no specific patient forecast due to its doctor-driven nature.

Thank you for taking my question. Also one on Joenja and patient findings. You see that there are 15 diagnosed patients in Q1. So, how many of these patients do you expect to be converted to paid patients? And also on operating expenses, are these the levels that we can expect throughout the year? Or are you foreseeing any increases or decreases compared to this quarter? Thank you.

Stephen, would you like to answer that?

We expect the majority of those patients, if not all, to transition to paid therapy. We haven't had any rejections thus far, so I expect that all those patients will come online as we continue.

Jeroen, what do we expect for operating expenses?

I would expect OpEx to slightly increase in the next quarters, as we continue to invest in Joenja across both U.S. and ex-U.S. markets and also to support the overall business growth.

I just want to start at the end of your written comments today because more on curiosity. I mean, obviously, it's not impactful of your investment case. But you did disclose that OTL-105 with Orchard is being discontinued. So, just curious if—two things. Is there anything technical or scientific that impacted the decision to discontinue the program? And are there any payments either way for the termination? And will you be potentially looking for an additional or an alternative gene therapy approach for the future?

All right, Joe. First, no significant payments. Secondly, there was always a high hurdle involved technically. It was associated with the ability to generate sufficient C1 inhibitor protein and a non-toxic conditioning regimen development. Those were high hurdles. At the time, we also did not have the opportunity to develop leniolisib. We are moving forward with a Phase II study for leniolisib and exploring more indications, which are promising in the near market without competitive threats. We are actively seeking clinical stage rare disease opportunities.

On RUCONEST, sort of a two-pronged question. How would you describe the first quarter impact with regard to insurance resets that are usually expected? How much did that impact at least just for the first quarter to be able to get back on trajectory?

Let's go to Steve for more insight.

The prior authorizations in Q1 went smoothly this year after a challenging experience last year. Patients' out-of-pocket costs dropped significantly, resulting in only half the impact that we saw in prior quarters, enabling us to navigate the reauthorization period well. Overall, while Q1 traditionally shows fluctuations, this year's process was particularly successful.

Really nice launch going on with Joenja. But I just want to revisit a previous question on the first quarter fluctuations. Are you seeing a large drop-off from Q4 to Q1? What exactly happened in the first quarter? Can we expect this pattern going forward?

Hartaj, as always, the first quarter typically results in some lumpiness due to prior authorizations.

Indeed, most Q1s tend to experience some decline due to the reauthorization process. We were prepared this year, and the reauthorizations went well with only a slight impact from prior challenges. Expect some drop, but we do not foresee the extensive drops observed in previous years.

If you're expecting significant revenue increases this year, should we expect OpEx to grow at the same rate, or might there be some operating leverage?

Jeroen has mentioned we expect OpEx to increase slightly in upcoming quarters due to our investments in Joenja, but we are not pursuing profitability this year as we focus on growth and expansion.

Can you tell us when to expect a readout from the Phase II design?

The Phase II study is conducted at a single center—the NIH. We expect to enroll patients rapidly and foresee reading results in 2025.

Just first of all, regarding Joenja, you've seen more diagnoses through Q1, but there hasn't been movement in patients on therapy. Are we seeing an underlying dynamic where you might have treated the most severe patients first?

Anurag, would you like to address that?

There was an initial bolus of severely ill patients coming from the clinical trial program. APDS is indeed serious, and we aim to continue educating doctors and patients on the disease.

Is there any sort of feedback on how dosing might differ for PIDs?

We are starting with a lower dose for the PID study than Joenja, but we believe we're in the right dosing range without the need for stronger suppression.

Thank you. We will now take the next question from the line of Joe Pantginis with H.C. Wainwright. Please go ahead.

On the OTL-105 program, can you provide insight into the decision to discontinue and any alternative gene therapy approaches you may be exploring?

No significant payments regarding the discontinuation. Challenges stemmed from high technical hurdles associated with generating a sufficient C1 inhibitor and non-toxic conditioning regimens. Our focus is now on leniolisib with exciting opportunities ahead, seeking clinical stage rare disease products.

This concludes today's conference call. Thank you for participating. You may now disconnect.