Camurus AB

STO:CAMX

Earnings Call Transcript 2024-Q1

[Operator]

Welcome to Camurus Q1 Report 2024. [Operator Instructions] Now I will hand the conference over to CEO, Fredrik Tiberg, Please go ahead.

[Fredrik Tiberg, executive]

Good day, everyone, and thank you for taking the time to join our first earnings call for 2024.

So before starting the presentation, please notice our forward-looking statements. So the agenda for today's call includes first quarter highlights, financial results. We will then move to commercial and pipeline updates and finish off with a Q&A. And with me on the call today, as previously are, Jon Garay, our Chief Financial Officer; and Richard Jameson, our Chief Commercial Officer.

So starting out with our highlights in the quarter. Camurus had a productive first quarter with strong profitability and pipeline progress. Total revenues grew by 37% year-on-year to SEK 390 million, which is the midpoint of our provided guidance, with profit before tax in the quarter of close to SEK 100 million. Our financial position was further strengthened by a successful directed share issue to support inorganic growth opportunities, accelerate U.S. commercial preparations for CAM2029 in neuroendocrine tumors and polycystic liver disease and enhance our manufacturing capabilities.

From a commercial perspective, we continued strengthening our leading position in opioid dependence treatment across geographies. Buvidal sales increased by 29% year-on-year to SEK 364 million at reported rates. In the U.S., Brixadi showed strong and accelerating growth, resulting in an approximate three-fold increase in sales and royalty in the first quarter versus Q4 2023.

So on the R&D side, we received FDA acceptance for the review of NDA for Oclaiz in acromegaly, with a PDUFA date in October this year. The corresponding application has now been submitted to the EMA. And outside the acromegaly area, we progressed the SORENTO study of CAM2029 in neuroendocrine tumors and completed patient recruitment in the POSITANO trial in polycystic liver disease.

Importantly, we also advanced several early development programs, including completing preclinical assessments of a novel monthly formulation of semaglutide. Based on the data received, we are preparing for a first clinical study plan to be started towards the end of this year.

And with this short introduction, I will hand over to Jon for the finances.

[Jon U. Alonso, executive]

Thanks a lot, Fredrik, and good afternoon, everyone. During this quarter, Camurus continued its development, delivering a strong profitability and remaining on track to meet 2024 market guidance and 2027 vision.

I would like to share now key highlights of our financial performance this quarter. Camurus achieved SEK 390 million total revenue in the quarter, delivering a growth of 37% versus same period last year, with product sales of SEK 364 million, growing 29% versus prior year and basically aligned with prior quarter. Swedish krona appreciation has impacted negatively reported figures by 1% year-on-year basis and 3% versus prior quarter. Brixadi sales in the U.S. represented a SEK 26 million royalty income in the quarter following its commercial launch of September last year.

Company profit before taxes was SEK 97 million, achieving an earnings per share after dilution of SEK 1.32 equivalent to a profit after tax of SEK 78 million in the quarter. Finally, our cash position progressed positively during the quarter ending at SEK 2.3 billion, including SEK 1,026 million obtained via directed share issue carried out in January in the size of 2 million shares.

Moving to next slide, we can see the main components of our profit before taxes. Company gross margin reached 92.1% in the quarter, representing an improvement of 222 basis points versus same period prior year. The improvement was driven by 3 major factors: firstly, supply chain efficiencies driven by Buvidal volumes scale up, represented 200 basis points; secondly, 60 basis points driven by Brixadi royalty; and thirdly, FX represented a negative impact of minus 45 basis points.

Total OpEx reached SEK 289 million, representing a 57% increase versus same period prior year, driven by following factors: marketing and distribution investments to support marketing penetration in own territories; expansion of Buvidal into new markets; and U.S. operations grew 23% to SEK 93 million. Administrative expenses aligned with corporate evolution to substantiate company development grew 73% versus same period last year to SEK 16 million.

R&D investment reached SEK 180 million, growing 81% versus same period prior year, driven by recruitment completion in POSITANO trial and progress in our preclinical and clinical pipeline. Company profit before taxes reached SEK 97 million, growing 26% versus prior year. Company cash position at quarter end was SEK 2.3 billion. Camurus improved its cash position by SEK 1,084 million in the quarter, driven by following factors: firstly, company operations generated SEK 139 million; secondly, working capital increased by SEK 102 million, driven mainly by inventory and receivables growth; thirdly, company carried out a direct share issue providing net proceeds of SEK 1,026 million after transaction costs; and finally, the company executed AGM 2021 authorization to hedge employee stock options, social security costs, obtaining SEK 22 million. At the end of quarter, Camurus has no debt.

All in all, Camurus closed its first quarter 2024 with a strengthened financial position, interesting growth opportunities and is on track to deliver 2024 market guidance.

Having said that, I would like to pass the word to Richard. Thank you, everyone, for your attention.

[Richard Jameson, executive]

Thank you, Jon. So we move over to commercialization update. I'm going to start in the Camurus markets, and then I will give an update on Brixadi in the U.S.

So in quarter 1, invoice sales for Buvidal grew at plus 29% versus previous year of 30% at constant exchange rate and plus 3% versus Q4 at constant exchange rate. After a strong Q4, we saw softer sales in January and February. However, as expected in market -- in March, rather, we exited the quarter strongly. Importantly, though, underlying in-market demand remained strong and grew at 5% quarter-on-quarter, which more accurately reflects performance in the countries. Sharpened execution on our strategies and plans by the team across countries is driving both access to Buvidal and penetration in clinics and criminal justice settings, and we continue to hear the positive impact that Buvidal is having on treatment outcomes for patients with opioid dependence.

To give some more granularity, we had good progress in the U.K., where in-market, we continue to grow high single digit and recruit new patients alongside accelerating access in criminal justice settings as NHS funding comes through. With that said, this was tempered slightly by delays in that NHS funding due to the year-end -- the NHS year-end that finished in March. In Australia, the recent government changes have reduced co-pay for patients, and we see both numbers in treatment and the numbers on long-acting injectable buprenorphine growing, and we maintain our strong leadership in the long-acting buprenorphine segment with patient share above 80%.

Also in the Nordics, France, Spain and the MENA region, all grew well in the quarter, and we remained on track for our market guidance of product sales. We now estimate we have more than 50,000 patients being treated with Buvidal at the end of the quarter, which is approaching 30% of the buprenorphine segment where we have access. Though, of course, with an estimated 750,000 patients in treatment in Europe and Australia, there remains a large opportunity for Buvidal in the region.

We also continue to expand geographically, and in Q1 achieved reimbursement approval in Ireland, which will allow us to expand Buvidal use in treatment [ clinics ] across the country, and we have ongoing processes for both reimbursement and market authorizations in other countries.

Now moving to the U.S. with the launch phase of Brixadi. Performance in the quarter in the U.S. saw accelerated penetration as shown by the large increase in our royalty stream from partner Braeburn. Royalty for the quarter was SEK 26 million. And based on information from Braeburn, after about 6 months since launch there, we already have an estimated 7,000 patients on treatment with Brixadi. This excellent early progress reflects the acceptance of the strong product profile and demand for Brixadi in the country with a high unmet medical need.

The compelling messaging around Brixadi is clearly resonating with U.S. health care professionals. And Braeburn continue to focus on the launch strategy and execution with a commercial team of more than 100 people. And they have strong payer coverage already on par with other long-acting injectable products in OUD and a channel development that provides quick and reliable access to Brixadi. And based on the strong performance of Brixadi in the U.S., our expectations of reaching peak sales above SEK 1 billion has been reinforced. We also continue to build and share the evidence base to highlight the advantage Buvidal brings for those seeking treatment for opioid dependence and data that supports a differentiated product profile.

Firstly, a recent publication on opioid blockade affirms the need to individualize treatment and titrate doses for optimal treatment outcomes and demonstrated blockade across the dose range for Buvidal and Brixadi. Other publications from Australia show how long-acting buprenorphine is individualized in the country with broad utilization of all treatment doses in rural clinical practice.

So on that note, I will hand back to Fredrik for an update on the pipeline.

[Fredrik Tiberg, executive]

Thank you so much, Richard, and I'll give a late-stage development update and focusing here on CAM2029.

During the quarter, we continued to advance 2029 across target indications, which are acromegaly, gastroenteropancreatic neuroendocrine tumors, of course, as you have heard previously here, polycystic liver disease, and the product is designed for both enhanced efficacy, improve patient convenience and also quality of life. As our clinical program has progressed with positive study data outcomes, our expectations for CAM2029 across the indications has been reinforced.

So moving to a short update on each program. In acromegaly, we have completed treatment of all patients in ACROINNOVA to our long-term safety and efficacy study, and we'll provide updated study results at the end of the second quarter, building on the previously communicated positive interim results. In parallel, the FDA review of Oclaiz has been progressing, and we recently submitted a corresponding Market Authorization Application for CAM2029 to the European Medical Agency.

In GEP-NET, after completing enrollment at the end of last year, we are now collecting data and monitoring progression-free survival events until we reach the target of 194 to read out the primary superiority endpoint. And in PLD, we completed during the quarter enrollment of all 72 patients in the randomized, placebo-controlled POSITANO trial, which primary endpoint is to demonstrate reduced liver volume and improved symptoms in patients with symptomatic polycystic liver disease.

So we continue to meet our objectives and time lines for CAM2029 across indications and have several important milestones ahead of us in the coming year. These include final results from the core phase of ACROINNOVA 2, which we expect to be able to present at the end of June and FDA approval decision for acromegaly by the PDUFA date of the 21st of October 2024, followed by the planned U.S. launch of Oclaiz for treatment of acromegaly in the U.S. around the year-end.

In GEP-NET, we are expecting to finalize the core phase of the SORENTO trial in the first half of 2025 and thereafter obtain top line results on the progression-free survival and other key endpoints. This win should allow an NDA submission to the FDA sometime during the second half of next year and an application in other geographies, they would, of course, follow as closely as possible. Finally, top line results from POSITANO in the PLD indication are expected early 2025.

So in parallel with the advances of the registration programs, we continue to build our U.S. commercial organization to prepare for the planned Oclaiz launch. The estimated market opportunity for CAM2029 across indications is significant and estimated in the region of about USD 1.5 billion. During the period, we started onboarding key functions in medical affairs, marketing and commercial. We also signed a lease for our new office space in Princeton, New Jersey.

Market research has been ongoing primarily for the acromegaly and NET indications, providing insight on patient, prescriber and payer perspectives and enabling the team to build out the launch plan. We have also been active with payer engagement and setting up a distribution on patient support model. Medical affairs activities have been accelerated in the quarter. And this has been reflected in the number of events that we are participating in. We have Camurus and study investigators sharing data from the ACROINNOVA program and updating on SORENTO and POSITANO trials at scientific meetings throughout 2024.

Key upcoming conferences include the European Congress of Endocrinology in Stockholm, the coming week. And later on in May, we are attending the ENDO meeting in Boston, which will be starting, I think, this 30th of May this year.

So with that short update on the business of Camurus, I'm pleased with the performance of our teams and the partners that we are working with, continuing execution, which in the quarter has delivered revenues and profitability in line with guidance, robust in-market growth for Buvidal and a very strong momentum for Brixadi in the U.S., which we are very pleased with. The Oclaiz NDA was accepted for review by FDA, and we are on track for an anticipated approval decision in October.

In parallel, we have made significant progress on other pipeline programs, including the ones I mentioned earlier today, and Camurus ended the quarter with strengthened cash position of SEK 2.3 billion to support future organic growth and also inorganic initiatives.

So with that, I thank you for your attention, and I leave it over to Ana here to please start out the Q&A.

[Operator]

[Operator Instructions] The first question comes from the line of Erik Hultgård from Carnegie.

[Erik Hultgård, analyst]

I have a few, if I may. First, on Buvidal. The pace of quarterly patient growth slowed to 2,000 from being stable at 3,000 in the past 2 years. And I think you mentioned U.K. funding delayed, but I assume it can't explain the full delta. So can you please provide some color here and more specifically, if you're starting to see a saturation in some of the early launch markets?

And then I have 2 on the monthly sema project. First, have you looked in preclinical models on whether your FluidCrystal technology can enable higher exposure of sema versus your original product in animals? And I think as reference, with octreotide, you achieved a higher exposure with CAM2029 compared to Sandostatin LAR. So I was just wondering if this could be the case as well for sema? And then just a short final one, when do you plan to publicly share the preclinical data generated on the monthly sema to date?

[Fredrik Tiberg, executive]

Thank You. So I think we'll let Richard start with a question about the softening in January and February.

[Richard Jameson, executive]

Yes. I have to say that yes, we did see a slight slowdown in the first 2 months of the quarter. The -- partly, as we said, is the U.K., the funding delay coming there and some of the changes are happening in Australia. Overall, I think, it's just a slight slowdown for that quarter. We're back to growth. Now we exited the quarter strongly, and we believe that we're going to pick up that growth rate the same as we were. I don't think it's around saturation. As I said, there's a lot of patients needing treatment in Europe, and we still have a long way to go and a lot of opportunity there. And I think we're seeing increasing demand from patients for long-acting treatments as well. So we only see that accelerating in the future.

[Fredrik Tiberg, executive]

Okay. Is that -- moving over to your question about higher exposure. I think what we see is that we have quite good flexibility in terms of exposure. And I can say that I don't think that's a limiting aspect for our technology in terms of semaglutide. So I mean, there are many other considerations, of course, in this treatment and they have to be considered. But I think we can say that with strong confidence that we can provide significant overall exposure during the treatment period whether or not from a bioavailability perspective because that's the difference we are seeing in the CAM2029 case. I don't think I can give you the indication that we have a significantly better bioavailability because here, we're comparing essentially non-formulated system, which theoretically should have 100% bioavailability, compared to formulated system.

Is that answer to your question, Erik?

[Erik Hultgård, analyst]

Yes. So you mean -- so in terms of bioavailability, it's fair to assume that you will have some type of trade-off when you go from -- when you go to formulated sort of version as the monthly version. So it's fair to assume that you're not...

[Fredrik Tiberg, executive]

No, I don't think you -- that assumption, I did not kind of confirm. On the contrary, I mean, with CAM2029, we essentially have 100% bioavailability. So we don't have -- I would say that, that having improved bioavailability will -- it's something I cannot confirm. I think my message is we can reach therapeutic levels across the current dose range.

[Operator]

The next question is from Brian Balchin from Jefferies.

[Brian Balchin, analyst]

First question is around Brixadi. So strong launch. I didn't see anything in the release, but just wanted to check if you saw any impact from the change healthcare, cyber-attack on Brixadi invoicing, new patient starts as Indivior had supported that to be the case to them for SUBLOCADE. Second, just again on our GLP-1 Phase I study. I guess what is the limit to the molecular size with your FluidCrystal test? Could you potentially go greater than 40 amino acids? And then just on the study, is it partnered with Novo Nordisk? And if so, what are the economics? And I've got a third question, but I'll stop there now.

[Fredrik Tiberg, executive]

Okay. So I mean, if we start out with your first question here, I don't think we have seen and we haven't heard any reports that we had any impact of cyber-attack. On the other hand, yes, so this has not been anything that we have been communicated by our partner in the U.S. No, we haven't asked specifically regarding this topic, but we haven't heard any information about that. So when it came to -- yes. The second topic, can you...

[Jon U. Alonso, executive]

The second topic is, which is the limit of the molecule size...

[Fredrik Tiberg, executive]

Yes. So yes, sorry. I mean, I think we have successfully formulated and performed preclinical studies for peptide or small protein compounds at least up to 20 kilodaltons, but It always -- it's always difficult to generalize. But -- so that's, of course, much more than 30 amino acids. So that is not a limit. Always when you're talking about these things, you have to consider many different aspects. But I would say that we are not limited to 30 amino acids, for instance.

[Jon U. Alonso, executive]

And then the third question, if partnered with Novo?

[Fredrik Tiberg, executive]

Yes. So I mean -- we have not announced anything about partnering or relationships with other parties in relation to the semaglutide project.

[Brian Balchin, analyst]

Got it. Helpful. And then just thirdly, on the GEP-NET study Phase III that you've got first half of '25. Can you just help us understand how the tougher patient population in the SORENTO study could mean that the comparator on Sandostatin and Somatuline could potentially underperform versus what we've seen historically from their Phase III studies?

[Fredrik Tiberg, executive]

Yes, we are not assuming the performance from the -- for the comparator arm. Of course, it depends on which study you are referring to. But definitely, if you're referring to the CLARINET study, which...

[Brian Balchin, analyst]

Yes. That's exactly.

[Fredrik Tiberg, executive]

I mean there, you had progression-free survival, which was very long. I would say that in that study, it was essentially a large majority of patients were Grade 1 patients with low proliferation rates when it comes to tumor proliferation, so below 2. We have a much broader and in a sense more representative population in SORENTO with a majority actually of the Grade 2 patients. So from that aspect, they have more advanced neuroendocrine tumor states. And we also have higher Ki-67 proliferation index values. So I think that's the basis that we have had in our assumptions. And I think the population we assumed when we started the study, it's very much reflecting the population that we now have in the study after recruiting all patients.

Anything else, Brian?

[Brian Balchin, analyst]

Great. That's fantastic.

[Operator]

The next question is from Mattias Häggblom from Handelsbanken.

[Mattias Häggblom, analyst]

Mattias Häggblom from Handelsbanken. I have two questions, please. So on my calculation, sales of Buvidal in your largest market, Australia declined in local currencies by 14% sequentially during the quarter. You referred to inventory fluctuations. But can you share what in-market sales growth you saw in Australia? Or was there any additional dynamic in the quarter that explain the performance in Australia? And then secondly, I guess, on the monthly sema, can you say anything why now because GLP-1 and analogs have been listed for molecular classes where FluidCrystal is applicable in presentation I think already back since 2018. So how do you see the technology breakthrough that you couldn't accomplish before? Or is it time left of IP that now has accelerated this program?

[Fredrik Tiberg, executive]

Jon?

[Jon U. Alonso, executive]

So thanks a lot, Mattias. So regarding your question of Buvidal at reported rate is correct. If we look at the in-market performance, excluding the FX impact and then the seasonality of the stocks, just remember that Australia is going through a change of the supply model. At the moment, the in-market trend that we see in the Australian market is in the range of 8%, yes.

And the second question is technology breakthrough.

[Fredrik Tiberg, executive]

That is plus.

[Jon U. Alonso, executive]

Yes, yes, plus positive. It's plus 8%, yes.

[Fredrik Tiberg, executive]

So yes, when it comes to the breakthrough in this case, first of all, I should say that we have been working with this program for some time. I cannot go into details about that. We have made some significant optimization efforts and of course, done quite a number of studies. So when we are speaking about at this time, it was more because we have taken the decision to move ahead towards the clinic. So -- and -- but we have optimized the formulation work, and we have got the preclinical data that we felt was required for us to take the next step in various different preclinical settings and models.

[Mattias Häggblom, analyst]

That's clear. And then I have one follow-up...

[Fredrik Tiberg, executive]

Yes. Regarding the intellectual property question. So I mean, sema is, as we understand, it depends on geography, but it's an interesting time range. 2029, I think the original patent expires, but they have patent extension term that goes to '31, '32. We'll see how that finally will pan out, but it's a good time and phase to look into this development.

[Mattias Häggblom, analyst]

And then -- yes, that's clear. That's clear. I have one follow-up, or rather not related to this, but coming back to Brixadi and the impressive ramp and royalty generation in the first quarter. So is there any risk that there is some kind of stocking in Q1 that drove this 3x sequential increase? I guess another way of asking, is the royalty triggered by sales into the channel, including potential stocking? Or is it driven by in-market sales?

[Jon U. Alonso, executive]

The royalty is not driven by what is put into the channel. It's what the channel is distributed to their customers. This doesn't mean that all the merchandise can be distributed to patients because they can be as multiples in the channel. So I'm trying to replay your question, Mattias.

[Fredrik Tiberg, executive]

But if we go into this question also, I don't think there is any tendency that this should be represented by a large stock up. On the contrary, the patient numbers that have been provided -- or patient numbers from Braeburn and they are reflective of the fact that the stock is being used in the market.

[Operator]

The next question is from Maria Vara from Bryan Garnier & Company.

[Maria Vara Fernández, analyst]

I just wanted to have a bit of an update on the buildup of the U.S. organization and sales force. How is this moving along in regards to the launch of CAM2029 in the U.S.? Could you maybe remind us the sales reps that you will be targeting?

[Fredrik Tiberg, executive]

So yes, we are going ahead and it's going very well right now. Our focus is very much on the medical affairs side. And of course, the whole system back up. So we have everything from compliance to other functions are now put in place in the U.S. In terms of the strategy going forward, I think I'll leave over to Jon, maybe you can just give a summary of where we are with the strategy of -- the sales strategy in the U.S.

[Jon U. Alonso, executive]

Yes. So we are -- in terms of the sales strategy, our sales team is we are going to build it up on a [ fair size ]. We are bringing in, and we already have, as we have disclosed our U.S. President, but we also have the Head of Marketing ourselves [indiscernible] in the market. And right now, we are working in parallel to start developing how the product will be distributed into the market, supply chain model, patient model and which are the partners that they are going to support into this area. In parallel, we are working quite intensively with payers to try ensure that the product can be accessed as soon as possible in the market. And that's where is our focus for, I would say, Q2 and probably Q3. Then after PDUFA date, all the sales force will be onboard, and we are trying to work ahead of the PDUFA date to identify the relevant talent that can be joined in our company.

[Fredrik Tiberg, executive]

And I think adding to that, of course, you also asked about the targeting of the product in the market, and we have been working very intensively with that, both own studies. We have had a number of regional studies performed, identifying the prescribers and also the centers of largest interest. So that is an activity that has been prioritized, and we are continuing.

Any further questions from you, Maria?

[Maria Vara Fernández, analyst]

Yes, great. That's super helpful. That's all from my side.

[Operator]

The next question is from Christopher Uhde from SEB.

[Christopher Uhde, analyst]

So you've previously enumerated why 2024 will be back-end loaded and yet in Q1, you've delivered in line with the midpoint of top line guidance. So why have you not raised the guide? Should we interpret this to mean that you're less confident about the favorable factors impacting market access and reimbursement in the EU5 actually transpiring than you maybe were previously? That's my first question.

[Fredrik Tiberg, executive]

Christopher, I think, I mean, what we are saying and we're communicating is that we are basically tracking along the mid of our guidance. That's the results that we have provided now. And if you're looking -- I mean, obviously, we'll have different models that I think we have not found a reason to change our guidance at this point. And we are expecting to follow this track going forward.

I mean, Jon, do you have anything that you would like to add there?

[Jon U. Alonso, executive]

No. So far, our major investment areas are the U.S. is public information. We disclosed, we intend to increase our investment level by SEK 300 million, mostly related to the U.S., and we are progressing aligned with our activities. So the investment will increase, especially in the second half of the year. And right now, we are aligned with the guidance we have provided in the top line. If I remember, okay, our company revenue has grown 37%, which is exactly the midpoint of provided guidance for the full year, 33% to 42%. And it is true that our profit before taxes has been strong versus what the market was expecting, SEK 97 million. But as said, we have 9 months to go, and we expect to reach the investment of SEK 1.3 billion -- slightly above SEK 1.3 billion we provided in our guidance. So right now, we -- in the first quarter, 3 months have started, and we don't see solid reasons to change our guidance.

[Christopher Uhde, analyst]

Okay. Great. And then I guess my second question would be -- so one of your competitors recently talked about partnerships with pharmacy grocery chains to be able to enable patients to administer the product in more convenient locations, so I guess, closer to patients' homes. Is this something that you guys are working on? Do you see it as a potential key driver? Or is it just one more piece of the puzzle? And then I guess, one, still on the subject of the OUD. In terms of competition, in some of your early launch markets, you now have, yes, more than you had before, perhaps. To what extent are you feeling or noticing this impact?

[Fredrik Tiberg, executive]

I didn't understand the last question -- the finish of that question, but can you repeat that? To what extent impact it was...

[Christopher Uhde, analyst]

Yes, sure. Of competition, I guess you have other long-acting injectable, are you noticing any...

[Fredrik Tiberg, executive]

Okay. That's a very good question. So I mean, we can start with that. I think that in most of our markets or all of our markets, we haven't seen the competitive landscape change very significantly, I would say, in any geographic territory yet. So of course, U.S. is a new situation. But otherwise, in the markets where we are very strong, like Finland, extremely strong, we are -- we continue to see growth, which we, of course, are very happy with. And we haven't seen a big penetration of any competitor product yet.

When it comes to alternate pathways and distribution models in the U.S., I would say that we have -- and I think we have mentioned this in earlier presentations that we have developed kind of pharmacy chain injection model, which is being used, especially in the Australian territory because there were kind of a stock up or there was a difficulty -- capacity limitation, you could say, in specialty clinics. And this model is being applied elsewhere. And I think there's very important groups here, and this is also an important initiative for patients in our different markets.

And similarly, in the U.S., I cannot speak about this topic here, but I understand that it's the model that Indivior is developing, for instance. And of course, it's reasonable to expect that other parties are using similar approaches. But it is a very important thing because, I mean, this -- we should optimize the pathways for these patients treatment that's accessible as possible both regionally and in the large cities. And I think there's a large possibility in just improving these systems going forward. So I can only confirm the importance of this.

[Christopher Uhde, analyst]

Okay. Great. And then, I guess, my last question would be on the pipeline. What can you tell us about the additional GLP-1 analog testing that you mentioned, including whether any is proprietary? And for semaglutide, would you seriously consider taking this to market without a partnership with Novo?

[Fredrik Tiberg, executive]

Okay. When it comes to the first question, I mean, we will communicate as we go along specifics. At this point, I think this is not our intention. But we have some interesting programs going forward. They are still a little bit earlier in terms of development. So therefore, we are not choosing to communicate on that note.

What was the second question?

[Jon U. Alonso, executive]

The ownership with Novo.

[Fredrik Tiberg, executive]

Yes, I mean, we are -- we have only decided to develop the product up to and beyond first clinical trial. Whether or not we will change our focus and do Phase II or other trials, this would be a topic for the future. But obviously, we are not expecting to be marketing products in the large indications here. But this is something that we will think about and communicate going forward. But our primary intent is not to bring this to commercialization. I cannot comment on the Novo question.

[Operator]

The next question is from [indiscernible] Asset Management.

[Unknown Analyst]

So first of all, congrats on quarter and particularly the development in the U.S., and I have two questions. So the first one is on the GLP-1 study related to Novo Nordisk. And I guess the idea here is to open up for monthly shots. But is there also other benefits to this? And can you say something about the potential? And secondly, I understand that the development in Buvidal may be affected by stocking. Is this again related to the development in your working capital for the quarter?

[Fredrik Tiberg, executive]

Yes. Well, starting out with the first question about GLP-1. So of course, there are multiple considerations there. I mean everything from the titration process up to therapeutic levels or to -- so dose increases to convenience of weekly or monthly treatments. And this is also dependent on the patient group. Of course, longer duration products have specific and maybe the highest interest in groups where compliance is challenging. But I mean, as a general rule, the larger the time frame between administrations, the better for the patients as long as you have the correct PK profile. So I think the benefits can be everything from compliance, titration up to the efficacy and exposure range that you are able to cover with the product. So -- and we are, of course, looking into all of these aspects.

I think the second question, I'll just leave over to Jon. Are you -- is that sufficient on the GLP-1, Jon?

[Jon U. Alonso, executive]

All good. And regarding working capital, the answer is, yes. Partially, the increase in our inventories is due to that. But also we have made a conscious decision to try to increase the [indiscernible] material aspect. So this is a conscious company decision. So it's a combination of both.

[Operator]

There are no more questions at this time. So I'll hand the word back to you, Fredrik.

[Fredrik Tiberg, executive]

Okay. Thank you so much. I think all I want to say is thank you for joining this call, and I'm looking forward to giving you the next update in June -- July 17. So until then, have a great day, and please enjoy the holidays if you have them coming up here.