Camurus AB (publ) (CAMX) Earnings Call Transcript

Welcome to Camurus Q2 Report 2023. [Operator Instructions] Now I will hand the conference over to CEO, Fredrik Tiberg. Please go ahead.

Thank you, Ainar, and good day, everyone, and thank you for taking the time to joining our second quarter earnings call today, which I'm happy to note was our strongest quarter yet. Before starting the presentation, please note our forward-looking statements here. So the -- again that for today's earnings call includes a summary of second quarter highlights. Then we will go through the financial results, followed by commercial and pipeline updates. And as usual, then finish off with Q&A. And with me on today's call is Jon Garay, our Chief Financial Officer; Richard Jameson, Chief Commercial Officer; and also Alberto Pedroncelli, our Chief Medical Officer. The second quarter was really strong across the board for the company and transformative. We continued the commercial execution, building on our leadership in opioid dependence treatment market with Buvidal. Net sales increased to SEK 305 million in the quarter, an increase of 36% against last year. In parallel, we continued market expansion with regulatory and market access processes and approvals. And on the pipeline development side, we achieved several major milestones in the form of the long-awaited FDA approval of Brixadi in the U.S., and positive top line Phase III results for CAM2029 in acromegaly, the ACROINNOVA 1 study. We reached 2/3 recruitment in our GEP-NET trial to SORENTO. And after the period, we announced positive Phase III data from the second Phase III trial of CAM2029, ACROINNOVA 2. On the corporate development side, we note record revenue and results, 6 consecutive quarters now with positive operating results. We recognized a $35 million milestone for the approval of Brixadi and got our U.S. subsidiary, Camurus Inc. operational. So in summary, it was really an exceptional quarter for Camurus, where we delivered above our own expectations. And with that said, let's move over to the financial review. Please, Jon.

Thanks a lot, Fredrik, and good afternoon, everyone. We would like to share with you now the key highlights of our financial performance this quarter. In the second quarter, Camurus achieved SEK 674 million total revenues, delivering a growth of 197% versus same period last year, with product sales of SEK 305 million, growing 36% versus prior year and 8% versus prior quarter. Brixadi approval by FDA triggered a one-off $35 million milestone revenue, which was recognized as income in the quarter. Operating results for the quarter was SEK 376 million, which means SEK 369 million improvement versus same period last year. Company has achieved an earnings per share after dilution of SEK 5.24 equivalent to a profit after tax of SEK 301 million in the quarter. Finally, our cash position at quarter end was SEK 654 million, which is a 53% improvement versus same period prior year. If we now move to next slide, we can see the main components of our operating results. Gross margin reached 95.7% in the quarter, driven by $35 million milestone revenue, triggered by FDA approval of Brixadi in the U.S. Excluding this one-off milestone, company gross margin reached 90.5% in the quarter, representing an improvement of 157 basis points versus same period prior year, driven by supply chain efficiencies as well with our [ volumes scale ]. On a year-to-date basis and excluding Brixadi onetime milestone, company gross margin was 90.2%, representing 167 basis points improvement versus the first 6 months of prior year. Total OpEx reached SEK 270 million, representing a 38% increase versus same period prior year, driven by following 4 factors: Marketing and distribution investment to support market penetration in own territories and expansion of Buvidal in the new markets grew 32%. Administrative expenses aligned with corporate evolution to substantiate company development grew 38%. R&D investment reached SEK 161 million, our highest ever R&D investment growing 39% versus same period prior year, driven by progress in our ongoing 3 Phase III trials, mainly ACROINNOVA 1 top line results readout and recruitment progress in net. Finally, other OpEx were minus SEK 3 million, driven by valuation of currency hedging contracts at quarter end. Company operating results became positive by SEK 376 million in the quarter. Excluding Brixadi one-off milestone, Camurus reached a positive SEK 8 million operating result with the highest ever investment in R&D. If we now move to next slide, our cash position at quarter end was SEK 654 million, delivering a 53% growth versus same period of prior year. Brixadi milestone will be realized in cash in the third quarter. So as it is neutral from a cash flow point of view, in this quarter, we are excluding it in the waterfall we are showing for transparency purposes. Camurus generated SEK 68 million cash during the quarter, driven by following 4 factors: firstly, company operations generated SEK 38 million. Secondly, working capital improved by SEK 29 million. Thirdly, exercise of warrant programs delivered SEK 6 million in cash. And finally, company invested SEK 5 million in technological activities. As end of quarter, Camurus has no debt. All in all, Camurus closed its second quarter 2023 with a solid financial and operational position, having achieved the first 2 milestones of 2023 and continue showing interest in growth opportunities. Camurus reiterates its 2023 financial outlook, expecting total revenues and profit before taxes in the mid to high end of current guidance and is on track to deliver the long range plan vision shared at Capital Markets Day celebrated in September last year. Having said that, I would like to pass the word to Richard. Thank you, everyone, for your attention.

Thank you, Jon. So I'll start with an update on Europe and Australia. We're pleased to share the continued positive momentum with Buvidal in Q2, built on the organic growth across our markets. As already mentioned by Jon, sales for the quarter were SEK 305 million, up 36% year-on-year and 8% quarter-on-quarter. The estimated number of patients grew from about 39,000 patients to above 42,000, a net increase of 3,000 patients spread across our different markets. We saw continued good revenue within the Scandinavia, Finland, U.K., Spain and Australia and in Australia where the growth has offset the recent government price decrease. There was a positive trend shift also in Germany, which grew over 30% versus Q2 last year. We continue our market expansion and have 4 [ HTA ] and 4 regulatory submissions under review. And in Austria, we received a new reimbursement status that allows improved patient access to treatment with Buvidal. Additionally, we saw continued strong momentum in the criminal justice system with new guidelines published in Sweden and Belgium recommending Buvidal as a first-line treatment in prisons and expanded use in this setting in the U.K. Now moving across to the U.S. As you already know, on the 23rd of May, we received the positive news that the FDA had approved Brixadi for the treatment of opioid use disorder in the U.S., with a positive statement from the FDA recognizing the expansion of dosing options to help patients sustain a long-term recovery. Brixadi is well differentiated in the long-acting injectable market and is expected to pay a role in addressing the significant unmet needs of patients with OUD in the U.S. It's unique in having both weekly and monthly formulations and flexible dosing aligned with current practice and can be given through multiple injection sites. It's easy to switch to or from current daily buprenorphine treatments through a dose equivalence table. Brixadi is the only long-acting injectable that can be initiated from day 1 for those coming into treatment and with small volume, small needle and room temperature storage, is simple to use and easy to store. So we're now looking forward to the upcoming launch in the U.S. of Brixadi. This is planned for September and will be conducted by our U.S. licensee Braeburn. Braeburn has informed us they are well prepared with the commercial organization, including having a sales force in place. And from a market dynamics perspective, the launch is well timed as there's increasing funding becoming available for OUD treatment, a new legislation introduced to expand patient access to treatment to help address the issue around the opioid crisis. Based on this positioning, we believe Brixadi has the peak potential of above USD 1 billion. Camurus has a significant part of the financials, and we're looking forward to discuss successful commercialization by Braeburn. So on this note, I will hand back to Fredrik for an update on the pipeline.

So thank you, Richard. As you have realized here, there has been some technical glitches outside here, but I'm trying to proceed accordingly and over to a pipeline update focusing on the top line results of the 2 Phase III trials of CAM2029. As a background, CAM2029 referred to as octreotide subcutaneous depot, is being developed for the treatment of 3 rare disease indications. These are acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease. The product is designed for enhanced efficacy and patient convenience. We have an extensive clinical program ongoing with CAM2029, which includes 3 Phase III trials in acromegaly and neuroendocrine tumors and 1 Phase II/III trial in polycystic liver disease. All of these have really progressed nicely during the quarter. However, I will focus the presentation on the recent positive results of the 2 ACROINNOVA trials. So despite the availability of several medications for treatment of acromegaly, there remains an important unmet medical need in the area. These include limited biochemical control of patients with acromegaly, often around 15% to around 50% of the population is full responders, persistent symptoms like fatigue, headache, paresthesia and soft tissue swelling as well as joint pain. Another unmet need is the complexity of present medications and the lack of convenient dosing options for self-administration of current first-line treatments. Finally, impaired quality of life is something acromegaly patients often experience. And as you can see on the right-hand side, acromegaly patients report significantly worse quality of life outcomes than healthy controls and similar to patients with obesity, who are known to have significantly compromised quality of lives. So with this as a background, let's move over to the Phase III trials and our new top line results. We will start with a quick review of the results from ACROINNOVA 1, which was presented just a couple of weeks ago. This was a 24-week randomized controlled trial of CAM2029 with the aim to demonstrate superiority versus placebo. The trial randomized 72 patients on stable treatment with standard of care, 2:1 to treatment with CAM2029 or placebo. The primary endpoint of the trial was responder rate for normalized insulin growth factor 1 levels, and the key secondary endpoint was responder rate for both IGF-1 and growth hormone, GH. Further secondary endpoints included patient satisfaction, quality of life, clinical signs and symptoms as well as sales and partner administration and, of course, safety. So as presented in our press release in June, ACROINNOVA 1 met both primary and key secondary endpoints with high statistical significance, showing superiority versus placebo. Importantly, the main results were confirmed by all prespecified sensitivity and supportive analysis as well as several secondary endpoints, demonstrating the robustness of this data. This is, of course, very important when we come later on to our regulatory submissions and the review processes. With significant treatment differences in biochemical control was further shown by the difference in the time to loss of biochemical response between the 2 treatment arms. For CAM2029, the median time to loss of response was not reached. While for placebo, it was about 8 weeks. The Cox regression analysis of these data show the hazard ratio of 0.1, which you can say implicitly means that it is 10x more probable to lose control when receiving placebo treatment compared to treatment with CAM2029. This was statistically significant with a p-value of less than 0.001. In addition to improved biochemical control, ACROINNOVA 1 also showed some other interesting outcomes, including statistically significant improvements in several patient reported outcomes. Here, we show the acromegaly quality of life for CAM2029 versus standard of care at baseline. As you can see in the [ forest plots ], there are significant improvements in the quality of life with CAM2029 compared to standard of care. This is seen for the total [ AcroQOL ] score, which is the measure here, as well as for the physical and psychological domain scores. Significant positive treatment differences were also seen in patient satisfaction and treatment satisfaction outcomes. This is noteworthy considering that the patients at baseline were on stable treatment with current standard of care and biochemically controlled. In summary, the ACROINNOVA 1 trial met both primary and secondary endpoints of superiority versus placebo and show that IGF-1 and GH and symptoms were well controlled over time. Quality life and patient satisfaction were statistically improved versus standard of care at baseline. And CAM2029 had a well-tolerated safety profile in line with first-generation somatostatin receptor ligands. So with this brief review, I will move over to presenting some of the highlights of the ACROINNOVA 2 study, which we announced top line results for only yesterday. So this was Phase III open-label, long-term safety and expansion trial, which included 81 new patients that were on stable treatment with standard of care, but had variable degrees of biochemical control, so variable degrees of treatment success, you could say, as well as 54 patients that rolled over from ACROINNOVA 1 after 24 weeks of treatment with CAM2029 or placebo. The placebo patients were regarded as treatment naive in this context and were, of course, very interesting to follow. The primary endpoint of the study is safety and tolerability of CAM2029, important secondary endpoints included biochemical response, clinical signs and symptoms, tumor size, patient and treatment satisfaction and again, self- and partner administration. Here, I will only present top line results. So starting out with the demographics here shown as the overall patient population and by patient group. The characteristics of the enrolled patients were overall representative of the acromegaly population in real-life setting, and we're spread across EU and the rest of Europe with about 10% of patients coming from the U.S. The primary outcome of the ACROINNOVA 2 study is safety, and we will start there. So the safety profile of CAM2029 is consistent with a well-established safety profile of first-generation somatostatin receptor ligands, octreotide LAR and lanreotide ATG. Most adverse events, vast majority, were mild or moderate, grade 2 and only a few were severe Grade 3 or higher. None of the severe events were related to the study medication. Only one serious adverse event was reported as related to study medication in the trial. This was a case of gallstones, which was moderate in severity and resolved spontaneously. Two patients discontinued treatment due to adverse events. And one patient had an adverse event relating to dose -- that resulted in dose reduction, I should say. Overall, the long-term safety profile of CAM2029 was regarded as favorable, with no new or unexpected findings. So moving over to efficacy. And here, starting with the biochemical control of patients. As you can see in the slide here, we saw significant improvement in insulin growth factor-1 normalization after 52 weeks' of treatment with CAM2029 compared to standard of care at baseline. For the overall population, we saw an increase in IGF-1 response from 49.7% and to 58.5%, an increase of 8.7% from baseline. For new patients in ACROINNOVA 2, who were on stable treatment, but with low rate of biochemical control, the response rate increased from 12% to 32%, which is a more than twofold increase compared to baseline. For treatment-naive patients previously treated with placebo that is in the ACROINNOVA 1 trial, the response rate increased from 20% to 93% after switching from placebo to CAM2029, an increase of 74%. While for rollover patients who were treated with CAM2029 in ACROINNOVA 1, biochemical control remained stable throughout the trial, demonstrating long-term efficacy. Overall, the data show that CAM2029 is effective in achieving biochemical control across patient populations with different treatment histories. So focusing on the patients rolling over from ACROINNOVA 1 to ACROINNOVA 2, where there's quite some interesting things happening, you can see in the top graph, the mean IGF concentrations over time when going from standard of care at baseline to -- or CAM2029 in ACROINNOVA 1 and then to CAM2029 in ACROINNOVA 2. In the lower graph, the corresponding response rates are shown. Essentially, what you see is that IGF-1 levels are elevated during placebo treatment and effectively suppressed on CAM2029, and this is also mirrored by the response rate. Notably, patients coming from placebo rapidly regain IGF-1 control when receiving CAM2029, which is a very important feature, of course. So over to another finding of the study and looking at symptoms, it was a notable outcome of the trial that significant improvements seen in acromegaly symptoms over time when switching patients from stable treatment with standard of care to treatment with CAM2029. Here, this is illustrated by the decrease over time of the Acromegaly Index of Severity Score for patients treated with CAM2029. While patients treated with placebo -- receiving placebo showed a trend towards worsening symptoms and then improving again when switched to CAM2029. In summary, the results of the ACROINNOVA 2 trial are quite compelling, reinforcing the favorable safety profile of CAM2029 showing improved IGF-1 response in overall uncontrolled and treatment-naive populations and stable response in controlled patients. Furthermore, important top line findings were the improved symptom control seen, both in patients having any symptoms as well as the AIS score that I referred to earlier. We also saw increased treatment satisfaction and improved quality of life. So based on the positive top line data received, we believe CAM2029 can offer an important option for patients with acromegaly. And we are confident that the data will support our regulatory applications and the future commercialization of CAM2029. So aside from the success with the ACROINNOVA program during the period, we reached the milestone of 200 patients randomized in the SORENTO trial, which aims at demonstrating superior progression-free survival with CAM2029 in gastroenteropancreatic neuroendocrine tumors versus standard of care. We remain on track to enroll the rest of the approximately 100 patients in the second half of the year, which I think is a very strong achievement once it happens. In polycystic liver disease, recruitment continued in the POSITANO trial with close to 50% of patients now being enrolled in the study. Again, we expect to enroll the rest of the patients before the end of the year. So besides the significant progress in our clinical trials, we have accelerated a number of other activities in the quarter. This includes preparing regulatory submissions for CAM2029 in acromegaly, starting the buildup of a U.S. commercial infrastructure and ramping up our medical affairs activities, including participation in key conferences and preparing new scientific publications. Our medical team has been expanded with key expertise and leadership led by our new Chief Medical Officer, Alberto Pedroncelli, with extensive global expertise in both acromegaly and neuroendocrine tumors. I look forward to reporting more on these topics in the forthcoming calls. Now I will just go over to the key takeaways of the second quarter. And I must say, it's a pleasure to report an outstanding second quarter here with record revenue and earnings, FDA approval of Brixadi, strong market growth of Buvidal and positive results from 2 Phase III trials as well as other clinical milestones achieved. So with that, thank you for listening, and we will move over to questions and answers. Thank you, everybody.

[Operator Instructions] Our first question comes from the line of Suzanna Queckbörner from Handelsbanken.

Suzanna Queckbörner, Handelsbanken. I have 3 questions. So first of all, you booked the $35 million milestone payment from Braeburn as revenue for this quarter, but it appears you haven't received the payment that seems booked as a receivable in your balance sheet. So when would you expect the actual payment from your partner to come through? Perhaps you can talk about the time line here? And then second question is, perhaps you could give us a broader update on the austerity measures? You briefly mentioned it with regard to Australia. I noticed that sales growth wasn't as high in Oceania, Australia here and also the revenue per patient seems to be coming down further. And then also thirdly, perhaps you could give a little bit more detail on this trend shift that you observed in German Buvidal sales. Is this a consequence of changes in doctor remuneration/reimbursement? Or is the 30% year-on-year growth just from a low base and a potential one-off?

Yes, please, Jon.

So thanks a lot, Suzanna. So regarding your first question, the $35 million will be collectible during Q3. And we issued a press release for the FDA approval. We informed that it will be collectible upon invoice, but it will be issued either 90 days after the FDA approval or when the first commercial sale will take place. So hopefully, we expect to get it in Q3.

Well, the sooner of those 2 events. The second one is, what will be the austerity measures?

Yes. So yes, the [ austerity ] measures, I mean, we've seen a small price cut in Australia. So actually, our underlying business in Australia is still strong. It grew 11% in volume quarter-on-quarter, and I think something like 29% year-on-year. So the underlying growth, remember that's from a strong base as well. It's still growing well. Yes, it's offset by the -- by that austerity measure in Australia that we saw from the government. And the revenue per patient, we think, is reasonably stable at the moment, apart from, of course, the impact of that Australian [indiscernible].

Well, the other one was Germany? Do you want to...

Yes. So the other question around Germany. Yes, we did see -- we had a strong quarter. You're right, Suzanna, it's a mix of all those. I think one of the things is the penetration we're seeing in the prison setting. We haven't seen a change in remuneration yet. We know there's a little talk about it going on in the moment and a proposal that's being considered. So most of this growth is coming from the prison setting at the moment where we're focusing on because it's not impacted by those measures.

Suzanna, are you -- any more -- are you fine?

That was great.

The next question comes from the line of James Vane-Tempest from Jefferies International Limited. Please go ahead.

Just a couple of Brixadi, please. Congratulations on the approval. Is there any information you can share either on the size of the sales force or what the pricing strategy will be and commercial strategy?

Thank you, James. I mean I think we haven't gone out with anything specific on the sales force. We are, I'd say, content with the size. We think that it's well dimension for the purpose. That's what I can comment on there. In terms of pricing, Braeburn has not officially announced their pricing strategy. So I think we will keep it at that for the moment unless you have some specific questions. I think that's the most I can provide at this stage.

No more questions from James. The next question comes from the line of Patrik Ling from DNB.

Can I have a follow-up question on pricing per patient because when I just do my calculations on the average price per month per patient, it's roughly around EUR 220 to EUR 219, which is down a little bit since Q1, but it's down quite significant from what you historically has reported. So -- maybe you can elaborate a little bit if this is sort of a price range that we should expect going forward? And whether there are more really than just the austerity measures, I mean, especially maybe if you compare to Q4 and previous quarters that has impacted price?