Idorsia Holdings, a notable player in the biopharmaceutical industry, has reported a productive first half of 2024, with significant strides in its product pipeline and financial performance.
The company's CEO, Andre Muller, and CFO, Arno Groenewoud, shared these updates during a recent earnings call. Key highlights include a collaboration with Viatris, the approval of aprocitentan for resistant hypertension, and increased sales of QUVIVIQ, an insomnia treatment.
Financially, Idorsia saw a rise in revenue and a notable reduction in both R&D and SG&A costs. The company has also successfully restructured its convertible bond to extend its cash runway and is exploring further collaborations to bolster its pipeline.
Key Takeaways
- Idorsia's collaboration with Viatris on two development programs.
- Approval of aprocitentan for resistant hypertension.
- Increase in QUVIVIQ sales for treating insomnia.
- Decrease in R&D and SG&A expenses.
- Non-GAAP operating loss projected around CHF 400 million for 2024.
- Sale of APAC business to Nxera in July 2023.
- Cash balance of CHF 237 million as of June 30.
- U.S. GAAP operating loss expected to be CHF 320 million in 2024.
- Discussions on market access, commercial supply, and future plans during the Q&A session.
Company Outlook
- Idorsia plans to tightly control expenses and slightly reduce R&D OpEx guidance.
- The company is conducting a portfolio review to prioritize R&D efforts.
- Aiming to extend the cash runway and maintain independence.
- Efforts to get additional drugs approved and launched are ongoing.
- Intellectual property for QUVIVIQ extends beyond 2035.
Bearish Highlights
- Idorsia reported a non-GAAP operating loss of around CHF 400 million for the year.
- The company expects a U.S. GAAP operating loss of CHF 320 million in 2024.
Bullish Highlights
- Revenue increased to CHF 26 million, mainly from QUVIVIQ sales.
- R&D costs decreased by almost CHF 85 million due to cost-saving initiatives and the Viatris deal.
- SG&A costs decreased by about CHF 82 million.
Misses
- Despite progress, the company still operates at a loss, with significant operating losses projected for 2024.
Q&A Highlights
- Interest from pharmaceutical companies in partnerships for Idorsia's assets.
- $200 million earmarked for selatogrel and cenerimod deals, with $36 million already paid.
- QUVIVIQ is the only insomnia treatment in Germany without a four-week limitation, with negotiations to end in March 2025.
Idorsia's financial and strategic updates reflect a company navigating the complexities of the biopharmaceutical landscape with a clear focus on innovation and financial prudence. With the next scheduled update on its nine-month results set for October 2024, stakeholders and observers will be watching closely as Idorsia continues to execute its growth strategy.
Full transcript - None (IDRSF) Q2 2024:
Operator: Good day, and thank you for standing by. Welcome to the Idorsia Half Year 2024 Financial Results Webcast. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be the question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Weiss. Please go ahead.
Andrew Weiss: Thank you, Nadia. Good afternoon, good morning to you all. My name is Andrew Weiss. I'm the Head of Investor Relations and Corporate Communications here at Idorsia, and welcome to our webcast conference call to discuss our first half results 2024 today. On the call are our CEO, Andre Muller; and our Chief Financial Officer, Arno Groenewoud, who are both with me for the first time in their new roles to give you additional color on what we announced this morning. Then for the Q&A session, we will have our General Manager and President of Idorsia U.S., Tosh Butt; and our President of the Idorsia EUCAN region, Benjamin Limal. Next slide, please. Before handing over the microphone, I need to remind everyone that we will be making forward-looking statements. You have therefore been appropriately warned about the risks and opportunities of investing in Idorsia shares. With that, I hand over to Andre for his introductory remarks. Next slide.
Andre Muller: Thank you, Andrew. Good afternoon, good morning, everyone. It is 11 years at Actelion and Idorsia, I had several opportunities to be presenting to you. But actually, it's the first time as CEO of Idorsia. So it's good to be back on regular reporting cycles after the delay in publication of the full-year '23 and first quarter 2024, which was published just eight weeks ago. As a result, it's not surprising that there are no groundbreaking news, but I'm happy to be reporting that we are on track. We see activities we described at that time. I want to start with saying a very big thank you to Jean-Paul, who I'm sure is listening in. We owe him a big debt of gratitude for his leadership as CEO and as a long-term significant shareholder as he and Martin invested north of CHF 1 billion in Idorsia. Without him -- without them, I'm not sure we would be there. My immediate focus as CEO is, of course, getting the best possible deal for aprocitentan, making sure that we maximize the short to midterm potential of QUVIVIQ, and conduct a portfolio review to ensure our R&D priorities match also our funding situation. I'll give you more information on these activities later in the year. Until then, let's have a look at the highlights of this first half of 2024. First, we announced the Viatris collaboration for selatogrel and cenerimod. This deal secures the future of two of very promising development programs, retaining long-term shareholder value through a potential milestone and royalties. We have also secured the approval of aprocitentan. So TRYVIO in U.S., JERAYGO in the EU. We strongly believe that aprocitentan has a potential to revolutionize a serious and growing public health problem commonly known as resistant hypertension. Launch preparation is underway. And in parallel, we are actively engaging with potential partners, as I already alluded to. We have also restructured the convertible bond, which was originally due mid-July, hence extending our cash runway. Having secured the bondholders' agreement and the Swiss court decision, we are now waiting for the final confirmation, which is expected by the end of August. QUVIVIQ is making progress globally. We'll give a little more detail on U.S., Europe, and Canada. But as you can see here, our partner, Simcere, has also submitted an NDA in China. At the recent AGM, mid-June all resolutions were approved, including the new governance structure. I would like to thank our previous Board members who did not stand for reelection. So Jörn Aldag, Felix Ehrat, and Peter Kellogg (NYSE:K). I want also to welcome our new Board member, Bart Filius. And of course, congratulate all the other Board members who stood for reelection, which, of course, includes Jean-Paul, who is our new Chairman; and Mathieu, who is now the Vice Chairman and Lead Independent Board Member. And lastly, we've seen a new compound enter into clinical development. It's our first synthetic glycan vaccine to be tested for clostridium difficile infection. Next slide, please. So as you can see, a lot has been achieved in the first half, but there is still a lot to be done in the second half of 2024. We need to extend the cash runway. The best viable option is closing a collaboration with aprocitentan with potential partners. We'll continue to prepare for the launch of TRYVIO in U.S. We'll continue to increase sales for QUVIVIQ, and we'll continue to innovate. We'll go in more detail for some of these points. Next slide, please. At the end of June 2024, more than 155,000 U.S. patients have been treated with QUVIVIQ since launch. Almost 450,000 prescriptions have been dispensed and product has been prescribed by more than 45,000 health care professionals. The chart on the left shows the quarterly evolution of QUVIVIQ sales. The chart on the right shows how our sales force numbers have decreased in the same period. And we had to downsize the sales force to 100 sales reps, which we feel is now the right number based on the access we have and on our scheduled status. Having optimized our resources and our promotional efforts and adjusted our commercial approach towards a payer paid model, setting a new baseline for sales in U.S., I am pleased that we have been able to maintain demand for QUVIVIQ and even see growth in sales. We continue to remain hopeful that our citizen petition can lead to a rescheduling of the dual orexin receptor antagonist class for insomnia medicines. This would remove a significant barrier to prescribing QUVIVIQ in U.S. Next slide. TRYVIO. We are on track to make TRYVIO commercially available in early Q4 2024 and plan for a full commercial launch in early 2025. As you can see, commercial supply, REMS program, distribution network, first wave of MSL routine will be up and running by the beginning of Q4. As you know, aprocitentan is the first innovation targeting a novel pathway in hypertension in almost 40 years. And this needs as any innovation, physician education through the MSLs and the Congress that we will be attending during the course of this year. As a reminder, TRYVIO is once-daily tablet. It's one dose, it's easy to use for patients and easy to prescribe for physician. And very important, it can be used in patients with renal impairment. We've been encouraged by the initial conversation with payers who understands that TRYVIO is addressing a significant patient need. And that treated patients remain uncontrolled at much higher risk of serious cardiovascular events. Next slide. So moving to Europe and Canada. So see what we call EUCAN region. You remember that in Q4 2023, we had a CHF 2.4 million impact of the negotiation with the first AMNOG price negotiation in Germany. Apart from that, the sales have shown a steady increase since launch, and then you see the recent acceleration with CHF 3.5 million in Q1 '24 and CHF 6 million in Q2 2024. This is the effect of additional markets and it's also driven by a great performance in Germany, and now spending a launch in France, where we are starting to see a need for an effective safe insomnia treatment translating into a demand. It's still very early days in many countries, but I'm confident that we'll continue on this trend in the coming months, as we aim to expand access in key European markets. So let's have a look now how this access activities are progressing. Next slide, please. Germany. As you know, QUVIVIQ is now the only insomnia treatment that does not have four week limitation, meaning that we are able to have -- and now we are really having another round of negotiation, so called AMNOG 2 process, which should end in -- by the end of Q1 next year. In the U.K., QUVIVIQ is reimbursed, is recommended as a first-line pharmaceutical treatment for patients with chronic insomnia after or as an alternative to CBTi. Coverage through the ICBs, Integrated Care Boards, continues to grow and reach 78% by the end of Q2. France. QUVIVIQ, as you know was launched by the end of March 2024. As the first and only pharmacotherapy recommended for the treatment of chronic insomnia disorders. And as already said, we had an excellent launch in Q2. In the other countries, we have launched in the self-pay market. So Canada, QUVIVIQ is available to private market patients, since November 2023. Almost 70% of the private Canadian lives are covered, which represents approximately 55% of the insomnia market. In parallel, we are also working on the submission of QUVIVIQ to public Canadian payers with a possible decision in H1 2025. Switzerland was launched to the self-pay market in June 2023. And there are some ongoing discussions regarding reimbursement. Italy, we launched QUVIVIQ in November 2022, a self-pay market, again, with a restriction to a specialist, psychs and neurologists, which accounts for roughly 20% of the insomnia market. So the reimbursement Idorsia, but also the request for the expansion of the prescriber base to GPs have been also submitted in Italy. Austria, we very recently launched in the self-pay market. And our reimbursement Idorsia has also been recently submitted. In Spain, we launched in September 2023. Demand is high. Reimbursement Idorsia has just been submitted last week. And finally, for now, we are also discussing Sweden where Idorsia has been submitted in May of this year. And with that, I will hand over to our new CFO, Arno to take you through the numbers. He may be new to the position, but we've been working together for 10 years. And I can assure you that the finance are in very capable hands with Arno. So Arno, the floor is yours.
Arno Groenewoud: Thank you, Andre. Good morning, good afternoon to everyone following on the call. It's my pleasure to be speaking to you as CFO of Idorsia. Let's start by looking at the operating results. As you know, Idorsia sold its APAC business to Nxera, formerly named Sosei, in July 2023. Therefore, we show you half year 2023 as reported in green, and pro forma excluding APAC business in pink, for a better comparison. Compared to half year 2023 pro forma, the revenue increased to CHF 26 million, mainly due to an increase in QUVIVIQ sales from CHF 12 million to CHF 24 million. R&D costs were reduced by almost CHF 85 million to CHF 61 million, which is primarily due to a cost saving initiatives that we implemented at the end of 2023, and the Viatris deal. The first half of 2023 also included about CHF 30 million of R&D costs related to the Phase 3 programs of selatogrel and cenerimod, which are now borne by Viatris. SG&A costs were also reduced by about CHF 82 million, primarily due to a reduction in sales and marketing costs in the U.S. and [indiscernible]. This results in a non-GAAP operating loss of CHF 170 million, which is a reduction of more than 50% compared to the first half of 2023. Next slide, please. On this slide, we provide you with a split of Idorsia and partners business. The partners business includes gains and contract revenues from partners. The U.S. GAAP EBIT of CHF 64 million mainly includes the non-GAAP EBIT of CHF 170 million, CHF 8 million depreciation and amortization, CHF 10 million stock-based compensation, and CHF 125 million gain resulting from the Viatris deal. Next slide, please. We started the year with approximately CHF 145 million in cash. Net cash outflows from operations were CHF 170 million and CHF 8 million working capital and other movements, which are mainly below EBIT. We received a $350 million cash inflow from the Viatris deal, which is CHF 308 million, of which $200 million are committed to fund the ongoing Phase 3 trials of selatogrel and cenerimod in the next three years. In the first half of this year, we paid CHF 36 million for these programs. This results in a cash balance of CHF 237 million as of June 30. Next slide, please. We tightly controlled our expenses in the first half, which enabled us to slightly reduce the R&D OpEx guidance, improving the overall outlook for 2024. We now expect the U.S. dollar -- U.S. GAAP operating loss to reach CHF 320 million, which includes a one-off benefit of CHF 125 million from the Viatris deal and a non-GAAP operating loss of around CHF 400 million, excluding contract revenues and the one-off benefit from the Viatris deal and this all unforeseen events excluded. And now I'll hand over to Andrew to open the lines for the Q&A. Next slide, please.
Andrew Weiss: Thank you, Arno. Thank you both for your prepared remarks, and now we have time to address your questions. As mentioned at the beginning, we will now be joined by our President of the U.S. organization, Tosh Butt, and by our President of the EUCAN region, Benjamin Limal. Welcome. Knowing that today is a rather busy day in terms of health care reporting, let's see how many questions we're going to be getting. Operator, please open the lines.
Operator: Thank you. [Operator Instructions] And now we're going to take our first question, and it comes from the line of Sushila Hernandez from Van Lanschot Kempen. Your line is open. Please ask your question.
Sushila Hernandez: Yes, thank you for taking my questions. I have a few, if I may. What kind of field force do you expect to need for aprocitentan in the U.S.? And also what kind of data will help payer discussions in the U.S. for aprocitentan? And also, what would you consider the optimal deal for aprocitentan in Europe?
Andrew Weiss: Thank you, Sushila. So on the field force, Tosh, do you want to -- do you care to already give some granularity at this point in time?
Tausif Butt: Yes. Andrew, thank you for the question. Yes. So I don't want to share the exact full side is that we're planning at this stage because that's still subject to ongoing discussion based on how much of the market we want to cover. But what I can tell you is, yes, we continue to do a thorough in-depth analysis of all the prescribers for uncontrolled resistant hypertension patients who are taking one, two, three or more antihypertensives of different classes and as blood pressure remains uncontrolled, and we will be sharing details about our field force makeup and field force size closely towards the actual commercial launch. But we will have a field force that adequately covers the high-prescribing cardiologists, high-prescribing nephrologists and where appropriate, high prescribing primary care physicians.
Andrew Weiss: Thank you, Tosh. Andre, do you care to speculate on any kind of apro terms at this point in time?
Andre Muller: No, we never speculate on terms. That's the best way not to be disappointed. Sushila, your question was what is the ideal deal. I would say rather than trying to get an ideal deal will try to get the best possible deal. And at the hindsight, it was good to restructure the convertible bond, which would have matured in mid-July because this would have forced us to take certainly suboptimal deal with potential partners. So best possible to your ideal/best possible is first to select the right partner and get the right structure. And if we have the right partner with the right structure we should be able to get good terms, but only the future will tell, and I hope we'll be able to update you in the coming months with an announcement regarding this aprocitentan deal.
Andrew Weiss: Thank you, Andre. Operator, next question please.
Operator: Yes, of course. And now we're going to take our next question and the question comes from the line of Joris Zimmermann from Octavian. Your line is open. Please ask your question.
Joris Zimmermann: Yes, thank you. Thank you for taking the question. So I have a first question as a follow-up on the question on aprocitentan. And here, just to clarify and verify. So the U.S. launch it's definite that you're going to commercialize in the U.S. yourselves. That would be on that one. And then maybe on the pipeline or the Idorsia led pipeline, you've mentioned that new -- or the asset that has newly entered into clinical phase, it's a synthetic glycan vaccine. So maybe you can share a bit more details here on the motive -- on the asset itself, but also on the medical need in that patient population and if possible already about the market potential that you see? Thank you.
Andrew Weiss: Thank you, Joris. Andre, do you want to add some granularity on how we're looking at apro and launching and how that pans into potential partnership discussions?
Andre Muller: Yes. No, I understand it sounds a little contradictory to say. We are looking for collaboration and prepare for the U.S. launch. But based on the discussion that we have, collaboration does not necessarily mean out-licensing. We have other structures, which could be possible, call it, SPV, a joint venture, profit sharing. And in order to do so, we need also to make sure that we do not delay the availability of the drug to a patient, because there's a huge need. There are a lot of truly resistant hypertensive patients in the U.S. So that's what we are doing in U.S. In Europe, as you know, the approval was a little more recent. We do not plan to launch. Our commercial teams are fully dedicated to QUVIVIQ and there's a lot on their plate in each and every European and Canadian countries. So here, either we have a global deal with partners that have a global organization or we would go for a regional deal. And here again, for Europe, we have engaged with some potential partners for a regional deal. I hope it answers your question.
Andrew Weiss: Thank you, Andre. Otherwise, I'll have a shot at the Vaxxilon, it's the vaccine's question. So the vaccine comes from an acquisition that stems back from the early days in Actelion and has moved on to Idorsia and comes from Vaxxilon. The technology behind that is something that comes out of the Max Planck Institute up in Berlin. And it basically in a simple term, you use a scaffold in the form of a sugar chain and you strap on the epitopes on to that for the immune specific expression that you want to generate the immune response such as you have in a vaccine. The target here is C. diff, so Clostridium difficile, very specific bacterial environment that resides in our gut and that helps us in our digestive process. And if going out of control will lead to some severe ramifications. So there is a huge unmet medical need both from a therapeutical side as well as from vaccines, i.e., immunological point of view, and this is what is moving forward here. Once we do have more results, then we'll try to flush out in more detail than the science behind it.
Andre Muller: Thank you, Joris.
Operator: Thank you.
Andre Muller: Operator, next question please.
Operator: [Operator Instructions] And now we are going to take another question, and the question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Your line is open. Please ask your question.
Sushila Hernandez: Yes, thank you. Just a follow-up question on your R&D strategy being the move of the vaccine into Phase 1. Will you continue to add earlier stage assets to your pipeline? While I would like to say you're looking for a partner for later stage assets, could you please elaborate on that? Thank you.
Andrew Weiss: Thank you, Sushila. So as I understood the question, you want to have some granularity as to what we're doing with our earlier stage pipeline, are we looking for partners in this field or are we doing all on our own. Andre, do you care to share some granularity as to how we think about it, not what we are -- where we are at this point in time exactly?
Andre Muller: Yes. As I told you, the portfolio review that we are conducting and now will give us the R&D priorities. But this is also depending on our funding situation. So we need to be a very nimble here. And we'll tell you more as we advance in the second half of 2024. If we want to secure the long-term future of Idorsia and sets year objectives, as a Board starting, of course, with Jean-Paul is fully aligned with this long-term objective we need to be able to get other drugs approved and that we would be in a capacity to a launch. And as you know, the IP of QUVIVIQ goes slightly beyond 2035. So we have time to do so. And in order to do so, that's why we kept despite the significant downsizing of the drug discovery and clinical team, we kept an R&D organization for CECL purpose, i.e., being able to discover, develop and with the approval, commercialize additional assets by ourselves. So that's the objective. At the end, I would not say this asset is core, this asset one is liable to be partnered. What is core is to extend the cash runway and to remain independent. And all the rest will be adjusted to this core strategic priority.
Andrew Weiss: Thank you, Andre. Operator, next question please.
Operator: Thank you. And now we're going to take the next question, and it comes from the line of Joris Zimmermann from Octavian. Your line is open. Please ask the question.
Joris Zimmermann: Yes, thank you. Thank you for taking some more questions. And if we can maybe just stay a little bit with the pipeline for a moment. Andre, if I understand you correctly, what you're saying is that this portfolio review will also affect the current kind of clinical pipeline. So it might be a bit difficult for you, but can you share like high-level time lines on next inflection points in that regard? And then a second question, maybe that's for Benjamin Limal. On the AMNOG, like the second round of AMNOG procedure and discussions, I think you said you mentioned Q1 '25 as the next round where you get -- or a point in time where you get feedback. Do you expect any further repayments that might be due to the discussions?
Andre Muller: So Joris, to your first question on the pipeline, should we keep it? Should we partner some of the assets? I would say we received for some of the assets, some inbound calls from large reputable pharmaceutical companies. And of course, we are open to a discussion with such potential partners. And -- but as I told you, the main driver now, yes, we have earmarked $200 million of which CHF 36 million has been already paid in connection with Viatris deal for selatogrel and cenerimod. We will have a few inflection points on the other compounds, be it Lucerastat, be it CXCR7, be it CXCR3, be it all the others. And we need to make sure that we can dedicate the operating and financial resources, we see most promising assets to see next inflection point or next milestone. So such an exercise, which is ongoing. As you understand, it's really depending on the resources that we will manage to get from the aprocitentan deal. Because all the others would not move the needle significantly. Benjamin, you take the question regarding Germany and AMNOG 2 after our meeting with the German team, I think it was two weeks ago together.
Benjamin Limal: Yes, exactly. Thank you, Andre. As mentioned, QUVIVIQ is now in Germany, the only insomnia treatment that does not have the four-week limitation. So that's why we have submitted [indiscernible] negotiation, which ended in December 2023. We have submitted our new dossier in March. So the negotiation will end in March 2025. In this second round of negotiation, QUVIVIQ will be compared to best supportive care because there is no other drug that is approved beyond four weeks. And so we will know about the benefit rating in September, and then we start the six months of negotiation, we are confident that we can keep the price at current level in Germany.
Andrew Weiss: Thank you, Benjamin. Operator, are there any more questions?
Operator: There are no further questions. I would now like to hand the conference over to your speakers for any closing remarks.
Andrew Weiss: Thank you, Nadia. If this is the case, then this concludes our call for today. Thank you for your ongoing interest in Idorsia. And we look forward to speaking to you again latest at our next schedule of events, the nine-month results 2024 that are forecast to be on the 29th of October. Operator, please close down the lines.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.