Albireo Pharma, Inc. (NASDAQ:ALBO) Third Quarter 2022 Results Conference Call November 8, 2022 4:30 p. m. Eastern Time
Participating companies
Hans Vitzthum – Managing Director, LifeSci Advisors
Ron Cooper – President and Chief Executive Officer
Jan Musin – Scientific Director, Head of R
Pamela Stephenson – Sales Director
Simon Harford – Chief Financial Officer
Conference Call Participants
Miriam Nolan – Jefferies
Brian Skorney – Baird
Ritu Baral – Cowen
Seamus Fernandez – Guggenheim
Tim Lugo-William Blair
Andreas Argyrides – Wedbush Securities
Thomas Yip – H. C. Wainwright
Operator
Good afternoon. And welcome to Albireo Pharma’s third quarter 2022 earnings call [Operator Instructions]. Please note that this convention is registered.
I will now turn the floor over to your host, Hans Vitzthum, CEO of LifeSci Advisors. Thank you. You can start.
Hans Vitzthum
Thanks, operator. This afternoon, Albireo issued a press release highlighting its recent business achievements and monetary effects for the third quarter ended September 30, 2022. This press release can be accessed through the company’s website. in albireopharma. com. Before proceeding, we would like to point out that today’s management comments may come with forward-looking statements regarding the company’s plans and expectations. These statements are made pursuant to the Private Securities Litigation Reform Act of 1995, and are subject to pitfalls and uncertainties. Actual effects are likely to differ materially due to a variety of vital factors, including those described in the Risk Factors section of the company’s most recent Form 10-K and upcoming SEC filings. These documents can be viewed from the investor segment of albireopharma. com or from the SEC’s online page. All forward-looking statements constitute our views as of November 8, 2022 and do not deserve to be relied upon as our views as of any future date. We assume no legal responsibility to publicly update those statements.
I am now very pleased with Ron Cooper, President and CEO of Albireo. Rum?
Ron Cooper
Thank you Hans, and thank you all for being with us this afternoon. With me is Dr. Jan Musin, scientific director and head of R
Let me speak with Jan to give him an update on the knowledge and our studies.
Jean Musin
Thanks Ron We had a very rich weekend at the AASLD meeting with 3 oral presentations, adding two overdue switches and six posters. I would like to draw your attention to 3 vital achievements of clinical studies. Starting with disease amendment and local survival of the liver, we believed that Bylvay would be a drug that would improve the symptoms of cholestatic liver disease and modify the course of the herbal disease. As you can understand, it takes a bit of time to generate knowledge for the latter, but we are moving forward urgently and the first set of knowledge is now available. In clinical consultations, we presented in an oral consultation insights showing that Bylvay improves local liver survival in patients with PFIC. A comprehensive investigation of knowledge showed that PFIC patients who responded to Bylvay remained liver transplant-free for up to 3 years. Serum bile acid trough at six months of treatment was strongly related to local liver survival for serum bile acid responders compared with non-responders, with a P price of 0. 005. The responders also had average improvements in liver like parameters. All responders to PFIC bile acid and all responders to pruritus remained graft-free for up to 3 years. Additionally, there was a last minute oral presentation showing that Bylvay restored the flow of bile bile acids and was decided through AASLD for inclusion as a keynote presentation in the Best of Delivery assembly in the Pediatric Hepatology category. Matrix This is only the first step in demonstrating local liver survival with Bylvay, and we plan to provide more information in the near future.
In addition, we presented insights at NASPGHAN’s annual meeting last month, which help treating children with the disease as early as possible, even with mild pruritus, can lead to greater efficacy and maintain local liver. Another good clinical fortune is AFFIRMING. Less than a month ago, we announced the first data from the phase 3 ASSERT study in Alagille syndrome and group R.
The overall rate of treatment-initiation diarrhea was also low, with placebo at 5. 9% and the Bylvay organization at 28. 6%. With more than 90% of patients responding to pruritus, the study was explained as a drop of at least 1 point at any one time. , we can relieve so many patients with the low curative dose of Bylvay without having to deal with the highest degrees of diarrhea. Finally, I am proud of our organization R.
Ron Cooper
Excellent. Thanks Jan for the scientific update. The advances obviously set Bylvay apart as the leading IBAT inhibitor. And Bylvay is the only IBAT inhibitor to show efficacy in all types of PFIC, adding PFIC 1 in long-term studies. But unlike other IBATs, Bilbay has a low healing dose, is given once a day, and is easy to take as a pill or noodle that can be taken with food or liquid. Bylvay has shown a low rate of drug-related diarrhea that is only greater than placebo in two placebo-controlled trials, to compare Bylvay in phase 3 studies in PFIC, Alagille syndrome, and now a third in biliary atresia. With biliary atresia, the opportunity is about the duration of PFIC and Alagille combined. We expect Bylvay to be the first to market with a positive result from the BOLD study. What does this all mean? This means we have a PFIC-approved patient-friendly product with just the right tolerability, targeting a broader patient population across many mutation types, and stellar clinical knowledge supporting its prospective approval in the syndrome. of Alagille. We can already see it at the launch of Bylvay at PFIC with a perfect Q3. So let me give way to Pamela to provide more key points about the quarter. Pamela?
Pamela Esteban
Thanks Ron and good afternoon everyone. We are excited about the ongoing global launch of Bylvay, the first and only FDA-approved drug for patients with PFIC, benefiting more patients around the world. Today I’m going to present more percentage points on Bylvay’s third quarter net product sales of 7. 5 million and what we’re seeing commercially. We now have a total of 270 Bylvay patients, which is 25 more patients than last quarter. We increased the number of patients reimbursed by more than 25% with 27 new patients, for a total of 126. These patients make up the $7. 5 million in revenue and we still have 144 patients, 77 awaiting reimbursement and 67 remaining patients, who are in the drug from which we hope to generate profits in the future. Revenue continues its upward trend and we’re starting to see the hiring that we were talking about last quarter. Weight variability normalizes over time as expected. The dropout rate is in line with expectations and rates seen with comparable products in rare diseases. In general, prescribers see the benefits of our treatment, its efficacy and benefits with the convenience for caregivers and families with the ease of administration of the medication once a day and its favorable protection profile.
Let’s start with the foreign trade, especially in Europe, where we are wonderful at delivering on our promise to make Bylvay a global product, and the HCPs in this product, and see that genuine global use is in line with or even better than this being has been observed in clinic. judgments In addition, our speed and execution in pricing and reimbursement, call generation, and clinical exchange was optimal. And again, you see it translating into patient capture and profit expansion. We continue our expansion in the European market with the Bylvay rebate shown in five European markets, Germany, UK, Italy, Belgium and most recently France. This strong platform will serve us well as we plan to launch our product in Alagille syndrome and eventually in biliary atresia. Bylvay continues to achieve top clinical effects-based European Health Technology Assessment scores from our Phase 3 trial, demonstrating its unique approach, immediate and sustained early benefits, and favorable tolerability. Healthcare professionals in Europe consider Bylvay to be a liver drug and perceive its potential to keep the liver local, as evidenced by our European disease-modifying label and our recently published long-term understanding. presented at the AASLD.
Let’s take a closer look at the United States. We are seeing demand for construction improvements in the United States, primarily due to our hard paints on the ground. We continue to increase the number of exclusive prescribers each quarter since launch, adding thirteen new healthcare professionals in the third quarter to bring the total number of exclusive prescribers to 86. We have had the most fortune in accounts where healthcare professionals receive how Bylvay can treat a symptom of underlying liver disease and act urgently to treat his PFIC patients. As a result, we are accelerating and deploying great urgency to address disease teaching systems and aligning our US sales force and MSL resources to accounts where we want to help clinicians realize the importance of treat itching immediately. Fix even in mild cases. This allocation of additional resources deserves to help fuel the expansion of our prescriber base in the United States. As our PFIC launch continues to progress, the company is gearing up for another Bylvay launch this time for Alagille Syndrome, following the impressive Phase 3 data. We are excited to be informed of the launch classes and opportunities. of the PFIC. Treating physicians are the same across indications, and the benefits they see for PFIC patients deserve to be translated into prescriptions for Alagille syndrome and, in all likelihood, biliary atresia. In Europe, we have had ongoing meetings and dialogue with all the primary payment and reimbursement authorities, which gives us an idea of what awaits us in Alagille.
In addition, the overall global market place opportunity is greater than PFIC, and we know that each of the 10 market place percentage numbers is worth between $50 million and $100 million. We plan to launch in most European countries at the same time as the other inhibitor IBAT, giving our already strong value repayment position and in the US to the US. In the U. S. , even as an instant participant, we plan to capture a valuable percentage of market place. I will conclude by saying that the real fun of doctors and patients of many other types of PFIC patients has been incredibly positive, and we look forward to being able to access more patients with an indication of Alagille.
Now I’m going to pass the call to Simon to cover our currency review. Simon?
Simon Harford
Thank you, Pamela. Let me summarize our money effects for the third quarter of 2022. Bylvay’s net sales of foreign products were $7. 5 million in the quarter, compared to $1. 1 million in the same quarter last year. United States revenue was $4. 1 million and foreign earnings were $3. 4 million. As we look towards the end of the year, there will be an impact on foreign sales in Q4 as we are out of the 12-month value review stage in Germany. We are very pleased with third quarter earnings, but at this point and leaving Bylvay’s 2022 earnings forecast at $24 million. Royalty gain was $2. 3 million for the third quarter of 2022 compared to $2. 6 million for the same period of 2021, resulting in a low of $0. 3 million. The minimum is similar to the estimated royalty earnings, which is passed on to HealthCare Royalty Partners. Product profit cost was $0. 6 million for the third quarter of 2022, compared to $0. 4 million in the prior year quarter. Following Bylvay’s approval, staff quality and production insurance prices are now included in the product benefit charge. There were no drapery prices as fabrics similar to recently sold products were expensed prior to approval.
Research and progression expenses were $23. 3 million for the 3 months ended September 30, 2022, compared to $21. 1 million for the same constant period in 2021, a cumulative of $2. 2 million. The accumulation of studies and progression expenses is basically due to the clinical activities of the program. Selling, general and administrative expenses were $20. 6 million in the third quarter, compared to $17. 6 million last year in the third quarter, a cumulative of $3 million. The backlog is attributable to the workforce and similar expenses as we continue to increase our headcount and marketing activities similar to those of Bylvay, adding our sales force and for global expansion efforts. Net loss for the third quarter of 2022 was $37. 8 million or a loss of $1. 92 consistent with percentage compared to net revenue source of $57. 1 million or revenue source of $2. 90 consistent with a consistent percentage on a fully diluted basis for the third quarter of 2021.
3Q 21 net profit was due to net proceeds from the one-time Priority Review Coupon sale for Bylvay. We entered into a royalty monetization agreement in September with Sagard Healthcare Partners for an aggregate net amount of $111. 6 million upfront in exchange for a mid-single-digit royalty rate in Bylvay’s global annual net currencies if all 3 indications. These additional resources provide us with the means to further expand Bylvay into a $1 billion product for the treatment of other rare cholestatic liver diseases. The arrangement is treated as a liability for monetary reporting purposes. Consequently, the net income from the initial commission is recorded in the balance sheet instead of in the origin of the coins in Array. The only effect on the source of currencies in is similar to the interest liability on the source of currencies in interest expense. The Company had money, money equivalents and limited money of $272. 5 million as of September 30, 2022. The Company hopes that this total money will be enough to expand our track further, at least beyond reading the front line knowledge of our BOLD 2024 Biliary Atresia Study, based on existing currencies and cost projections. With that, let me turn to Ron for final comments.
Ron Cooper
With Bylvay, we have a product with a more sensitive profile and exceptional clinical data. This puts the company in a strong position with Bylvay’s overall patient count developing strong third-quarter revenues, a strong monetary position, two successful Phase 3 studies in PFIC and Alagille Syndrome and an ongoing Phase 3 in biliary atresia now fully enrolled, continue to be at a steady rate to pursue our aspiration to make Bylvay a billion-dollar drug in the current part of the decade, key for us in Bylvay’s transition from a PFIC drug to a leading pediatric drug for cholestatic liver disease. We continue to advance our first liver disease assets in adults with A3907 and A2342, which will enter Phase 2 and Phase 1 trials, respectively. opportunity and we will continue to focus on our expansion engines. We thank everyone for joining us and are excited to open the call now for questions and answers. Operator?
Q&A session
Operator
[Operator Instructions] The first comes from Eun Yang of Jefferies.
Myriam Nolan
I’m Nolan for Eun, thank you so much for answering our question. We have an over biliary atresia, please. I heard that most pediatric patients get a liver transplant as the only curative option. Is it moderate to assume that Bylvay would be used to close the hole with liver transplantation?
Ron Cooper
First of all, we are very happy with the complete registration of the BOLD trial. This is the largest study in pediatric cholestasis. And right now, when you think about those little kids with biliary atresia, it’s terrible for those families, because they have their bathroom, they have this procedure. And then parents will ask what remedies are available, and there are no remedies available. So, the only thing they can turn to is a liver transplant in the future. So what we hope with Bylvay is that we bring hope to those families and young people through the conversion of that course, right?So, delay a transplant for the child who is even healthier, or you can even save him this transplant. Therefore, we are looking to obtain this knowledge in 2024.
Operator
Next is by Brian Skorney of Baird.
Brian Skorney
I just need to take a look at the numbers you have on your corporate record in terms of Bylvay patients, reimbursed patients. So I wonder if I’d like to take a look at the end, coming out of the last few quarters, more or less. If you do a calculation on the back of the envelope instead of patients being reimbursed the expected net introductory price, it’s roughly next quarter. So I guess if I look at 5. 5, 7. 5 would be an average of 9. 5 for the fourth quarter based on the 126 release of that quarter. Can you help us understand, is this the right way to think about what those reimbursed patients constitute in terms of projected revenue?
Simon Harford
What I would tell you, Brian, is that this is not a direct correlation, it is rather an indicator of the direction and trends of long-term earnings, based on the fact that, as we have discussed several times, you have everything from six young people from one month old to some kind of teenagers, who have a fairly large percentage in terms of individual income. especially at this level of launch. So there will be some variability from one moment to the next. But certainly, the trend is there to help you perceive that we are moving in the direction of expanding over time.
Brian Skorney
And then, according to maybe just a follow-up to your point about that kind of variability. As more and more patients are underfunded, do you see a more consistent net price consistent with the patient and some sort of that instability that we’ve noticed in the first two trimesters?Do you think we’re at a point where it’s a kind of more reliable average?
Simon Harford
So I think it becomes more reliable, because at the end of the day, you’re right, the critical mass of overtime is somewhat average to a greater extent. But that doesn’t mean there can’t be bumps in the road from a slightly uneven mix, here’s how I put it in terms of earnings for the next few quarters.
Ron Cooper
Thanks for the questions, Brian. Implicitly, if you look at the price between a child compared to a teenager and an adult, that’s 10 times the difference, right?So when Simon talks about it, that’s what reflects this tenfold variability. from quarter to quarter.
Operator
Our next one comes from Ritu Baral by Cowen.
Ritu Baral
Thank you for answering the question. And it was great to see him at the meetings last weekend. I wanted to ask you about your knowledge about patients with partial serum bile acid response. It was intriguing what it could mean for the liver’s possible survival in the cholestatic state. Can you tell us what it might be, what it might mean for doctors and their, especially American doctors and their attitude [technical difficulty] anti-itch drug compared to Bylvay as a drug that can prolong liver survival?
Ron Cooper
Ritu, I’m also glad to see you. You cut a little bit, but I think what you were saying is about the knowledge we’ve presented about local liver survival with building PFIC, what that means for U. S. prescribers. And how do you think they’re going to. . . How are they going to do it, right?Is that what you’re saying?
Ritu Baral
Yes, especially the elegance of the composite responder as a component of this dataset.
Ron Cooper
So I think the attractive thing is that it’s the same types of patients around the world, it’s the same phase 3 knowledge. There is another application in other geographies. And what we’re seeing is that doctors really perceive that Bylvay has the potential to not only improve your symptoms, but also help maintain your liver over time, that’s where they are. He really has to do things. And I think we were excited about the knowledge that was presented last weekend, especially if you look at PFIC 2 patients, there’s really no difference between those who respond fully and those who respond partially, right?And don’t forget that those definitions of responder are what we created when partial responders did, that’s a pretty clever definition, the definition of partial responder expands that definition. In the end, it doesn’t matter if you’re a partial responder or a full responder. Based on the knowledge we presented last weekend, it looks like he’s doing pretty well at PFIC with his local liver surviving.
Ritu Baral
And is that something you can bring to the FDA to replace label language?I mean, it’s a pretty compelling presentation.
Ron Cooper
Yes itArray Thanks for the plugin. It’s a compelling presentation. I think, as Jan said in the ready comments, this is just the first of the other datasets we’re creating and running. So as those datasets mature, I think there will be a point where we get started a discussion with regulators, given their reactions to the data, and we’ll move on from there.
Operator
The next one comes from Seamus Fernandez of the Guggenheim.
Seamus Fernandez
So, Ron, a question for you is, how do you see the opportunity in Europe, in particular, when you bring the indication of Alagille?It turns out that there is an opportunity with a cashback set to capitalize on this market and potentially get a refund. before the competitor that might be in the market places a little further with the indication, but not necessarily the refund. And the current consultation is only about the pipeline and pipeline of the past stages, can you tell us how you plan to advance products?In those markets, in particular, and when are we most likely to see data and most excited about the pipeline of the previous phase?
Ron Cooper
In fact, in the first consultation on Europe, I will let Pamela comment first and then communicate a little about how we see the evolution of the pipeline. So, Pamela?
Pamela Esteban
The first thing I would say is that we have a lot of experience with payers in Europe and we are satisfied with the best tests, clinical trials that we have ever been given, and we just enjoy and know the questions. You may be asking us. As we head to Alagille, we believe this really provides us with a smart merit in terms of being able to submit reimbursement instances temporarily to get the kind of highest clinical scores needed to do certain pricing favors and refunds. And we already have contracts in position with many of those big payers. Therefore, we hope that this procedure will go smoothly and smoothly.
Ron Cooper
And I would just add, Seamus, if you think about the position of those European countries, we go there with phase 3, with the ASSERT knowledge, which seems smart. We receive, as Pamela said, correct indications and smart marks with the knowledge of PFIC. We already have contracts in force at that time in a maximum of countries. We have a sales force in position. We deserve to be able to get there pretty quickly. So we’re looking ahead of that. Then in terms of the early-stage pipeline, I think what we’re excited about is genuine drugs, right? A3907 is the world’s first and only systemic ASBT inhibitor. A2342 is the world’s first and only oral NTCP inhibitor. A3097, we’re going to go into a phase 2 study. A2342, we’re going to go into a phase 1 study. And we hope to hear from you next year. So what excites us is that those drugs don’t last very long, they were just ideas, but Jan and the team have done a wonderful job promoting those products. We are entering studies that will tell us a great deal about the outlook for these vital new drugs.
Operator
The next one comes from William Blair’s Tim Lugo.
Tim Lugo
And I guess just by expanding on knowledge about liver survival, I think the host discussed that, I guess, the quote was, only time will tell before we know that this is actually a disease-modifying treatment. And it seems that Jan is running more knowledge about it. Perhaps you can tell us more about this delay?I agree with the presenter, everything turns in that direction. Perhaps some in the communities just symptomatic treatment. Maybe you can tell us, it’s a one-year period, it’s a two-year period, what do you think?
Ron Cooper
I think it’s that old question when you’re in those scientific meetings, the longer the better. But I think in this case, I think the genuine question is, are you going to oppose liver disease, right, it’s a very high bar, it’s rarely very much?And I don’t know if we or anyone else will be able to show it for a long period of time. So, it’s kind of the latter, is it rarely very, very?I think now that we have 3 years of knowledge and we’re going to have more knowledge over time, I think many on the net think it’s actually a vital knowledge that we are, in fact, we deserve to receive knowledge to show that. We are improving local liver survival. And I know the presenter in this case is also a strong advocate for that. So we think we’re modifying the disease, right, and that’s the ultimate vital. To be able to say, you are reversing the disease. I don’t know if anybody is going to do that, it’s going to be a very top bar.
Tim Lugo
And I guess from a more publicity standpoint, it looks like 77 patients are waiting for reimbursement. I know we’re still at the beginning of the launch. But have there been leaks from those patients since the beginning of the launch, or do we deserve to assume that those 77 patients will end up paying for the remedy for a certain number of months?
Pamela Esteban
You can assume that those patients will go through therapy. There are no leaks. These patients are literally in countries where we don’t have the final refund yet. And our story to date has been that those patients in the countries where we get reimbursement have transitioned.
Operator
Next comes from Andreas Argyrides of Wedbush Securities.
Andreas Argirids
So, for Bylvay and PFIC, he discussed that patients’ weights were normalizing. Do you still consider that this is prescribed more in younger patients?And where do we see the biggest impact and recent expansion?And then I have a follow-up.
Pamela Esteban
So what we’re seeing is with a patient’s weight, so if I perceive their query correctly, we’re seeing younger patients and older patients. So we see an intelligent variability of patients coming to Bylvay. And because the total number of Bylvay patients is increasing, the kind of effect on individual fluctuations will decrease over time. And in general, the number of patients with gains will increase.
Andreas Argirids
And with the forged knowledge of the gold standard, as Ron likes to say, in Alagille syndrome. When does Bylvay differ from the competition at launch in the U. S. ?Is it in the population under one year old, or would it be the difference?In protecting against diarrhea inspire change?
Ron Cooper
Well, first of all, Andreas, I think this is the first time you’ve looked at data from phase 3, randomized placebo-controlled data. And if I take the reaction from the US and foreign network at the AASLD liver assembly last week, they’re pretty excited to have this. So it’s not just one thing, it’s a diversity of things. It is the fact that there are types of mutations in this database. It’s the fact that it’s a broader diversity of patients. It is the fact that the effects were noticed from the beginning and were maintained over time. And then on your point about tolerance, we’re certainly delighted with diarrhea, 5. 9% in the placebo organization and 11. 4% in the Bylvay organization. And that was also consistent with what we saw with the PFIC patients, right? So if you look at the total database, I don’t think it’s one thing, it’s several things that motivate. So you only upload the drug itself, Andreas. When we communicate to the doctors, the fact that it’s once a day, once, it’s a low dose, it’s a capsule that can be taken as a capsule or combined with food or combined with water, you put this package in combination and I think that’s what excites both American doctors and foreign doctors.
Operator
The following is by Ed Arce of H. C. Wainwright.
Tomas Yip
It’s Thomas Yip who asks Ed some questions. Thank you for answering our questions. Maybe a couple of us. Assuming Bylvay’s approval for the U. S. and the EU, what do you think would be the maximum facets and a possible advertising launch in those two areas?
Ron Cooper
I think it’s phase 3 knowledge, unambiguous knowledge and just the breadth and intensity of that knowledge in other types of patients. There are other types of mutations, a great diversity of patients, a sustained effect rate. So, I think that’s what we’re going to communicate. And then only the implicit qualities of the drug itself, once a day, in low doses, easy to administer with food, or in capsules or liquid and very moderate tolerance profile. We think it’s a top profile and that’s what’s going to be attractive.
Tomas Yip
And then, maybe a consultation about biliary atresia with [indistinguishable] [completely] enrolled. How do investors see the market opportunity, because you argued that there is a much larger market than PFIC and Alagille, even combined?Can you describe some of the main differences you anticipate in advertising strategy in biliary atresia compared to the other two indications?
Ron Cooper
Well, that’s the good looks of our business model, Thomas. When you think about it, those are the same doctors who prescribe PFIC for Alagille and biliary atresia. We have created a commercial design in the United States and Europe that covers this audience. And it covers it very well. So we won’t want a lot of additional resources to succeed in customers. So when we get to biliary atresia, which you said is the biggest opportunity, we capture that, it’s a game-changer for us, right?It can accelerate our business.
Tomas Yip
I was given Thank you for answering our questions and moving forward with Alagille’s regulatory filing.
Operator
We have come to the end of our question and answer session. I will now turn to Ron for closing remarks.
Ron Cooper
Great. Thank you, operator. Thank you all for participating in today’s convention call. In fact, I am proud of our organization’s ability to deliver and execute as planned. And I thank each of our employees for their commitment, dynamism and innovative spirit. we advance the Albineo project to give hope to patients and families affected by these devastating liver diseases. Thank you all for your continued support.
Operator
That concludes the convening of today’s convention. You can disconnect your lines. Thank you for your participation and have a day.