Biohaven Pharmaceutical Holding Company Ltd

NYSE:BHVN

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, and welcome to the Biohaven Pharmaceutical’s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference will be recorded. I would now like to hand the conference over to Caroline Dircks from Biohaven. Thank you, Caroline. Please go ahead.

[Caroline Dircks, Vice President, Corporate Operations]

Thank you, and welcome to the Biohaven’s fourth quarter and full year 2021 earnings call. Speaking on today’s call are Dr. Vlad Coric, our Chief Executive Officer; Matthew Buten, Chief Financial Officer; BJ Jones, Chief Commercial Officer; and Dr. Elyse Stock, Chief Medical Officer. Also speaking on today’s call, Dr. Michael Bozik; and Dr. Steven Dworetzky, who will be joining Biohaven as President, Biohaven Labs and Senior Vice President, Biohaven Labs, respectively; and Cliff Bechtold, President and General Manager, Biohaven Ireland. We are also pleased to announce the addition of Jennifer Porcelli to Biohaven Pharmaceuticals as Vice President, Investor Relations. Earlier this morning, we issued a press release announcing the fourth quarter 2021 highlights, and a summary of year-end results. A copy of this press release can be found on our website at biohavenpharma.com, and we will file our Form 10-K later today. Before we begin, let me remind everyone that today’s discussion contains forward-looking statements based on the environment as we currently see it and include risks and uncertainties. A list and description of risks and uncertainties associated with an investment in Biohaven can be found in the company’s filings with the U.S. Securities and Exchange Commission. Please be aware that you should not place undue reliance on any forward-looking statements we make today. For this call, we will focus on non-GAAP financial measures. Detailed descriptions of these non-GAAP measures and reconciliations to the most comparable GAAP measures can be found in our SEC filings. An archive of today’s call will be posted to Biohaven’s website in the Investor Relations section. With that, I will turn the call over to our CEO, Dr. Vlad Coric.

[Vlad Coric, Chief Executive Officer]

Thank you, Caroline. Good morning, and thank you to our investors for joining the year-end fourth quarter earnings call. Fourth quarter 2021 has been another standout quarter in what was simply an exceptional year for Biohaven. NURTEC ODT has become the number one prescribed migraine treatment in its class, allowing patients and doctors the ability to customize a single therapy to treat and prevent migraine. Business performance continues to exceed all expectations with 2021 year-end day sale revenues of $463 million in net revenue and over 1.6 million prescriptions since our launch. Our strong revenue growth highlights the value that our differentiated product brings to patients and physicians. The only simple-to-use oral migraine medication with dual indications to stop your migraine attack now and prevent your next one. Our global strategic collaboration with Pfizer for markets outside the U.S. is well underway, and our teams are working lockstep to prepare for an expanding global launch of rimegepant. This partnership will serve as a catalyst for the creation of a world-class migraine business that will open the door to delivering rimegepant to millions of patients around the globe. Imagine what our global commercialization with Pfizer will achieve for patients. We are extremely pleased to announce this morning the CHMP positive opinion for rimegepant in the EU, recommending the granting of a marketing authorization for the prophylaxis and acute treatment of migraine. I want to congratulate the Biohaven and Pfizer teams for this exceptional outcome and working closely with the CHMP to achieve this milestone. With the recent positive data for our pivotal trial of rimegepant in the acute treatment migraine in China and South Korea, we are targeting a regulatory submission in the second half of 2022, and if approved, this will unlock a market of greater than 120 million acute migraine patients in China, who may benefit from the release provided by the number one migraine treatment in this class. In addition to the market growth and anticipated expansion of NURTEC ODT around the globe, our team is completing the NDA submission of zavegepant in the U.S., which we anticipate will be filed later this year. Zavegepant is the only intranasal CGRP receptor antagonist in late-stage development and has demonstrated an ultra-rapid onset of action within 15 minutes of administration. If ultimately approved, we believe that zavegepant will provide an important treatment option to enhance speed to migraine relief and a non-oral formulation for patients with prominent nausea or vomiting at the time of the migrate attack. While we are very proud of our robust CGRP franchise and the positive impact that it’s having on patients, we continue to focus on advancing other novel and potentially best-in-class therapies for patients suffering from neurologic and neuropsychiatric disorders. We are excited to announce this morning the acquisition of two new platforms to our pipeline. We acquired what we believe is a potentially best-in-class Kv7 Ion Channel Activator for epilepsy and other neurologic indications that we will discuss in further detail later in this presentation. We are also pleased to report that we have licensed a late-stage myostatin targeting asset from Bristol-Myers Squibb that is expected to enter Phase 3 clinical trials in spinal muscular atrophy, or SMA, later this year. The license of Taldefgrobep will become the third drug candidate to enter the clinic that we have licensed from BMS. With the two additions to our portfolio announced this morning and the discovery engine of Biohaven Labs, our clinical pipeline is robust, and we believe will fuel the development of new innovative drugs for patients. In the U.S., we have raced ahead of the competition, and NURTEC continues to be the number one migraine treatment in this class. Our commitment to innovation in the treatment of migraine is strong as we continue to strive for excellence and look forward to bringing the leading therapy to patients around the world. The new CGRP oral medications are just beginning to scratch the surface of the migraine market in the U.S. The oral CGRP class is showing strong growth and continues to gain momentum into 2022. To put the progress in perspective, oral CGRPs as a class recorded a remarkable net sales of approximately $1 billion in 2021, while only representing a small fraction of about 5% to 6% of the overall migraine scripts. We believe that the oral CGRP class will show growth for many years and ultimately, will become first-line therapy for migraine. Looking specifically at fourth quarter market share versus triptan, the oral CGRP has continued to gain market share. This reflects the limitations of these older therapies and the advantages offered by the new oral CGRP class. The oral CGRPs have shown quarterly increases in both TRx and NBRx volume compared to the triptans. As you can see, there is a significant growth opportunity ahead of us, and we are already seeing the increased penetration of oral CGRPs as patients increasingly become more informed about the fast and lasting benefits of dual-acting NURTEC ODT. We continue to update this slide regarding the oral CGRP class penetration compared to the injectable monoclonal antibodies. Oral CGRP antagonist continue to drive the growth of the overall CGRP market. Injectable mAbs are limited to prevention and many patients consider an injection less desirable compared to a single dissolving pill. Given the projected size of the overall market, we remain focused and committed to investing our long-term success of NURTEC ODT as the only medication that can provide acute and preventative treatment. Our world-class global commercialization partnership for rimegepant with Pfizer will allow us to bring what is the leading oral CGRP antagonist in the U.S. to patients’ worldwide suffering for migraine. Our mutual goal continues to be gaining approvals to deliver dual therapy NURTEC ODT rapidly to as many patients as possible around the world. There are approximately 1 billion patients who suffer for migraine across the globe. The news release this morning regarding the positive CHMP opinion for rimegepant, or Vydura, as it will be marketed in Europe to treat acute and prevent episodic migraine is exciting. In addition to the regulatory progress in the EU, we also recently received positive Phase 2 data in our China, South Korea study for the treatment of migraine. We anticipate filing an NDA in China later this year. The global market opportunity for rimegepant is becoming a reality and the expansion of NURTEC ODT beyond the U.S. continues to be robust. With multiple approvals in migraine for both acute and prevention, double-digit submissions across the globe and multiple pivotal trials ongoing, we are seeing the results of our differentiated product. We are confident in the power of our collaboration with Pfizer in their long history of successfully launching and building partnered brands around the world. With the positive Phase 3 data of zavegepant, which is another cornerstone of our unparalleled CGRP franchise, Biohaven has the only intranasal CGRP antagonist with ultra rapid migraine relief and the potential to usher in a new era of non-oral CGRP targeting migraine therapies. Our CMO, Elyse Stock will update you on the progress in our regulatory efforts for zavegepant later during the presentation. Now moving from one cutting-edge development platform to the next. We are excited this morning to announce the acquisition of Channel Biosciences, a subsidiary of Knopp Biosciences and our Kv7 platform, an innovative potassium channel platform that is expected to move into the clinic by the end of this year. Later in the presentation, you will hear directly from the clinicians and scientists who develop this platform. We believe a lead molecule BHV-7000 has the potential to be a best-in-class potassium channel modulator for epilepsy and represents a validated mechanism of action with other broad therapeutic applications. We are especially excited to welcome the entire Kv7 team from Channel Biosciences or Knopp Biosciences to Biohaven, and this includes their leaders, Dr. Mike Bozik and Steven Dworsky, who will be joining our company to ensure that the lead assets are efficiently advanced to patients. Mike and Steven will be discussing the exciting program with you in more detail shortly. In what has been a morning filled with new announcements, we are pleased to announce more breaking news with the acquisition of Taldefgrobep from Bristol-Myers Squibb. Taldefgrobep is an anti-myostatin adnectin in a Phase 3 ready asset that already had a sizable human safety database and pediatric populations. Given the recent proof-of-concept data of other myostatin targeting agents, our intention is to initiate a Phase 3 study in the first half of 2022 for the treatment of spinal muscular atrophy. Importantly, this acquisition further extends the neuroscience R&D collaboration between Biohaven and BMS. This is our third late-stage asset licensed from BMS to enter the clinic and Cliff Bechtold, who previously was a development lead for this asset at BMS, will speak in more detail about this differentiated product in just a few minutes. To summarize, we have a strong portfolio of product opportunities that we believe will deliver value for patients and investors in the near-term and for years to come. Our goal is to continue to deliver best-in-class therapies from our promising pipeline for patients across the globe. I’d like to now introduce Matthew Buten, our new Chief Financial Officer, who joined us in December. As a former Managing Director of Foresite Capital, Matt brings to Biohaven more than 20 years of experience in health care investment, investment banking and strategic structuring deals for both large and small cap companies. We are thrilled to have him. I would also like to thank Jim Engelhart for his long service and dedication to Biohaven. We wish Jim well in his much-deserved retirement. Matt will now review the details and results of our financial performance in the fourth quarter and year-end of 2021.

[Matthew Buten, Chief Financial Officer]

Thank you, Vlad. First, let me say how thrilled I am to be here for today’s call. As many of you have seen, I’ve joined the Biohaven team in early December right off the heels of the company announcing an incredible strategic collaboration with Pfizer, enabling us to gain access to their industry-leading expertise and global footprint to turbocharge global commercialization efforts for rimegepant. I’ve been following Biohaven’s progress for many years while I was at Foresite, and I couldn’t be more enthusiastic about the opportunity to join this incredible team, especially at a time like this as I look at the opportunities in front of us. Some of the guiding principles that I’ve incorporated in my role from learnings during the transition of my predecessor, Jim Engelhart are threefold: maximizing value for shareholders is top of mind, ensuring we’re adequately capitalized, limiting dilution for shareholders whenever possible. This was and will continue to be a critical focus for us. This dovetails into the next key tenant of our strategy, which is ultimately getting to a place of profitability. This is critical for us, ensuring we are well-positioned to realize long-term revenue streams. We have obviously made tremendous inroads since the launch of our dual acute prevention label, and we see strong growth as we eventually pursue more of the extension opportunities for NURTEC and pediatric migraine pain adjacencies and other non-migraine indications. And finally, maintaining that steadfast financial discipline while continuing to ensure we are driving access to new patient starts, investing wisely in a brand that is still relatively new in a market that only continues to grow rapidly. These are the critical components of our strategy, and I look forward to sharing more updates in the months ahead as we make progress. So with that in mind, let me take you through some of the financial highlights from the past year. The press release we issued this morning contains details of our financial results for the fourth quarter of 2021 with further details in our 10-K, which should be filed shortly. And rather than read through all these details, my comments will focus on some key financial results. NURTEC ODT achieved net sales of $190 million in Q4, demonstrating another quarter of strong performance, increasing 40% versus Q3 and increasing 440% year-over-year, driven largely by increased sales volume in NURTEC ODT and expanded and improved managed care reimbursement. The oral CGRP market continues to grow at an exceptional pace, carving out a small but expanding market share for migraine drugs while generating almost – generating over $1 billion in revenues last year. In total, oral CGRP market revenues grew greater than 400% for the full 2021 year, while Biohaven grew revenues over 600%. As the market continues to grow, we expect to see higher-than-market rates from growth for the oral class of CGRPs as well as for Biohaven. In the fourth quarter, we benefited from a large and growing market, which supported higher volume, and in addition, we had some favorable seasonality, which impacted us in a few ways. Higher volume and net price as payer constraints on patients such as deductibles and coinsurance were largely satisfied, resulting in reduced co-pay systems for Biohaven. This is in addition to direct efforts we made to encourage refills. We also experienced favorable payer mix with lower rebate payers. And as we discussed the influence of positive seasonal factors as well as market growth in our Q4 results during webcast presentations and investor meetings as well as last year on our year-end earnings call. Many of these favorable contributors we experienced in Q4 are typical and expected a patient supportive pharma program, and they pull back along with the typical seasonal changes anticipated in Q1, and it could have an impact on volume as well as sequential revenues. Now as we go down the P&L, R&D investment in the quarter on a non-GAAP basis was $76.4 million, compared to $57.8 million in the prior quarter, an increase of $18.6 million or 32%. The increase is primarily due to continued finding a post-approval international and pipeline expansion spending for rimegepant as well as our late-stage product candidates, including zavegepant, troriluzole and verdiperstat, which combined with the vast majority of our spend. SG&A expense in the quarter on non-GAAP basis was $189.3 million, compared to $114 million in the prior quarter, an increase of the prior year quarter – an increase of $75.3 million or 66%. Most of our SG&A costs continue to support commercial sales of NURTEC ODT as we invest behind our novel dual indication therapy with less than 50% of our spend on personnel costs and the rest supporting our promotional spend. Now moving on to full year 2021 results. NURTEC ODT achieved net sales of $462.5 million for 2021, growing $399 million or 627%, demonstrating very strong performance. This is driven by increased volume in NURTEC ODT, which benefited from a partial year of sales associated with the expanded label to include prevention compared to a partial year of sales in 2020 with only at the acute label. Net revenues were also benefited by improvements in net price realization. R&D investment for the year end of 2021 on a non-GAAP basis was $287.1 million, compared to $195.4 million in the prior year period, an increase of $91.7 million or 47%. Again, the increase was primarily due to our continued investment in our post-approval international product expansion opportunities from rimegepant as well as other late-stage product candidates and preclinical research. The late-stage products I mentioned earlier also comprised the vast majority of our spend for the year. SG&A expense for 2021 on a non-GAAP basis was $623.6 million, compared to $428.6 million in the prior year, an increase of $195 million or 45%. The increase was primarily due to increased promotional activities supporting NURTEC ODT commercial sales in 2021 for the treatment and prevention migraine, which got its dual indication approval on May 21. And compare that to the same period in 2020, which reflects pre-commercial and promotional NURTEC ODT spend, which was launched in March of 2020. Now turning to our balance sheet. Pro forma for the closing of our collaboration and subscription agreements with Pfizer in early January, we have access to approximately $1 billion of liquidity. As of December 2021, we have $367 million in cash and cash equivalents and marketable securities, immediate access to $125 million from our debt facility with Sixth Street and an additional $500 million of cash we received on January 4 from Pfizer. Let me echo what Vlad said about our excitement over our recently announced acquisition of Channel Biosciences, adding a valuable Kv7 program for epilepsy and potentially other indications to our pipeline. The terms of the deal are as follows: a consideration comprised of $65 million Biohaven stock and $35 million in cash. Successful – success-based milestone payments broken down as follows: BHV-7000 regulatory milestones of up to $325 million for U.S., EMA and Japan approvals for epilepsy and $250 million for additional geographies and additional indications for Kv7. BHV-7000 sales-based commercial milestones are up to $562.5 million with the full amount achievable on reaching $3 billion in annual sales. And we’ll pay scale royalties for BHV-7000 of high-single digits to low teens. And for additional programs, we’ll pay starting royalties in the mid-single digits. And with that, let me turn it over to BJ Jones, our Chief Commercial Officer. BJ?

[BJ Jones, Chief Commercial Officer]

Thank you, Matt, and good morning, all. 2021 has been a transformational year for Biohaven and NURTEC ODT. We remain enthusiastic about the brand’s success to date and significant impact we’ve had in the lives of so many patients with migraine and their loved ones. Looking back at the year, NURTEC ODT experienced strong and steady growth in market that health care professionals and patients became more familiar with the brand’s unique and what we believe to be best-in-class profile. We began the year similarly focused on promotion and acute therapy, which produced a healthy growth curve through the spring. And once NURTEC receives agency approval for preventive therapy, we witnessed dramatic acceleration in our growth rate, with early trial among established subscribers as well as those new to brand. We remain confident that NURTEC ODT’s unique profile as the first and only medication proven to treat and prevent migraines is well-positioned to shift the paradigm in migraine treatment to dual therapy. We’re very pleased with fourth quarter sales of $190 million, an increase of 40% over prior quarter, which totaled $463 million in our first full year of commercialization. With NURTEC ODT only now approaching its second anniversary in market, we’ve achieved $526 million in revenue since launch. We’re certainly proud of our commercial team and what’s accomplished with passionate support from every member of the Biohaven family because we realize that every prescription filled is a potential life-changing moment for patients and those we love. The new year brings with a tremendous opportunity as the oral CGRP class continues to penetrate, which is a highly dissatisfied market. As Vlad mentioned earlier, we’re witnessing significant penetration of the generic triptan market as well as significant growth from patients who haven’t saw a prescription in years and have made due with over-the-counter meds and other means to address their migraine attacks. With a tremendous clinical advance of oral CGRPs, we see old habits changing. In the most recent fair stat, evidence suggests physicians are optimistic about triptan and expect their adoption to accelerate in the months ahead. Not surprisingly, we see a similar dynamic among preventive therapies. Physicians predict strong uptick of oral CGRPs, specifically NURTEC, while generic therapies continued to erode over time. Although, changing physician prescribing behavior doesn’t happen overnight, these data are a leading indicator of the evolution taking place across the migraine market that will come to fruition in the months and years to come. Another leading indicator is physician satisfaction with migraine therapies, and as you can see by this graph, all CGRPs dominate. Even among these impressive class data, our consistent theme shows NURTEC is the brand of choice among physicians, and highlighted here, we see NURTEC chosen as the brand with the highest level of satisfaction. As the market leader, NURTEC is poised to benefit differentially by the growth dynamics among the oral CGRPs. We’re also encouraged by the class volume growth within the last few weeks. In early Q1, we anticipated slower uptake for all the seasonal factors that are endemic to our industry, i.e., new year insurance plan changes, deductible annual resets, prescription acceleration in year-end resales in Q4, et cetera. But we are seeing earlier return to growth trends than in years past. In closing, 2021 has been an amazing year. We’re pleased with our position as market leader in a rapidly growing market with high unmet needs. We continue to perform well across all launch measures as prescriber and patient trial in advocacy steadily grow. In addition, I’m pleased to report we’ve maintained NURTEC’s extremely strong formulary active for both acute and preventive indications. With that, I’d like to introduce you to another NURTEC patient, Greg, with a great testimony to share.

[Unidentified Company Representative]

I’m a retired Green Beret from the Army, 21 years, seven combat tours. I had a TBI and bad migraine headaches. I started to take NURTEC ODT, and I think it has changed my life. I used to live in my closet between migraine headaches and all my other problems after seven combat tours, I had lost hope. NURTEC has made my life so much better. I’ve now started Blue Ridge Safe House. It’s a non-profit to help active duty guys like me.

[BJ Jones, Chief Commercial Officer]

Patients like Greg and so many others make what we do every day so incredibly worthwhile. At this point, I’d like to hand it over to my partner, Elyse Stock, our Chief Medical Officer.

[Elyse Stock, Chief Medical Officer]

Thank you, BJ. Oh my goodness, so much has happened in this last quarter, and I’m really delighted to share it with you. Before I start, I really wanted to thank the fantastic people that I work with at Biohaven, because they are really the ones who are delivering the milestones that I’ll be sharing with you this morning. With these talented individuals, we will be able to unleash the potential of our multiple assets and bring multiple therapies to patients here in the U.S. as well as with our Pfizer colleagues across the globe. So far this year and I’ll remind you, we’re only in February, we’re delivering on important milestones. Just yesterday, we received news of a positive opinion from the CHMP on our filing with NURTEC for both acute and preventive treatment of migraine. This quarter, we also had positive topline results from our NURTEC acute treatment of migraine study in Asia. At the end of last year, we delivered positive results on our second registrational intranasal zavegepant trial. We’re expecting further milestones to be achieved over the course of the year, but I’ll delve into each of our most recent achievements just a bit more. Our impressive CGRP franchise at Biohaven is just unparalleled in our industry. NURTEC ODT remains our cornerstone marketed product and the only oral migraine product indicated for the acute treatment of migraine as well as for prevention. Yesterday, we got news from the CHMP that we’ve been given a positive opinion on our oral – on our NURTEC submission for this dual treatment. For those of you following closely, we were not required to attend an oral explanation. We were quickly able to address all of the issues raised and really appreciate the speed and collaborative nature of the European regulators. The ability to treat a large number of patients across the migraine continuum is a truly innovative approach to the treatment of migraine, and we look forward to an approval over the coming weeks. Earlier this month, we also announced positive results from our fourth positive Phase 3 study of rimegepant for the acute treatment of migraine, which was conducted in China and Korea. This study met its co-priority endpoints of freedom from pain and freedom from the most bothersome migraine-associated symptom, also known as MBS, which includes nausea, phonophobia and photophobia at two hours, following a single oral dose of rimegepant. As seen in the graph, a single oral dose of rimegepant 75 milligrams provides statistically significant relief of migraine symptoms and return to normal function at two hours and deliver sustained efficacy that lasted up to 48 hours for many patients. Rimegepant showed broad efficacy across multiple clinically meaningful endpoints at a favorable safety and tolerability profile that was consistent with prior clinical trial results in the United States. Our work with Pfizer has brought us great collaborative colleagues, and I’m confident that they will be able to take these tremendous accomplishments and expand our global footprint bringing relief to patients suffering with migraine across the globe. As I said before, we will continue to expand our program with life cycle studies of NURTEC ODT, both within neuroscience as well as explore a wide variety of scientifically relevant indications outside of migraine as we follow the science of the CGRP antagonist. Earlier this month, we enrolled our first patient in a NURTEC study of rhinosinusitis. This is just one of the NURTEC studies we intend to begin this year. Investigator-initiated trials, Phase 4 clinical trials and studies in health economics will add to the wealth of information that will ultimately be available for NURTEC and will help define the scope of important information for patients, providers and payers, both within the U.S. as well as globally. We recently announced positive results from our intranasal zavegepant Phase 3 study. Its co-primary end points of pain freedom and freedom from MBS to two hours, with statistically significant and replicated the results seen in our positive Phase 2 study. As we hoped, it confirmed an ultra rapid speed of onset with pain relief differentiating from placebo as early as 15 minutes with a single dose. After zavegepant’s treatment, patients who previously experienced moderate to severe pain, achieve reductions to mild or no pain. And we anticipate a filing of intranasal zavegepant for the acute treatment of migraine in the first half of this year 2022. Our oral formulation to zavegepant is being evaluated now in a Phase 3 study in chronic migraine. We continue to just make great progress across all of our late-stage assets, including our glutamate-modulating agents and our myeloperoxidase inhibitor platform. And over the coming months, we will see topline readouts and are excited about all of the opportunities that we saw across both common and rare diseases. Our Biohaven laboratories also remain busy with its early discovery work, and it continues just to grow. We have more than 10 preclinical programs that include both novel small and large molecule approaches. These currently target over 12 indications with high unmet medical need. Our pipeline is not only advancing, but it’s growing. We’re delighted to have just announced the acquisition of Channel Biosciences, and we are really delighted to welcome their team into the Biohaven family. Their innovative potassium channel modulation platform is exciting, and we believe that the unique and differentiated pharmacology of their lead compound will allow us to effectively study pediatric and adult seizure disorders. But I’ll let Mike and Stephen tell you about it in just a moment. Additionally, we’ve added Taldefgrobep, an anti-myostatin assets to our portfolio, and you will hear more about that as well. We will continue to make strategic decisions across the portfolio as our data matures with both external partnerships and internal programs. Our pipeline is large and growing, and I’m really excited about Biohaven’s future. It’s a real pleasure to be able to turn the call over to Mike Bozik and Steven Dworetzky to speak about Biohaven’s newest innovative platform technology, Kv7.

[Michael Bozik, President, Biohaven Labs]

Thank you, Elyse. We couldn’t be more delighted to be joining Biohaven Labs at such an exciting time for the business, and we’re pleased to be delivering our Kv7 platform to the capable and efficient hands of Biohaven Pharmaceuticals. We founded the Kv7 platform at Channel Biosciences to address an ancient disease and also one of the most prevalent. In the United States alone, 3.5 million people suffer from epilepsy, a disease that can take over and disrupt your life because of seizures that can strike at any moment and comorbidities like depression and migraine headaches. Focal epilepsy is the most common form of the disease, affecting both children and adults, and for many patients, it’s not easily treated. In fact, focal epilepsy is refractory in one in three adults and one in four children, often requiring two or more medications in highly individualized treatment regimens. Epilepsy is not only difficult to treat, but tragically, it can also be lethal. Each year, more than 1 in 1,000 people with epilepsy die from SUDEP, or sudden unexpected death in epilepsy, in a person who was otherwise healthy. Clearly, there’s a missing piece in epilepsy treatment, and from the start, we targeted a critical regulator of neuronal excitability called Kv7, a voltage-gated potassium channel present in the brain. The field discovered Kv7 about three decades ago, but unlocking the pharmacology is proven difficult. Although targeting Kv7 has been clinically validated as a mechanism for seizure treatment, existing Kv7 activators carry tolerability risks. We believe our in-house team of biologists and medicinal chemists have cracked the Kv7 code. We have a library of small molecules in the platform with different pharmacology profiles and that have the potential for development in adjacent indications beyond epilepsy. We believe our lead molecule, BHV-7000, shows potential to be a best-in-class Kv7 activator. BHV-7000, the lead candidate to emerge from our platform, was rationally designed to target Kv7. Importantly, it’s structurally distinct from two other Kv7 activators, ezogabine and XEN1101, with patent life to at least 2039. Its profile is also highly differentiated because we dialed out the GABAergic activity intrinsic to these competing molecules. We expect BHV-7000 to be in the clinic this year an important next step in delivering what we hope will be a key missing piece for the treatment of epilepsy. The molecule also benefits from rare pediatric disease designation from the FDA. All in all, we’re coming to Biohaven with a potential best-in-class treatment for epilepsy and with follow-on compounds from our Kv7 platform with the potential to treat other types of epilepsy as well as pain disorders and affective disorders. With that, I’ll turn it over to my friend and colleague of 30 years, Dr. Steven Dworetzky.

[Steven Dworetzky, Senior Vice President, Biohaven Labs]

Thanks, Mike. Let me reinforce being excited about the opportunity to be joining Biohaven Labs and working with the team to deliver BHV-7000 for rapid and efficient development by this organization. As Mike mentioned, we see BHV-7000 as highly differentiated from the existing Kv7 modulators, ezogabine and XEN1101. Those first and second generation drug clinically validated Kv7 as a compelling target in epilepsy, but with attributes, we have worked hard to overcome. For example, on the left panel, ezogabine is chemically unstable to light, and its label cites the risk of blue skin discoloration as well as a boxed warning for potential retinal effects and vision loss. In contrast, BHV-7000 is stable to photooxidation. Shown in the middle panel, XEN1101, like ezogabine, has significant activity at the GABAA receptor, which may account for the off-target activities responsible for somnolence, dizziness, fatigue and other tolerability issues that have been recorded. In comparison, as you can see, BHV-7000 has negligible activity for GABAA receptors. Our aim from the start was to avoid these liabilities while also maintaining potent antiseizure efficacy in vivo. Put another way, we want to maximize the therapeutic index by putting as much distance as possible between efficacy and intolerability. As shown on the right panel, BHV-7000 attains that goal as both a potent activator of the Kv7 channel and was effective in preclinical seizure assays and was well tolerated. Allow me to share more detailed evidence in the following slide. Epilepsy happens to be a disease where the preclinical assays have excellent predictive validity in humans. What we’re showing here on the left graph in the green circles is the number of animals protected from seizures with increasing dose. We demonstrate excellent potency with an ED50 of 0.5 mg/kg. Now take a look at the open red circles along the bottom of the graph. That is the measure of tolerability according to a neurological deficit with zero reflecting normal animal behavior. As you can see, these animals are normal. The shaded area between the green and red results calculate a therapeutic index greater than 40-fold. On the right, you can see the similar experiment for ezogabine. The green triangles represent the antiseizure efficacy, which you see has an ED50 of about 20 mg/kg, so the potency is much lower than for BHV-7000. Let me turn your attention to the red triangles, which you can see shows the neurological deficit increasing with increasing dose and is close to the efficacy dose. Thus, the therapeutic index is approximately threefold compared to more than 40-fold for BHV-7000. This approximates the clinical experience with ezogabine as the drug was poorly tolerated. We do not have the same experiment results for XEN1101, but based on Xenon reported data, we estimate its therapeutic index at approximately six-fold, somewhat better than ezogabine, but dramatically different than the greater than 40-fold therapeutic index of BHV-7000. Our aim is to develop and deliver the third-generation, best-in-class Kv7 modulator, and we hope this will give people with refractory epilepsy better control of their diseases and their lives. In closing, we believe the BHV-7000 significantly differentiates from other molecules in this class of Kv7 activation. The graphic shows where we believe the superiority of our lead assets will provide the potential best-in-class for the treatment of refractory epilepsy and other neurological hypersiability disorders. Thanks for the chance to share a bit of the 7000 story, and now back to you, Elyse.

[Elyse Stock, Chief Medical Officer]

Thanks so much. I would also like to introduce Cliff Bechtold, who will provide a brief update on the recently in-licensed anti-myostatin inhibitor.

[Cliff Bechtold, President and General Manager, Biohaven Ireland]

Thanks, Elyse. We’re very excited to add Taldefgrobep to Biohaven’s portfolio. Myostatin is a well-characterized negative regulator of Alfa growth. Based on a number of disease models and clinical studies, we believe a molecule that can target the signaling pathway of myostatin has potential in many different disease areas that could lead to improved strength and function in patients with muscular dystrophies and other neuromuscular diseases as an adjuvant to the current therapies. Taldefgrobep Alfa is an advanced development program that has extensive human data, especially in the pediatric population. With this robust package, we will be able to rapidly enter Phase 3 in neuromuscular diseases, including SMA. I know this asset very well. I led the program well at BMS and oversaw development into – from the lab into Phase 3. This program will synergize with Biohaven’s experience in ataxia and other rare diseases, and we are looking forward to partnering with SMA community of patients, physicians and advocacy organizations to find novel combination therapies. With that background, I’m going to hand them back to Vlad.

[Vlad Coric, Chief Executive Officer]

Thank you, Matt, BJ, Elyse, Mike, Steven and Cliff. And once again, welcome to the entire Channel Biosciences team. We’re so excited to have you for the Biohaven and also on behalf of the whole team at Biohaven, we just want to say how excited we are to be working with Mike and Steven again. Many might not know this, but they were both important leaders at the BMS Neuroscience group that many of us were all part of years back, so it’s somewhat of a home coming to have them in the company and working with us again. In closing, Biohaven has demonstrated robust growth in our commercialization of NURTEC ODT and important maturation of our late-stage innovative pipeline. We continue to expand our clinical pipeline as well as our early-stage portfolio with the goal of increasing value and growth year-over-year. Our commitment to people with migraine around the globe has never been stronger, and our global expansion with Pfizer will open the door to the 1 billion people worldwide who suffer from the debilitating disease. Before opening up to Q&A, I would like to thank the entire Biohaven team for their relentless commitment, drive and value creation for patients and investors. I also want to take the opportunity to thank all the patients who have enrolled in our clinical trials, their family members and investigators, who participated in advancing our pipeline. We will continue to work hard to bring novel treatments to patients living with the burden of devastating neurologic and neuropsychiatric diseases. Finally, thank you again to our visionary investors who have helped fund our studies and bring NURTEC ODT to patients. Operator, we’d now like to open up the call and take some questions.

[Operator]

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Ken Cacciatore from Cowen & Company. Your line is now live.

[Ken Cacciatore, Cowen & Company]

Hey good morning and congratulations on all the progress. I was wondering with no formal guidance, could you give us a sense of comfort maybe around the Street’s NURTEC-specific revenues for this year around $850 million? And then maybe, Matt, could you speak a little bit to the thoughts on spending this year? Is that Q4 run rate good? And then a general question for you, Vlad. Obviously, really exciting new pipeline additions, but some investors do worry that increasing the pipeline investment, which you further enhance today, could detract from NURTEC value. It’s just hard to value the pipeline versus easier to value NURTEC. So can you talk about the balance of really huge spending to support NURTEC need to invest in pipeline versus potentially an exit or maybe even a split of the business or all options still on the table? Can you talk us through that? Thank you so much.

[Vlad Coric, Chief Executive Officer]

All right. I’ll have Matt start off, and then I’ll jump in.

[Matthew Buten, Chief Financial Officer]

Yes, Ken, as you know, we don’t provide guidance. So I can’t really comment on the $850 million. And as it relates to sort of the Q4 run rate for expenses, we do expect modest increases on the expense side, and we just have added a few really promising assets, which would be part of that calculation.

[Vlad Coric, Chief Executive Officer]

So again, we’re excited about NURTEC. And as you know from prior discussions, when you look at where we are in our net revenue generation and where we and others believe will be in future years, there’s very few drugs that have this type of potential both for patients and net revenue generation for companies. So I don’t think we have a large spend to support that. I think it’s an appropriate infrastructure size and spend to what we believe ultimately will be multibillion-dollar net revenues at the peak sales. And give you a little bit of a glimpse as to how early we are and how much growth is ahead of us, and so in addition to the revenue from NURTEC, we do want to make sure we have other assets that can mature into the commercialization infrastructure that we have. And I think what you saw today is an addition of what I would view as to derisk mechanisms of actions that are very much fast follower approaches. And when you look at some of the external data that’s been generated in Kv7 and epilepsy and the predictability of assays to how those assets will perform the clinic, we think these are high probability or higher probability wins in neuroscience. And that’s why we’re so excited to be incorporating them into the pipeline. Your question about M&A and other activity, as you know, we can’t comment too much on that other than say that look, acquisitions like today and broaden the pipeline just strengthens our company, and strengthens, I think, our ability to organically generate increased revenue in future years or for something that would be of interest to other parties, right, to put together a pipeline like this. So we’re going to continue to run our business, maximize investor returns and grow value, and we’re going to continue to do that until there’s a reason not to do. So thanks for the question, Ken, and I appreciate it. Operator, next question.

[Operator]

Our next question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.

[Charles Duncan, Cantor Fitzgerald]

Yes. Good morning. Thanks for taking the question. Congrats, Vlad and team, on continued good commercial execution as well as the news flow this morning. Wanted to ask a commercial question for BJ, and that is that, BJ, you mentioned in your prepared remarks that you’ve seen earlier returns to growth in the first quarter than perhaps, you would have expected, given your experience in previous years. And I’m just wondering if you could provide some more color on that. And then relative to the current, I’ll call it, adoption rate of the oral CGRPs and specifically, NURTEC ODT, what message would you like prescribers to hear that could drive further adoption of the class and the drug specifically?

[BJ Jones, Chief Commercial Officer]

Charles, thank you for the question. I appreciate that. And I would say, just to provide a little context around – the comment around the earlier growth is that – it is a little bit slow in regards to what the uptake is in Q1 normally. Again, that’s not just a – either a NURTEC or a migraine in issuance some sense right as more broad across the industry. But I will say that, again, in recent weeks, basically started in February, we start to see what is kind of that return to growth again and I’d say, across the class, which is a positive news for us. Again, there are good reasons for that. I think a lot of it is the incremental promotion is happening, because of different products actually entering the market as well, which actually benefits everyone, especially patients. So that’s a good new story overall. So that points to greater growth, and we’re pleased about what that means for coming weeks. As it relates to the adoption rate that’s happening and what I’d like to say to prescribers, and this is essentially what we communicate on a day-to-day basis, right, with all of our customers out there is that essentially, now they have an opportunity to utilize a product for patients suffering in this space for so long, we’re clearly very, very little risk, but tremendous upside for those individuals. And they can use it in this convenience platform, which, again, is one product. Obviously, you’re right. That can treat and prevent, and it’s one dose. And again, does not have the same kind of baggage, if you will, that the older medications have had in the past. And so I would say, again, I think it’s part of what is the fire this at kind of under this marketplace is that clinicians perceive that. They see it. They actually give trial and get tremendous feedback from patients, and that is what we believe really will fuel this market going forward.

[Vlad Coric, Chief Executive Officer]

Thanks, Charles. Operator, next question.

[Operator]

Thank you. Next question is coming from Chris Raymond from Piper Sandler. Your line is now live.

[Chris Raymond, Piper Sandler]

Yes, thanks. Just a couple of questions on some of these new assets, if you don’t mind. So I guess the anti-myostatin just did some digging on this molecule. It looks like it’s been studied already in DMD and failed to show impact on ambulatory measures. DMD and SMA are different in a lot of ways, but just kind of what you guys are seeing – are you seeing in the data that sort of gives confidence in this indication? And then just thinking about Phase 3 design, is it contemplated this be looked at in combo with a disease modifier like SPINRAZA? Any details on that sort of plan would be great. And then I guess on the Kv7 asset, it looks like this has on the Knopp website anyway, is in development for epileptic encephalopathy. Can you maybe – is that still on the table as an indication that you’re targeting? Is maybe sort of a quick path to market? Just maybe talk about that a little bit. And then maybe if I can put one more question to you guys, maybe more strategic, just on how you’re thinking about guidance. Are there some elements around the business that you’re looking for before guiding? Or is there maybe sort of some philosophical reason to that guide?

[Vlad Coric, Chief Executive Officer]

Great. Chris, just – I’ll turn it over to Mike in a minute to talk about Kv7 response to that comment. On myostatin, I’ll also have Cliff chime in here, but the mechanism of action has not been demonstrated in DMD to establish efficacy. However, we have a very large safety database from that experience. And as you know, the Scholar Rock data in SMA with a similar myostatin targeting did suggest efficacy, and that’s really the clinical proof-of-concept that is advancing our interest in this area. We also note that there’s other competitors, Roche, who have a myostatin targeting agent as well. So Roche and Scholar Rock are both heading into SMA, given the recent clinical POC there. We believe that this has the potential to be a best-in-class myostatin targeting agent and excited to quickly advance into SMA given the emerging data. Cliff, do you want to add anything?

[Cliff Bechtold, President and General Manager, Biohaven Ireland]

Yes, just really quickly. I think what we learned at the Duchenne areas of its molecule is very safe. It’s well tolerated in pediatric population. But we also learned that as a monotherapy, it’s – it didn’t hit the significance to see a clinical benefit. What’s different in SMA is the presence of the SMN upregulating therapies that are approved in the market, which we think and demonstrated by preclinical models will show a synergistic effect. And so that’s why we’re targeting SMA to begin with.

[Vlad Coric, Chief Executive Officer]

Great. And the study would be in combination with standard of care therapy and others. Great. And then, Mike, do you want to comment on Kv7 in the indication?

[Michael Bozik, President, Biohaven Labs]

Sure. So we were really excited to be joining the Biohaven team and their commitment to advancing BHV-7000 in for the treatment of epilepsy. And in answer to your question, the drug has great sort of clinical proof of concept as a treatment for adult refractory focal epilepsy. So we’ll clearly be advancing the drug along that path. It’s an established clinical development pathway. You’re following footprints in the snow. So that is a strong commitment. We’re equally committed to exploring the potential of the drug as a pediatric epilepsy treatment, including the opportunity to treat patients with KCNQ2 epileptic encephalopathy. So we’ll be advancing the molecule in clinical development. As you know, there are steps that you need to take before you can treat children and certainly young children. And so we’ll be doing – taking the steps that we need to be able to walk down that path.

[Vlad Coric, Chief Executive Officer]

And Matt, do you want to guide...

[Matthew Buten, Chief Financial Officer]

Yes. I mean from a guidance perspective, I think we’re going to be more comfortable getting to place where we’re guiding next year. At this point, we have a lot of variables, a lot of moving parts, including Pfizer and sort of how they’re looking at this in EU from a contribution. We have prevention, which is still kind of early-ish in the launch phase. We have a highly competitive environment. So there are variables there as well. So as we get more comfortable with all those, we’ll start to provide guidance.

[Chris Raymond, Piper Sandler]

Great. Thanks so much.

[Vlad Coric, Chief Executive Officer]

Great. Thank you. Operator, next question.

[Operator]

Certainly. Our next question is coming from Paul Choi from Goldman Sachs. Your line is now alive.

[Paul Choi, Goldman Sachs]

Thank you. Good morning, everyone, and congrats. Let me add my congrats on all the progress as well. My first question is for Vlad and BJ as well. Maybe as you’re thinking about the commercial execution strategy here in 2022, you launched in the pandemic environment, which involves a lot of virtual selling. How are you thinking maybe about pivoting to more feet on the street to grow the NURTEC franchise over the course of this year and next year as we exit the pandemic? And then second, on the pipeline, maybe for Elyse. As you think about the clinical strategy for SMA, is there going to be a particular focus on a subpopulation, whether it’s type 1 that where you see the highest probability or type 2 and so forth? And just maybe any specifics you can provide on just sort of your high level thoughts on clinical trial design here would be great. Thank you.

[Vlad Coric, Chief Executive Officer]

Thanks, Paul. And with regard to this year, the pandemic, we demonstrated the success of NURTEC, despite the pandemic. And I think it reflects how debilitating this illness is and that people will go out and get a novel treatment because they’re so disabled by migraine when it strikes. So we’ve demonstrated the ability to do this well in a very harsh environment. And what we see from the data is that as patient traffic and volume of physicians’ office increases, we do better. And so we believe as the pandemic gets behind us, there will be a greater opportunity to increase volume, and we are not planning anything other than modest changes toward sales force. There will be some – like always, some optimization to ensure we’re remaining highly competitive at maximizing share, but you’re going to see a continued emphasis on digital and virtual in addition to the in-person, of course. But the things that made us successful during the pandemic, we’re going to continue to optimize as that alleviates. BJ, you want to add anything to that?

[BJ Jones, Chief Commercial Officer]

The only thing I’ll add is, well said, thank you. I’d say that we are absolutely committed to what is kind of our digital-first approach. And again, that is in the full line of day, hopefully, as this pandemic passes. And the view is, what we can to build this capability so that we can actually integrate that with our feet on the street. But as Vlad mentioned, kind of – what is kind of a modest incremental investment in feet on the street. But we are focused on increasing impact, right, of each one of our folks out there, and we look forward to full year.

[Vlad Coric, Chief Executive Officer]

And on like question, Elyse maybe to make a comment.

[Elyse Stock, Chief Medical Officer]

Yes. On the design of the SMA, I mean one thing that the field has changed significantly, and we’ve been partnering with thought leaders and experts in the area to understand that with the advances in the marketed products that are operating in SMA. We’re seeing it move away from the classification of SMA 2 and 3 because they are performing differently. So partnering with the experts in the field and patient advocacy, we’re still coming for the right design to move forward.

[Vlad Coric, Chief Executive Officer]

Great. All right. Operator, the last question.

[Operator]

Thank you. Our final question today is coming from Laura Chico from Wedbush. Your line is now live.

[Laura Chico, Wedbush]

Hey thanks, guys for squeezing me in. Just two on the pipeline. So first, BHV-7000, could you talk a little bit more on how you see clinical points of differentiation manifesting? It sounds like you’re highlighting GABA activation. And I’m just curious if this – how this plays out? Is this more on the adverse event side? And I guess, how would you elaborate or could you elaborate on how you would tease that out from a trial design perspective? And then just with respect to verdiperstat, I know we’re getting results in around the middle of the year, but could you talk a little bit more about the communication strategy around those top line results? This is obviously a unique design evaluating a couple of different therapies in the study. So I just want to make sure I understand perhaps how the degree of disclosure might work or who will be leading that effort. Thanks.

[Vlad Coric, Chief Executive Officer]

Sure. So we’ll invite Mike and Steven to comment and reply on the Kv7. Mike, do you want to start?

[Michael Bozik, President, Biohaven Labs]

Sure. So as you probably know, the first and second generation Kv7 activators are not specific for Kv7. They have a GABA activation component to their pharmacology. And we specifically dialed out the GABA activity because we’re very confident, and we have the preclinical data to show that Kv7 activation alone is sufficient for efficacy and potent efficacy at that. And then what has really limited Kv7 activators to date is the fact that as you become effective, you bump up against side effects, somnolence, vertigo, diplopia. And when you hit those side effects, you can’t go further, and so you have efficacy limitations and you also have compliance limitations. And we have preclinical evidence that we don’t see this. So we will be looking for differentiation in terms of side effect profile. And there are other liabilities that the first and second generation activators have had, including events of urinary retention. So we think we’ll be differentiated both as a more potent activator of the target, which we hope will translate into very good efficacy as well as a compound that will be very well tolerated and patients will stay on the drug.

[Vlad Coric, Chief Executive Officer]

Great. Thank you. And just to wrap up on the question about the HEALEY and the ALS trial. So although that the platform trial with multiple different assets, they share a placebo arm. As the asset reads out, we will get the top line on that asset. So we’re not waiting for other assets to read out. So once we get to that top line data, it will be revealed, and we’re thinking somewhere around mid-year. So I know we have to wrap up now as we’re out of time. So thank you, everyone, for joining us today. We deeply appreciate the support of our employees and investors as we move forward to delivering life-changing therapies to patients and talk to everyone very soon. Thank you. Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.