Camurus AB

STO:CAMX

Earnings Call Analysis

Camurus Q2: Robust Growth and Strong Financial Outlook

Camurus had a robust Q2 with revenue climbing to SEK 445 million, marking a 46% year-on-year increase excluding prior onetime revenue. The company's profit before tax hit SEK 104 million, and its cash position strengthened to SEK 2.6 billion. Buvidal sales were impressive at SEK 400 million, up 31%. Brixadi in the U.S. saw royalties rise by 73% to SEK 45 million. The company’s R&D is on track, with the FDA reviewing CAM2029 for acromegaly, aiming for a PDUFA decision in October. The firm reiterated its 2024 guidance, projecting to reach the mid- to high-end of expectations【4:0†source】【4:1†source】【4:2†source】.

A Robust Show of Growth in Q2

In the second quarter of 2024, Camurus reported impressive results highlighted by a 46% increase in revenue year-on-year, totalling SEK 445 million. This growth rate excludes a substantial one-time revenue from the 2023 U.S. approval of Brixadi. The company's profit before tax reached SEK 104 million, showing a notable improvement in profitability, positioning them for a strong upward trajectory.

Strength in Core Products: Buvidal and Brixadi

Sales of Buvidal surged to SEK 400 million, reflecting a 31% year-on-year increase. The positive momentum is evident as sales improved by 10% compared to the previous quarter. In the U.S., royalties from Brixadi shot up 73% quarter-on-quarter to SEK 45 million, indicating strong adoption and market penetration in opioid dependence treatment. These figures underscore the growing demand for their core therapeutic products.

Financial Health and Operational Efficiency

Camurus demonstrated a remarkable gross margin of 92.9% in Q2, a 233 basis point improvement from the prior year's quarter. Enhanced supply chain efficiencies, alongside the increased volume of Buvidal, played a central role in this boost. While total operational expenses grew by 23% to SEK 331 million, this spend is justified by strategic investments in marketing and distribution to enhance market penetration and support ongoing R&D efforts.

Strategic Advancements in Research & Development

The R&D pipeline is progressing well, with EMA accepting the market authorization application for CAM2029 in acromegaly. The FDA's review is also advancing toward a PDUFA date set for October, which could significantly influence revenue growth in the coming years. Their clinical studies, particularly for CAM2029 and a once-monthly semaglutide formulation, are on track, reinforcing Camurus' commitment to innovation in therapeutics.

Revised Guidance: Optimism for the Future

Due to the strong Q2 performance and positive market reactions, Camurus raised its full-year 2024 financial outlook, projecting revenues to be at the mid- to high end of previous expectations. This revision indicates confidence in the company’s growth trajectory, catalyzed by their expanding product portfolio and evolving market landscape.

Market Dynamics and Future Prospects

The European market continues to show promising growth, particularly for Buvidal. Notable gains are being observed in the U.K., Australia, and Germany, with expectations to enhance operational effectiveness across these territories. Importantly, the company is witnessing a consistent demand even amid pending reimbursement reforms in key markets, suggesting a solid market position moving forward.

Conclusion: A Company on the Rise

Camurus is entering a critical phase where its operational strategies and innovative developments may yield substantial returns for investors. The combination of robust sales growth, strategic investments in R&D, and improved financial metrics positions the company favorably. Investors should keep a close eye on upcoming FDA approvals and market expansions, as these will likely dictate the company's trajectory in the coming quarters.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to Camurus' Q2 report for 2024. [Operator Instructions]

Now I will hand the conference over to CEO, Fredrik Tiberg. Please go ahead.

[Fredrik Tiberg, executive]

Thank you so much, and good day, everyone. Thank you for joining. It's a pleasure to report on Camurus' second quarter earnings today. Before starting, please note our forward-looking statements.

So the agenda for today's call will be a short summary of second quarter highlights, followed by a review of financial performance. We will then move to commercial and R&D pipeline updates and finish off with Q&A. And with me in the call today is like previously is Jon Garay, our CFO; and Richard Jameson, Chief Commercial Officer.

So we had a solid second quarter, with strong operational performance across the business. This resulted in a positive financial development. Our revenues in the quarter were SEK 445 million, representing a 46% year-on-year growth, excluding a onetime revenue from the U.S. approval of Brixadi in 2023.

Profit before tax in the quarter was SEK 104 million and SEK 201 million for the first half year. Our cash position at the end of the quarter grew to SEK 2.6 billion with no debt in the company.

Commercially, we continued advancing our global leading position in the opioid dependence treatment area. Buvidal sales grew to SEK 400 million in the quarter. In the U.S., the adoption of Brixadi continued to be strong and royalties increased by 73% quarter-on-quarter to SEK 45 million.

In R&D, we progressed our pipeline according to plan. EMA issued an acceptance for review of our market authorization application for CAM2029 in acromegaly. And in parallel, FDA's review of the corresponding new drug application for CAM2029 advanced towards the PDUFA date in October.

On the clinical side, the core phase of the ACROINNOVA 2 study was completed. I'll present some of the results later here with final results announced yesterday. We also completed our preclinical studies for once monthly semaglutide, and are preparing for a planned start of clinical study by the end of the year.

So overall, we had a very productive second quarter with significant progress across our business. And with this positive initial remark, I'll leave the word to Jon for a financial review.

[Jon U. Alonso, executive]

Thanks a lot, Fredrik, and good afternoon, everyone. During the quarter, Camurus continued its development, delivering strong profitability and remains on track to achieve 2027 vision.

I would like to share now key highlights of our financial performance this quarter. At the end of the quarter, Camurus achieved SEK 445 million total revenue compared to SEK 674 million in the same period prior year. Excluding SEK 369 million onetime revenues driven by Brixadi FDA approval in 2023, company revenues grew by SEK 139 million, delivering a growth of 46% versus same period last year.

Buvidal sales reached SEK 400 million, growing 31% versus prior year and 10% versus prior quarter. Swedish krona depreciation has impacted positively reported figures by 3% year-on-year basis and 4% versus prior quarter. Brixadi sales in the U.S. represented a SEK 45 million royalty income in the quarter, representing a SEK 19 million improvement versus prior quarter.

Company profit before tax was SEK 104 million, achieving an earnings per share after dilution of SEK 1.25 equivalent of profit after tax of SEK 74 million in the quarter.

Moving to next slide, we can see the main components of our profit before tax. Company gross margin reached 92.9% in the quarter. Excluding onetime revenues impact, it represents an improvement of 233 basis points versus same period prior year, driven by 3 major factors: Firstly, supply chain efficiencies driven by Buvidal volumes scale up, represented 171 basis points. Secondly, 83 basis points are driven by Brixadi royalty. And thirdly, FX represented a negative impact of 21 basis points.

Total OpEx reached SEK 331 million, representing a 23% increase versus same period prior year, driven by following factors: marketing and distribution investment to support market penetration in own territories, expansion of Buvidal into new markets and U.S. operations grew 39% to SEK 131 million.

Administrative expenses aligned with corporate evolution to substantiate company development grew 97% versus same period last year to SEK 24 million. R&D investment reached SEK 174 million, growing 8% versus same period prior year, driven by progress in our preclinical and clinical pipeline.

Company profit before tax reached SEK 104 million. Excluding onetime revenues impact, it represents an improvement by SEK 92 million, increasing 763% versus same period prior year.

Company cash position at quarter end was SEK 2.6 billion. Camurus improved its cash position by SEK 293 million in the quarter, driven by following 4 factors: Firstly, company operations generated SEK 155 million. Secondly, working capital increased by SEK 56 million, driven by receivables growth mainly. Thirdly, financing activities, mainly driven by exercise of stock option program by our employees, delivered SEK 196 million. And finally, company invested SEK 2 million in technological activities. At end of quarter, Camurus has no debt.

All in all, Camurus closed its second quarter with a strong operational performance and solid financial position. Camurus raised its 2024 financial outlook and expects to finalize in the mid- to high end of current 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 as usual, I will start with an update on cameras markets and then progress to the progress with Brixadi in the U.S.

So starting with the Camurus' markets. In Q2, the positive long-term growth trajectory for Buvidal continued, with sales of Buvidal during the quarter of SEK 400 million, a 31% increase versus same period last year, and 10% versus the previous quarter.

Strong performances were seen across all our major markets, notably in the U.K., where funding continues to reach clinics and the criminal justice settings as we anticipated.

In Australia, we saw ordering patterns normalize after the recent changes in the reimbursement system, alongside continued growth of the long-acting buprenorphine segment, where we maintain a share of 80%. In Australia, we have year-on-year growth above 20%.

In Germany, growth was also strong, notably in the community setting, as a result of strong sales force execution and new market initiatives. France continues to make headway in the specialty center setting, and the French government recently acknowledged the utility of long-acting injectable buprenorphine with the release of additional funding for the coming year.

And finally, in Spain, where it's growing -- where Buvidal is growing well, we have high and growing penetration in the buprenorphine segment and seeing patient capture now from methadone.

At the end of the quarter, we estimate we have well above 53,000 patients in treatment with Buvidal. We also continue to seek and to expand the geographical reach for Buvidal, and have reimbursement applications expected to finalize in Q3 and additional regulatory applications in progress.

So now moving to the U.S., considering the launch just 9 months ago, the results for Q2 were impressive with growing patient capture, resulting in a continued positive picture for our royalty stream, with revenue for the quarter of SEK 45 million, a 73% increase versus Q1.

Braeburn have continued to execute on their plans, payer support continues to improve. And remember, Brixadi payer coverage after 6 months was already aligned with other long-acting medications in OUD.

Other leading indicators are positive, including continuing high interest in the medical education, high levels of filling of prescriptions in all channels and the broad and expanding fully functioning distribution network. The positive dynamics on the execution is also resulting in a high patient and health care professional satisfaction rate.

The high adoption of Brixadi, alongside a significant unmet medical need and interest from patients and treatment providers, has reinforced our positive view on the market potential for Brixadi in the U.S.

During the quarter, we also continued to grow and share the growing evidence base for Buvidal and Brixadi. Key papers were published this quarter with 2 in JAMA Open Network. The first indicates that Buvidal may be favorable to sublingual buprenorphine in reducing fentanyl use, and the second from investigators at Yale University, highlighted the potential of weekly Buvidal to initiate treatment for patients presenting in the emergency room setting for instance after an overdose event, and that facilitates the transition to longer-term treatment.

In Q2, we've had significant presence at many of the scientific congresses across our markets, with presentations on the experience in patients with multiple psychiatric comorbidities, health care professionals' positive perspective on the treatment of the long-acting buprenorphine, patient experiences from start of treatment with Buvidal in France and treatment dynamics in Australia confirming the utility of different doses and the importance of a product with individualized and flexible dosing.

So on that point, I will hand back to Fredrik.

[Fredrik Tiberg, executive]

Thank you, Richard. So over to a quick R&D update. And I will begin with a brief presentation on the top line final results from the 52-week Phase III ACROINNOVA 2 study, which was recently completed and announced yesterday. The study included a total of 135 participants on stable doses of standard of care at baseline. These 81 were new patients in the trial, and 54 were rollover patients from 24 weeks of randomized treatment with CAM2029 or placebo in the ACROINNOVA 1 study.

For placebo patients, we have 2 baselines here, the standard of care baseline. So when entering the study on standard of care and the placebo baseline after 24 weeks of receiving placebo. Primary endpoint of the study was safety and tolerability over 52 weeks and secondary efficacy endpoints included change from baseline in biochemical response, symptom scores, quality of life and patient -- and treatment satisfaction.

Starting with the efficacy endpoints. Here are the response rates for insulin growth factor I, IGF-I, below or equal to 1x the upper limit of normal after 1 year of treatment with CAM2029 versus standard of care at baseline. Here, standard of care is either long-acting intramuscular octreotide or lanreotide depot or Autogel as it is called in Europe.

In new studied patients, mostly consisting of uncontrolled patients on stable doses of standard of care, there was a significant increase in the response rate of 22.8% after switching to treatment with CAM2029 for 52 weeks. The improvement represented a key outcome of the ACROINNOVA 2 study.

For rollover patients who are generally biochemically controlled on stable doses of standard of care at the start of the study, these remained well controlled after switching to treatment with CAM2029. Overall, including also placebo patients from ACROINNOVA 1, there was an increase in response rate of 12.7% from base end of treatment with CAM2029.

If we look specifically at the placebo patients in the study, they were well controlled with high IGF-1 response rates at standard of care, and remain control until the end of treatment with CAM2029. However, during the placebo period, a portion of these patients, majority of them, lost biochemical response. Importantly, all of these, 68.5%, regained response during treatment with CAM2029. These results provide support for the long-term efficacy of CAM2029 in biochemically controlled and uncontrolled patients as well as patients initiating treatment after brief interventions or after previous treatment episodes.

Moving over to symptoms and looking at the full population, remembering this includes the rollover patients who received placebo during the first 6 months. As you can see in the graph, the symptom burden score estimated by the acromegaly index of severity, AIS score, continuously improved on treatment with CAM2029 compared to the standard of care at baselines.

In addition to the improved AIS score, we also saw an increase in the number of patients who had no acromegaly symptoms after switching to CAM2029, and no tendency of breakthrough symptoms at the end of the dosing intervals.

So now over to patient-reported outcomes, starting with quality of life. As you can see on the figure here, we saw a significant improvement of the AcroQOL, total and psychological scores after switching to CAM2029. Note for the context here that these patients were all on stable doses with standard of care before switching.

Continuing with patient's reported treatment satisfaction versus standard of care at baseline. The graph on the left-hand side shows significant improvements in the validated treatment satisfaction questionnaire for medication, TSQM, convenience, effectiveness and global satisfaction scores. The side effect score was also numerically improved compared to standard of care. However, the effect was not statistically significant.

Finally, on the right-hand side here, the patients' satisfaction score clearly favored CAM2029, with the majority of patients rating the treatment as better than their previous treatment. And I think 56 patients here rating it as much better.

So finally, and moving over to safety, CAM2029 was generally well tolerated with a safety profile consistent with standard of care. Most adverse events were mild or moderate, grade 1 or 2 in intensity, with transient injection site reactions and gastrointestinal events being the most frequent observations. No severe adverse event relating to CAM2029 was observed in the trial. One serious adverse event, the case of cholelithiasis of moderate intensity was reported in a rollover placebo patient. However, this was resolved and the patient continued treatment with CAM2029 throughout the trial. Two patients discontinued treatment due to 2 adverse events, one case of mild depression and one case of mild injection site reaction. Finally, no new safety signals were noted in adverse events, ECGs or laboratory tests.

In summary, we are very pleased with the ACROINNOVA 2 top line results, demonstrating a safety profile consistent with standard of care and compelling data on biochemical and symptom control during the 52 weeks of treatment, alongside significant improvements in patient-reported outcomes. Detailed results will be presented in an upcoming meeting or meetings and future publications, of course.

Based on the combined scientific evidence from the ACROINNOVA program, we believe CAM2029, if approved, has the potential to become a new standard treatment for patients with acromegaly, combining convenient once monthly self-administration with durable efficacy and also, of course, a safety profile.

We continue making good progress in the CAM2029 program across the treatment indication of acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease, and are looking forward to several key milestone events over the coming quarters, including the FDA approval decision in acromegaly by the PDUFA date of 21st of October 2024 and a planned launch of Oclaiz in the U.S. around the end of the year.

In GEP-NET, gastroenteropancreatic neuroendocrine tumors, we are expecting to finalize the core phase of the SORENTO study in H1 2025, and thereafter report top line results. This could allow for an NDA approval -- submission, I should say, to the FDA in -- sometime in the second half of next year, and applications in other geographies to follow.

So finally, top line results from the POSITANO study in PLD are expected early 2025.

In advance of the planned U.S. launch of Oclaiz, we have been active -- very active in sharing scientific evidence from the ACROINNOVA program. And this has included several presentations, both oral and posters at the leading endocrinology conferences, ECC and ENDO. During the quarter. We also arranged, very well attended and appreciated satellite symposium about new emerging treatments of acromegaly, including CAM2029, at the ECE in Stockholm in May.

So summing up the second quarter, I'm pleased with the continued strong performance of our teams, commercially as well as in development and the significant progress that we have made during the quarter. Buvidal sales grew and were reinforced across the markets in the EU, MENA and Australia. Brixadi uptake was also growing nicely in the U.S. Our pipeline continued to advance with significant events in terms of the acceptance of the EU MAA by EMA. And in parallel, we accelerated preparations for launch and the establishment of our U.S. organization, and also advanced early pipeline programs, including the once monthly semaglutide project.

As a result of the solid performance to date, we reiterate our guidance and expect to finalize, as Jon said earlier, in the mid- to high end of the previous interval.

So with that said, thank you, everybody, for listening. And Enaar, please take over the call for Q&A.

[Operator]

[Operator Instructions] The first question comes from Christopher Uhde from SEB.

[Christopher Uhde, analyst]

Hi there. Can you hear me?

[Fredrik Tiberg, executive]

Yes, we hear you very well, Christopher. Thank you.

[Christopher Uhde, analyst]

Excellent. Okay. So I guess I'd like to start asking in terms of Germany, some reimbursement reform was recently announced. And I wondered if that is the same as the reimbursement reform that you had previously discussed that was likely to have been delayed to -- I guess it was early next year. Could you comment on that, please?

[Fredrik Tiberg, executive]

Yes, I can do that. I mean, these are different processes. So the reimbursement reform is up to specifically related to Buvidal in any way. What we have been discussing is the change in the remuneration system, which is a different process and going on independently. And that is still targeted, I think, for early part of next year.

[Christopher Uhde, analyst]

And do you know what [indiscernible]

[Fredrik Tiberg, executive]

No. Yes, this is to do with the remuneration to doctors and not specifically reimbursement of the product, drug product.

[Christopher Uhde, analyst]

Right. Okay. Yes. And do you know what it was that actually resulted in the delay specifically? And how confident are you, because per my understanding, this has happened before, how confident are you that it will actually transpire in H1 '25?

[Fredrik Tiberg, executive]

Well, no, we cannot say by what level of confidence we have. What we understand is that all stakeholders in the process are positive and realize that there is a need for a change. So we have a good understanding of that. And we know that there is a large interest here, and this is our best prediction. However, I wouldn't give you a probability.

What is nice, though, and I want to stress in this quarter is, of course, that Germany, despite this change not having materialized yet, has been growing very strongly.

[Christopher Uhde, analyst]

Great. And then I guess I had a question on the gross margin for Buvidal. It seems to have been trending up slightly over the past few quarters. Is this something we should expect to continue? And how high do you think it can get as you improve -- get more leverage?

[Jon U. Alonso, executive]

Thanks a lot, Christopher. So yes, you are correct. The gross margin for Buvidal has been increasing for the last 4 consecutive quarters. I think in Q2, if you do the calc, it will be around 92.1%, and it's basically a combination of the volumes are scaling up. So it's giving us economies of scale in the manufacturing process. And then we are finding more efficient ways to ship the product to the market.

Can we assume that we will continue growing margins quarter-on-quarter? We are very prudent, and we think we are reaching the point in which the margin will remain there. We are already 92%, and we improved it from a base of 88% last year. We have always been saying that we expect the margin in the range of 90%, perhaps 91%. So this is where we are at the moment, Chris. But I don't think you can expect that the margin will continue growing -- of moving up to 93%, 94%, 95% is not realistic.

[Christopher Uhde, analyst]

May I ask a question on R&D and sort of the cost cadence there? Firstly, should we sort of still expect costs to move lower over the year?

And secondly, I noticed you mentioned a new long-acting formulation of Buvidal. Can you give us more details on that, please?

[Jon U. Alonso, executive]

So yes, our R&D investment year-to-date is in the range of SEK 350 million, and our full year guidance is in the range of SEK 0.6 billion. It can be 600 million-650 million.

It's true that we are going to launch a new program. Fredrik has announced in the interim report that the company is making the preparations to start a new clinical program in semaglutide. So we think that we are going to be in our market guidance in the range of SEK 0.6 billion-SEK 650 million, Christopher. This is our guidance at the moment for R&D.

[Fredrik Tiberg, executive]

With regards to the second question you have there, Christopher, about the longer-acting formulation, that is a development that is ongoing. We haven't given any indications on the status of this publicly. I would say that we don't expect it to affect our costs in this year or our long-term cost side here. I mean, all of our internal developments currently are in the long-range plan.

[Christopher Uhde, analyst]

Okay. And if I could just add one last question on R&D and then I'll turn over. The interim that you mentioned in the report for SORENTO, was it an interim where they looked at efficacy? Do they look at futility? What can you comment about that?

[Fredrik Tiberg, executive]

So I think that was a mistake. I did not mention an interim readout. I mean we do have safety monitoring independent, but we are not doing any futility analysis. So yes, it's not -- we don't do any interim analysis on efficacy, that we come at the end of...

[Operator]

The next question is from Oscar Haffen Lamm from Bryan Garnier.

[Oscar Haffen Lamm, analyst]

Congrats on the results. Regarding the GLP-1 program, I was wondering on when you plan on sharing preclinical results? And as a follow-up question, maybe if you can already, at this stage, provide some granularity on the upcoming Phase I trial that you guided towards year-end 2024 or start of 2025?

[Fredrik Tiberg, executive]

Yes. So thank you, Oscar. In regards to providing preclinical results, we have not in our plans to do that for various different reasons, at least not this year. In terms of the Phase I plan, Phase I or Phase Ib clinical study, I think you can expect that to be very similar to other studies in the segment, having similar components. We have said that it will be a dose-escalating study, a repeat dose study and in a patient population that is of relevance for the indications -- the target indications. But other than that, we will, of course, disclose the study as soon as it is -- the CTA is approved.

[Oscar Haffen Lamm, analyst]

Okay. Very clear. And perhaps a second question. I was wondering if you could provide some granularity on the number of patients that have been treated with the Brixadi in the U.S., perhaps you already said it before, but perhaps I missed it.

[Fredrik Tiberg, executive]

Yes. So we haven't, because of the closeness of this meeting to closing of the quarter, we haven't given any updates, so we haven't received such updates that we can provide to the market. I mean there are estimates, including by analysts here, and we have the 7,000 patients that we reported last quarter and the growth.

So -- but I mean, as we understand it and from our partner, we are pleased with the continued uptake. But I cannot give you a good number at this point.

[Operator]

[Operator Instructions] We are going to have a brief pause, just to see if there are any more questions coming in. And it does not seem that way. So I hand over back to you, Fredrik.

[Fredrik Tiberg, executive]

Okay. Thank you so much, and thank you, everybody, for attending this call today. This was a very strong quarter for Camurus, and we look forward to providing the next update in the Q3 call in November. Thank you so much, and I wish you all the best for the summer.

[Operator]

We actually have one more question, if you want to take it.

[Fredrik Tiberg, executive]

Of course, we take it.

[Operator]

It's Patrik Ling from DNB.

[Patrik Ling, analyst]

Just a short one and maybe to Jon. The tax rate in the quarter was a little bit higher than what I had expected. Is there any changes in what we should expect going forward? Or is this an anomaly, so to speak?

[Jon U. Alonso, executive]

No. It's the one we are expecting. I think we are in the range of 21.5%, if I remember okay, Patrik. So it's aligned with what is happening, that we are starting to book taxes in the U.S. for our operations. Q2 was the first quarter that we had, I would say, ongoing operations in the U.S., and we have booked taxes for them as well. But not that I am aware, nothing strange has happened otherwise in the quarter, Patrik.

[Patrik Ling, analyst]

Okay, because when I looked at it, I thought it was close to 29% now for Q2 standalone, and I'd be wondering if that was really recent?

[Jon U. Alonso, executive]

No, the catch-up is what I'm saying, there is a catch-up of the U.S. operations because we started a bit in mid Q1, but our effective tax rate is usually in the range of 21.5%, and we expect to be in that area only.

[Fredrik Tiberg, executive]

Thank you. Super good.

[Operator]

Now there are no more questions. So I hand over back again.

[Fredrik Tiberg, executive]

Thank you, everybody, and it was a pleasure, of course, to give this call and looking forward to the next one in November. Thank you. Have a great summer.