Ipsen S.A. (IPN) Earnings Call Transcript

Hello, and welcome to Ipsen's conference call and webcast on the year-to-date sales performance. I'll now hand you over to David Loew, Ipsen's CEO.

Thank you, operator. Good afternoon or good morning, everyone. Welcome to Ipsen's year-to-date sales update. I'm David Loew, CEO of Ipsen. And it's my pleasure to take you through our sales performance in the first 9 months and third quarter of the year. Please note that our presentation is available on ipsen.com. Please turn to Slide 2. This is our safe harbor statement, which outlines the routine risks and uncertainties contained within this presentation. Unless stated otherwise, any commentary on growth you will hear today will be based on constant exchange rates. Please turn to Slide 3. I'm going to take you through our brief presentation, after which I'll be joined for the question-and-answer session by our CFO, Aymeric Le Chatelier. Please turn to Slide 4. We are on track for the full year delivery of our strategic priorities, and this is illustrated by today's highlights that center on our sales growth momentum and pipeline progress. Total sales grew by 7.1% in the year-to-date, with Q3 sales up by 6.5%. Sales from the growth platform of Dysport, Cabometyx, Decapeptyl and Onivyde increased by a combined 16.1% in the first 9 months where there was also a growing contribution from our new medicines. We also made significant milestone progress in our pipeline, including with Sohonos, Cabometyx and elafibranor while we plan to refile odevixibat with the EMA in Alagille syndrome. I'll take you through the details in a moment. Finally, we have confirmed that our full year guidance, we continue to expect total sales to increase by more than 6% at constant exchange rates this year. The core operating margin is anticipated to exceed 30% of total sales. Please turn to Slide 5. Our growth platforms are continuing to perform well and are consistently outweighing the gradual decline of Somatuline. I'd now take you through our sales performance in more detail. Please turn to Slide 6. Turning to the growth platform's performance in Q3. Dysport sales grew by 13%, reflecting a challenging baseline effect. The market, however, remains strong in both aesthetics and therapeutics with Dysport sales up by 25% in the year-to-date. Cabometyx sales were up by 21% in the quarter, with strong volume growth, in particular, from the first-line renal cell carcinoma combination, which is now reimbursed in over 20 markets, so shipment phasing in the rest of the world impacted the overall performance. Cabometyx in second-line real cell carcinoma also continues to see good volume growth, notably in rest of world markets. Decapeptyl's growth in Q3 was limited to 4.5%, reflecting the challenges in China from the impact of adverse economic conditions on market growth. We have also recently seen the majority of health care provider interactions canceled as a result of the industry-wide anticorruption campaign in China. In Europe, volumes continue to perform well, though overall sales were stable, reflecting increases in the level of competitive activity. Finally, Onivyde is growing nicely. In North America, Q3 sales increased by 16% as we continued to grow share in the current setting. We also made further preparations for a potential launch of the Onivyde regimen in first-line pancreatic cancer. As a reminder, the PDUFA date is set for mid-February. Please turn to Slide 7. Somatuline sales fell by 12% in the year-to-date and in the third quarter. This was further evidence of its gradual long-term decline profile as illustrated by the chart, you can see. In North America, sales fell by 18% in Q3. Pricing continues to be impacted by the level of commercial rebates and adverse movements in channel mix, so our market share is holding up well. In Europe, the sales decline of 9% was less than in recent quarters, given the reduced baseline effects from Q3 as it is more than 12 months since the generic was launched in key countries. Finally, in the rest of the world, sales were up by 16% despite the launch of a generic in Australia. Please turn to Slide 8. Our new medicines made a significant contribution to our topline in the first 9 months of the year. Since completion of the Albireo acquisition in March, Bylvay has delivered EUR 46 million in sales, and we were pleased to launch recently in a second indication Alagille syndrome in the United States. Sales in the first indication, PFIC were encouraging as we increased the number of treated patients in both North America and Europe. Tazverik's relaunch continues to progress, though we recognize that it will take time to convert our activities into sales growth. In the first 9 months of the year, we delivered EUR 28 million of sales with growing commercial demand as a result of increasing prescriptions in the community setting. Finally, it was great to see FOP patients finally being treated with Sohonos in the U.S. this month after the FDA approval in August, especially as it's the first and only approved treatment for patients with FOP. Global Sohonos sales so far is amounted to EUR 3 million, though this reflects the special license sales in some ex U.S. markets. Please turn to Slide 9. Looking to the major elements of our pipeline, we reached a number of important milestones in the period. In prostate cancer, one of the primary endpoints, progression-free survival was met in the CONTACT-02 Phase III trial of Cabometyx plus atezolizumab. We await to mature overall survival data. While Bylvay was approved in the U.S. in Alagille syndrome, we did not achieve orphan drug maintenance status in the same indication in the European Union despite the positive CHMP opinion. We, therefore, plan to make a separate regulatory submission of odevixibat in Alagille syndrome under a different brand name in order to retain Bylvay's orphan status in PFIC. We expect to file before the end of this year. We have initiated 2 new Phase III trials for Dysport across chronic and episodic migraine. We have seen that the migraine market is dynamic and growing, and therefore, presents a good opportunity for Dysport. Finally, regarding elafibranor, we plan to file in second-line PBC in the U.S. and EU before the end of this year. Please turn to Slide 10. So before we go to questions, please let me conclude. There are 2 key messages to take away from our update today. Firstly, our topline momentum is strong, driven by our growth platforms and the increasing contribution from our new medicines. Secondly, our pipeline is progressing nicely with several positive milestones in recent months coming ahead of multiple expected launches in the near term. Finally, I wish to confirm 2 dates for your diary. Following the late breaker presentation of the ELATIVE trial results at the AASLD Congress on 30 November, we plan to host a question-and-answer call for analysts and investors on 14 November at 4:00 p.m. Central European Time. Joining the event will be Dr. Christopher Boles, presenter of the late breaker session. The other date is the Capital Markets Day we plan to host on 7 December in London. Details will be published and distributed next week. Please turn to Slide 11. So thanks for listening to our presentation. Aymeric and I now have time for your questions. Operator, over to you.

[Operator Instructions] First question is from the line of Brian Balchin from Jefferies.

Just 2 for me. On Bylvay, can you just help us with how we should be thinking about peak sales of that now that you won't have orphan designation for ALGS in the EU? And can you just clarify if Mirum successfully filed off their Phase IIb in biliary atresia in December, would that per orphan designation status risk of Bylvay in that indication, too? And then on Somatuline erosion, can you just help us with how we should be thinking about that '24 and beyond in light of the Crinetics' once-daily oral paltusotine and potential impact from that?

Yes. Thanks, Brian. I will start with Bylvay. And on your question on peak sales, I mean, I want to defer the Capital Markets Day. So we are going to update you on the longer-term guidance there and also talk about sales guidance on the key products. But I can elaborate a bit on the orphan drug designation. So you need to remember that on the Bylvay forecast, the majority of sales is going to come from the United States. In Europe, there will be some delay. We anticipate an approval of the second brand mid next year. And we are not going to be able to launch in all the countries, especially probably Germany because there is a legislation that if you don't have auto drug indication for a certain drug in a certain indication, it has an impact on the pricing. So we will stay on PFIC with orphan drug in Germany, for example. But on the orphan drug status for Alagille, that is going to probably have an impact. And therefore, we will have to see with the payers in some markets where orphan drug status plays a role on reimbursement, how we can proceed there. But the impact is not that big. So just to help you with the guidance. On your question on biliary atresia, the feedback we have gotten from the FDA was that they want to see an outcome in the clinical trial. So this is why we have reopened our Phase III study to go for native liver survival. Mirum does not have that in their Phase IIb. It's hard to say what's going to happen with that in Europe. It's not totally clear there. If they would be able to file in Europe, I think it's fair to say that if we go for an outcome trial, we would probably have significant benefit and therefore, maintain the orphan drug status while coming a little bit later. But I mean, BA is an indication where you can generate native liver survival data relatively rapidly. So we have to see what the reaction is going to be from the regulators regarding that. Then on your second question, on Somatuline erosion, specifically regarding Crinetics, I think that's your question. So there are kind of 2 aspects. What's going to happen to the erosion. So we still continue to believe that there is going to be a gradual erosion over the years to come. It's triggered by 2 things. There are some more generics potentially making it to the market, but then there might also be some new drugs coming to the market like Crinetics. However, on Crinetics, specifically to your question, we don't believe it's going to have a very big impact because when you look at their study, it's in acromegaly and it's stopping some asset in analog and switching to an oral and they compare it against placebo. So I'm not sure that this is really very convincing. So we have baked in some erosion for new drugs. But on this specific one, it's probably going to be more limited.

We'll now move to the next question. This is from the line of Xian Deng from UBS.

So I have 2 questions, please, and both on Dysport. So the first one, just wondering if you could give us some color on the aesthetic market in the U.S. and ex U.S. region, especially considering the economic downturn. I'm just wondering what have you seen so far in terms of the trend of the end-user Dysport in aesthetics market? And what do you expect in Q4 and going into 2024? So that's the first question. And the second question is related to Dysport and QM1114. So I was just wondering if you could confirm for like the geographical split and royalty, et cetera and economics for QM1114. So I was just wondering if you could confirm for like the geographical split and royalty, et cetera, and economics for QM1114. So just wondering if you could confirm whether those economics are actually similar to Dysport at the moment or they are quite different? And do you think they might actually change depending on the remaining arbitration outcome?

Thank you, Xian. On your first question on Dysport on the aesthetics, we see worldwide that the markets are a little bit softer, but it's still growing very nicely in aesthetics and also in therapeutics. So it's a very attractive market still. Regarding your second question on QM. So the economics are broadly similar. There might be a difference if QM would penetrate to a very, very large degree, which when you look at [indiscernible], we would not anticipate today. So -- but that's where we are. In terms of the geographical split, I'm not quite sure what your question is.

So it's just at the moment, are they actually similar to what you have agreed with Dysport? For QM1114...

Yes. The answer is yes.

We'll now take our next question. This is from the line of Simon Baker from Redburn Atlantic.

If you'll indulge me, I have 3. Firstly, I'm going to Slide 13, you very helpfully gave us some color on the currency exposure that you have. But I wonder if I can dig a little deeper and ask us some more clarity on the other portion. Particularly the approximate contribution of the 3 currencies that you highlight on the right-hand side, the real, the Aussie dollar, and the Turkish lira. Any color on that would be quite useful. Secondly, on Tazverik, I wonder if you could just update us on how far through the mechanics of the relaunch you are on that? And then secondly, and you did allude to this a little on the call, but some more insights would be great on the process and timing for getting access and reimbursement for Sohonos and where you currently stand on that in the U.S.

I will defer the first question to Aymeric regarding the currency exposure.

Yes. So regarding the currency, as you know, we are operating in many, many countries. I think it's more than 40 country outside of the euro currency country and the U.S. dollar country. You see that the major one, which are really about Brazil, about China for sure, about Turkey is also an important country. None of them are very, very meaningful. You've seen that the Turkish lira has significantly devaluated over the last 9 months. So to classify by country, it's a little bit difficult. There's a lot going on. But clearly, Turkey has had a significant impact. China had also some impact. And we also have remaining business in Russia, which also, as you know, the ruble has devaluated quite significantly.

Then on Tazverik, how far are we through with the relaunch? So first of all, just as a comment, relaunches, we know that in pharma industry are very difficult. We are somewhat behind our expectations. It's linked to the fact that we had quite some changes on the field force. We have now onboarded new people. We have trained them. So we have started to deploy them. So we will see hopefully an effect in the coming months moving forward. The switch is also happening from a focus that Epizyme has at the time in academic centers. And we really believe that the severe patients are in the community setting. And in the community setting, it's a relatively large community, so you need to go and see a lot of doctors, and they don't have that many patients. So it's just going to take time until patients become eligible for Tazverik and that physicians are actually going to choose Tazverik. So it's a bit of a work to actually get there, but we're confident we can see further growth on Tazverik also for the future. Then on Sohonos in terms of reimbursement in the U.S. So we have several patients where the prescriptions have already been initiated. They now need to get the reimbursement with their insurance companies. That takes always a little bit of a delay, but I think we should see a sort of a pickup in the coming weeks and months.

I'll move to the next question. This is from the line of Richard Parkes from BNP Paribas Exane.

Just 2. Firstly, on Bylvay in Alagille syndrome. Just wondering to what degree you expect payer access to have an influence on prescribing given that Bylvay and LIVMARLI look largely interchangeable? And I just wondered if you could update us on where you are in terms of payer access and what barriers you might need to overcome and the new indication. And then secondly, on elafibranor, if I look at the patient numbers, the opportunity for novel branded drugs in PBC looks to be materially larger than suggested by sales of Ocaliva. And I know it's not the perfect drug, but maybe you could talk about the barriers to unlocking that opportunity and how you might be able to do better than interceptors.

Thanks, Richard, for the question. On Bylvay Alagille in the U.S. where we had the approval, we don't really see a problem with the reimbursement. So that's encouraging. So here, it's going to be a question how quickly we can penetrate that market. We see patients coming de novo, but we also see switches from LIVMARLI to Bylvay, which is actually a surprise that this has started to happen so early. But these are the 2 sources of patients where we're getting scripts from. On your second question regarding the market. You're right that on Ocaliva, they were not able to drive so much the market size. Typically, if you have one competitor in the field, of course, it's harder than if you have 2 talking about this. So that's -- there is one effect. But the second effect is also, of course, that they have some side effects with pruritus, which is known. So they have recently not shown that the outcome trial was positive. So perhaps there is a little bit of an opportunity for elafibranor to take some share here. In terms of barriers of detecting new patients, we know that the detection sometimes on these orphan drugs is not so easy. So we foresee that, first, we are going to launch elafibranor and focus really on gaining market share as quickly as possible. Market expansion projects typically come in a second phase and they can come from, I would say, 2 sources. One is there is a question, can you treat patients a bit earlier. And the second one is, are you actually identifying enough patients or not, and we would have to probably work with laboratories on detecting them correctly when the blood sample is being drawn. So that's where we stand in terms of our market expansion and thinking.

We'll now move to the next question. This is from the line of Richard Vosser from JPMorgan.

Two please. Just going back to Sohonos, just thinking about the patient pool that's in the U.S. of maybe like 400 patients or so, how many are enrolled in other clinical trials and therefore, how many are actually available to treat and a linked question of how is the approval going to affect the development of the ALK2 within your pipeline? Is that going to make it more difficult? Are you going to have to amend the trial program at all? And then second question, just on Onivyde, maybe a housekeeping question. Some recovery in Servier sales, but they're still very, very low. And I know there's a new manufacturing setup, but how should we think about those ex U.S. sales particularly as we go into the expansion into the first line? How should we think about the growth there? But also, I suppose, the growth in the U.S., but really thinking the ex U.S. at the moment.

Okay. Thanks a lot, Richard. On Sohonos, with the published incidence rates, [ Micro ] Hospital published that and we apply that around the world because we don't really see big epidemiological differences. You can calculate that there are roughly 450 patients that have FOP in the U.S. Out of those, we have identified, I would say, by roughly half. Then you have to deduct from those, the ones which in the label are below the age. So in our indication, it says years 8 and 10, so 8 for girls and 10 for boys. So you have to deduct about 15% of the patient pool. But then once they get older and their disease progresses, some of the older patients can find themselves in a situation where their bones are already almost completely locked. So you might have to exclude a couple of patients there as well that are not going to be eligible for treatment. And then, of course, we come to your question, we see about 50 patients in the U.S. being in clinical trials, of which a good part in the fit researches program that we are running. We don't anticipate an impact there because we have advanced very well already with the recruitment. So we don't anticipate that this is going to really interfere. But of course, you're right, you would have to take them away from the commercially available patient group. Regarding Onivyde, ex U.S., I'll let Aymeric elaborate on this because there is a technicality on it.

Yes. So Richard, your question on Onivyde. As you know, this year, has been impacted by both phasing impact by quarter because we are shipping the product by batches for several countries. It was impacted by the new manufacturing setup, where we are seeing at a lower price, but we make more margin as we transfer the product to our manufacturing plant in Europe. But your question was more about the trend. So the trend, the business is pretty mature today on the existing indication. I think going into 2024, you should see a very slow inflation as our partner Servier is progressively securing access in different geographies. But as you know, it's going to take time in Europe and also in some of the ex U.S., ex Europe territories. So you should expect limited growth in 2024 to progressively. But as you remember, we have a limited contribution at the bottom line from that partnership.