Camurus AB

STO:CAMX

Earnings Call Transcript 2020-Q2

[Operator]

Ladies and gentlemen, welcome to Camurus Q2 Results Presentation. Today, I am pleased to present CEO, Fredrik Tiberg. [Operator Instructions] Please begin your meeting.

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Thank you. Good afternoon, everyone. And welcome to our Q2 and half year results presentation. It's been another good year -- good quarter for Camurus. Before starting, I want to alert you to our forward-looking statements, which you can read on your own leisure. Slide 3, please, to the agenda. In today's presentation, we will provide an update on our financial results, market performance and pipeline progress. We will finish off with key takeaways and some questions. And with me today, I have Chief Financial Officer, Eva Pinotti-Lindqvist; and Chief Commercial Officer, Richard Jameson. Let's start on Slide 4. So as I said, we had a good quarter. We continued to make excellent progress across business areas toward fulfilling and exceeding our goals for the year. Key highlights in the quarter included a strong financial development and growth of sales of Buvidal, market expansion to second wave countries in the EU, a request for final market approval of Brixadi was sent to and accepted by the U.S. FDA with a PDUFA date set to 1st December 2020. An arbitration process was initiated in England following our issuance of a material breach notice. And we continued to advance key projects in our pipeline of innovative treatments and announced positive Phase II results in the collaboration with Rhythm. After the period, we successfully completed a directed share issue rating, approximately SEK 300 million in gross proceeds, to increase our financial flexibility and to be able to invest in market expansion for Buvidal, development of a new indication for our long-acting octreotide program and for general corporate and business development activities. So going over to Slide 5. In the second quarter, on the financial side, we delivered strong growth and performance. Our net revenues amounted to SEK 80.8 million, which was up 580% compared to the same quarter in 2019. Our product sales were SEK 75.8 million, which was an increase of approximately 570% against last year and 56% compared to the last quarter. Our operating expenditures were SEK 102.1 million, actually down by 15% compared to 2019. And this was mainly due to the fact that we took a lot of start-up costs for the Phase III acromegaly study in the second quarter of 2019. So the result for the period, it ended at minus SEK 20 million, which corresponds to a 77% improvement compared to 2019. At the end of the quarter, we had a cash position of SEK 222 million. And to this, we can now add the proceeds from the directed share issue, which has further strengthened our cash position. So moving on then into highlights of this presentation, it's updating on Buvidal. And this is there on Slide #6. So as you're aware, I think on the negative side here, of course, is that opioid dependence continues to be a huge and growing global problem, which has become a public health crisis in the U.S. as well as in Canada and a number of other countries. Unfortunately, an already dire situation has only gotten worse by the COVID-19 pandemic. Drug overdoses are soaring around the world with a significant spike seen in the data, for instance, provided in the recent Washington Post article. This is on top of an already unacceptable overdose death rate in the U.S. of almost 130 people per day. Actually, New York Times published yesterday another update showing that overdoses are increasing -- drug overdoses are beginning to increase again in 2019, and as you see, continuing in 2020. So there is an urgent need for new treatments that can provide improved outcomes and improved access to treatment as well, reduce burdens on patients and the healthcare system. And we see that our product, Buvidal, can deliver that. And at this point, I would like to leave over the word to Richard Jameson for a short update on the commercials. Slide 7. Richard, please?

[Richard Jameson, Chief Commercial Officer]

Yes. Great. Thanks, Fredrik. Firstly, I'd like to say what a pleasure it is to work each day with a product that really does make such a difference to the lives of patients from the feedback we receive and also contribute significantly to society as a whole. As you already know, Buvidal is the first prolonged release injection approved treatment of opioid dependence in the EU and Australia. It's the only treatment available in multiple weekly and monthly dosages, allowing flexibility to individualize treatment according to a patient's need, which is so important in this area. It's also the only prolonged release treatment that demonstrated superiority in head-to-head clinical studies against standard treatments with daily buprenorphine, and a bit more about that later. So if we could move to Slide 8, please. We're very pleased with the continued strong growth of Buvidal in Q2 and the continued amazing feedback we received from both patients and health care professionals from our markets. For the fourth quarter -- fourth consecutive quarter, Buvidal sales increased by over 50%, and we now have in the region of about 9,500 patients in treatment in our markets. The COVID-19 pandemic has had positive and negative effects on sales, as you'd expect. It's been a catalyst for the transition from daily medication to weekly and monthly treatments in clinics with Buvidal experience, and has shown clear and obvious benefits for the criminal justice setting. And our teams have done a really excellent job supporting and training clinics via digital platforms when access to clinics has been stalled due to the pandemic. On the counter, that limited access has -- to health care professionals, has delayed patient initiations of Buvidal in some clinics and some markets. But during that time, in Q2, we also achieved several significant milestones in addressing the market access challenges that we raised in the Q1 report. In Sweden, we received approval for reimbursement, and now seeing a positive impact of this across the country. In Australia, the prescriber base was widened by TGA to include GPs, and we've already established accounts for GPs with high patient numbers. And in Germany, the remuneration change has resulted in more clinics initiating Buvidal in the community setting. And during this time, we also continued to work to establish Buvidal in the next wave of launch markets. We saw a legislative change in Austria, which allowed for the launch of Buvidal, and the first patients have now been initiated treatment Austria. We're also preparing for launch in second wave countries with Belgium, Netherlands, Spain and Iceland expected to launch in Q3 as well as supporting the MENA region, where patients have already started to access Buvidal. So if we can move now to Slide 9. We're also making good progress on our regulatory activities. Firstly, to open new countries, we have ongoing reviews of the MAAs in New Zealand and Switzerland, and are supporting NewBridge with their regulatory submissions for the MENA region. And we're also delivering on our life-cycle management plans with line-extension applications and label enhancement submitted to EMA. As you heard from Fredrik earlier, our U.S. partner has now a clear path to market approval. The FDA granted the Citizen Petition in 2019 and the filing for the final FDA approval of the NDA for Brixadi was accepted by the FDA, and the PDUFA date now is the 1st of December 2020. So we really have now built a strong foundation for continued growth of Buvidal, supported by the unique clinical data and the great patient and physician experience that we're seeing. And I'll hand back to Fredrik now to update on the progress on the clinical side, and moving on to Slide 10. So Fredrik?

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Thank you, Richard. During the period, we have continued to build on the already compelling scientific evidence base for Buvidal. We and our scientific collaborators, and I must give them a large thank you for their great work, have been active in preparing papers and publishing in peer-reviewed journals. Despite the COVID-19 situation, we have been able to present new important data for Buvidal at key scientific conferences, including ASAM, American Society of Addiction Medicine, in April. And also recently at one of the key meetings in the year, the CPDD Annual Meeting, where results from 2 prospective clinical studies, the DEBUT and UNLOC-T studies were presented. In both cases, demonstrating significant benefit of Buvidal in real-world like clinical settings. So moving over to Slide 11. I think this was one really strong example of our development activities. The Buvidal study was a 24-week randomized controlled study performed in the community setting in Australia, where the focus was on patient-reported outcomes, PROs, including patients' global satisfaction with treatment as a primary endpoint and other satisfaction measurements, treatment burden, quality of life as important secondary endpoints. Despite the quite limited size of the study featuring a total of 120 patients with 16 each group, we were able to demonstrate superiority for the primary endpoints with statistically significant improvements in patient-reported global satisfaction. And also improvements in patients' views on the effectiveness and convenience of the Buvidal treatment versus standard of care. In Australia, majority of patients are on sublingual film. So Suboxone sublingual film is the standard treatment in most instances. In addition, patients treated with Buvidal reported significantly reduced treatment burden, higher quality of life and improved physical health compared to those receiving daily sublingual treatments. So overall, the DEBUT study was highly successful, thanks to the excellent work and efforts of our investigators, clinical staff and, not the least, the patients that were participating in this important study. So going over to Slide 12. We also completed a second study that was presented -- results were presented at the CPDD with the UNLOC-T study. It was a non-randomized, open-label, multisite study in patients who received Buvidal versus control group on methadone. And the study was performed in 8 prisons in New South Wales. The sponsor of this study was actually the Government of New South Wales, with Camurus contributing with drug product. This unique study showed that Buvidal had a good safety profile with no observed events of drug tampering or diversion. It resulted in significant reduction in drug withdrawal and a high retention in treatment in this setting. Importantly, the study also showed significant reduction in treatment costs with Buvidal. So it compared -- with a 60% reduction compared to methadone and 90% reduction of treatment costs compared to sublingual buprenorphine reported from the study. 3 months after the study was completed, there was more than 500 patients in treatment that had switched to Buvidal in New South Wales prisons, and this process continues. To further build on our already strong scientific evidence base with Buvidal, we also have -- during the second quarter, we started to recruit patients into the investigator-led study in Germany called ARIDE comparing Buvidal in Germany, weekly and monthly against treatment as usual, and we're looking forward to the results from this study. It's a 1-year study, together with the recruitment, we believe it will take approximately 24 months to complete. All right. Going forward here, I will wrap up the updates about Buvidal by mentioning also the arbitration process that was recently initiated in England by our U.S. partner, Braeburn, after we had served them a material breach notice, which questioned their performance in relation to preparing for regulatory approval and commercialization of CAM2038 for opioid dependence in Canada as well as the approval and launch of Brixadi weekly for OUD in the U.S. and also preparing for regulatory approval and commercialization of CAM2038 for chronic pain. Braeburn has, as you can see in our press release, disputed the validity of our material breach notice, and this will be decided upon through a 90-day arbitration process, with the potential outcomes that if the tribunal finds that Braeburn is in material breach, Camurus will be entitled -- to subject to a 60-day cure period to terminate the agreement and regain all rights granted to them. Should the tribunal find that Braeburn is not in breach, then -- material breach that is, then the license agreement will remain in full force and effect.So -- but for further information and details on this, we refer to our press release from the 15th of June 2020. And going forward, we will inform of any material developments in relation to the arbitration process as per market rules, of course. So with that, I think I'll move into the second part of the presentation. It's giving you an update on the pipeline progress. During the quarter, we have achieved very significant progress in both in-house and partner programs, including CAM2038 for chronic pain, CAM2029 for acromegaly and neuroendocrine tumors, and, not the least, CAM4072 for genetic obesity disorders as well as other development programs that we have ongoing in-house. We have got several patent applications granted in the period, including a new patent for 2029 in the U.S., which has the validity until late 2037, which is, of course, very positive. Going to Slide 15, I'll just give you some snapshot of where we are with our different activities -- key activities. For CAM2038 in chronic pain, we held a pre-submission meeting with the EMA Rapporteurs, and we are now in the process of finalizing work on product positioning and pricing, and are intending to submit an MAA to the EMA later in this year then, during the second half, of course. For the acromegaly program or 2029, I should say, in a broader sense, we initiated recruitment in the Phase III -- reinitiated recruitment in the ACRO Phase III studies, and after COVID-19 stall. And we also worked a lot with the autoinjector development, which is now ready for clinical trials. And we are about to start bridging PK study for the autoinjector in second half of the year. We're also working with a neuroendocrine tumor program with Phase III studies planned to start early 2021. And also we have decided to start a new program in polycystic liver disease, a new indication, which will be starting late Q4 2020. We have also had some progress with 2043, we are planning to start a Phase II study later this year in Raynaud's phenomenon. So -- but I will start going over to Slide 16 here and just give you an update about this polycystic liver disease indication that we are progressing into. It is a rare chronic disorder with significant negative impact on patient's well-being and quality of life. Today, there is no approved treatment for PLD but results from clinical studies of octreotide in patients with PLD suggest that CAM2029 can be an effective treatment. We believe that we have a good exposure range for this indication. Our market research also suggests that there is a significant market opportunity for 2029 in PLD with estimated peak sales potentially in the region of USD 400 million. After financing and Board approval, we are now initiating formal development activities as a part of the overall 2029 clinical development program, shown on Slide 17. So here, Slide 17, as you can see, we have 2 Phase III studies ongoing in acromegaly, and are planning to start a bridging PK study for the autoinjector second half, a Phase II study for PLD around the new year and also a pivotal trial of 2029 for next -- early '21. So it's quite a lot of activities going on. The ACRO program has been affected by the COVID-19 outbreak, but we think that the effect will be limited to a delay of between 3 to 6 months in worst case. So we expect completion of the Phase III efficacy study in the second half of 2021 and the long-term safety study in the first half of 2022, with the ambition to submit a first MAA/NDA in the second half of 2022. So moving over to Slide 18 and to some updates on our partnerships. In the quarter, we announced positive data from the Phase II study of once-weekly setmelanotide, an MC4 agonist, in participants with severe obesity. The study was performed by our partner, Rhythm. And it showed that the once-weekly fluid crystal formulation of setmelanotide resulted in comparable weight loss and daily injections with the potential of both improved patient convenience and compliance, of course. Both formulations were well tolerated systemically and locally. And the next step for Rhythm in this process is to have discussions with the FDA about the registration path for the once-weekly formulation. And I should also say that an NDA is currently progressing in review for the once-daily formulation in the U.S. So with that, I also should mention that we have had progress, of course, in the collaboration with RA Pharmaceuticals with the plans to start clinical development later on this year. Going to the next slide, Slide 19. I think you can see that we definitely have had lots of positive results during the first half of the year and also some good news flow, and we are expecting this to continue during the third and fourth quarter. Of course, one important highlight here being the expected U.S. approval for Brixadi in December. So going over to Slide 20. I think in conclusion to this presentation, we have really had a successful second quarter, where we have delivered strong growth with net revenues of over 50% for the fourth quarter in a row. This was mainly due to the continued high demand for Buvidal, improved market access and also expansion, of course, into new markets, a process that we will continue over the months and years to come. Finally, we also saw good progress in our pipeline, collaborations with pharma partners with the potential to become significant value drivers in the coming years. Before I finish, I would just like to go to Slide 21 and -- for an update about our full year 2020 financial outlook, and say that we are repeating the updated guidance from the 23rd of June this year. The guidance for net revenues was then raised to the interval from SEK 290 million to SEK 330 million to SEK 340 million to SEK 380 million for net revenues. And we also increased, of course, the guidance for product sales from SEK 240 million to SEK 280 million to SEK 310 million to SEK 340 million. Guidance for full year OpEx remains the same. So in summary, we do expect significantly better 2020 results than anticipated. And with this, I think we are standing very strong here at this moment. And I think that's a good time to conclude the presentation and open up for questions. So please.

[Operator]

[Operator Instructions] And our first question is from Peter Sehested from Handelsbanken.

[Peter Sehested, Research Analyst]

This is Peter from Handelsbanken. I actually had one relating to your ongoing, let's say, dispute or whatever legal interaction with Braeburn. In that respect, first of all, you say that your legal costs are sort of embedded in your full year guidance. So either you've planned this from the beginning or the spread in that guidance is so large that the costs are so low that it doesn't really impact costs in any way significantly. Secondly, if we assume that you -- that you assume right to bring Brixadi in the U.S., I guess you would have to explain to investors what you are seeing going forward, how long time will it take for you to establish the commercial sales force, et cetera, et cetera, in the U.S.? So just your thoughts on those 2 items.

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Yes. I think that first, to your comment, it's, of course, that we have not planned for this from the beginning. But simply, the situation is that we have saved quite some costs and due to COVID-19, and this is partly because the marketing budgets, et cetera, have gone down significantly. And we have also seen other effects on our cost base. So -- and that includes, of course, the R&D that has not been according to our -- as you say, the COVID-19 stall has impacted the -- so that just is explained by those cost savings, you should say. I should say that, of course, the costs that we have saved on the Phase III stall, they are, of course, just shifted to later on, and they will become more into 2021. So that was the answer to your first question. Could you please repeat the second one, Peter?

[Peter Sehested, Research Analyst]

Yes, sure. In the case that you resume rights to Brixadi in the U.S., I mean, you have to answer questions regarding what to do. Either we out-license it or go yourself. That will require investment in commercial infrastructure, et cetera, et cetera. A delay to launch or potentially also a bigger share of the cake down the road. So I mean, what kind of thoughts have you made at this point in time should you resume rights to Brixadi in the U.S.?

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Well, I should say that -- I mean, I think it's premature for us to discuss that. I mean, we're, of course, planning for all scenarios. And -- but I do think it is premature at this stage to discuss that option. But we will certainly update the market as we go along here with any alternatives. But we will look at the situation, and we will plan for all eventual scenarios. That's what I can say today.

[Peter Sehested, Research Analyst]

Okay. And you're still looking for some kind of resolution around October?

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Well, I mean, what we have said that it's stipulated at a 90-day period. And definitely, we will update the market on any material developments in this process. But at this stage, we will stick to the information that we have provided in this press release. And should there be any significant deviations from that information, of course, we will be updating the market of that.

[Operator]

[Operator Instructions]And as are no further questions, I will hand it right back to the speakers for any final comments.

[Fredrik Tiberg, CEO, President, Head of Research & Director]

Okay. Thank you. Thank you all for joining this call. And we, of course, from Camurus side, wish you all a very nice summer, a safe summer as well. And our next quarterly call is the 5th of November at 2:00 p.m. CET. So looking forward to presenting our progress to you again then. Meanwhile, enjoy the summer. Thank you.

[Operator]

This now concludes the conference call. Thank you all for attending, you may now disconnect your lines.