Amryt Pharma plc (AMYT) on Q1 2022 Results - Earnings Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the Amryt Pharma Q1 Results Call. . Please be advised that today's conference is being recorded, Wednesday, the 4th of May, 2022. I would now like to hand the conference over to Amryt Pharma. Please go ahead.
Simon Loughrey: Thank you, operator. On the call today to discuss Amryt's Q1 2022 financial results are Dr. Joe Wiley, CEO; and Rory Nealon, the company's CFO and COO. In addition, Dr. Tracy Cunningham, VP, Head of Development; Paul Greenland, President, EMEA region; and Sheila Frame, President, Americas, will be available to answer questions during the Q&A session. Joe will provide an update on the business, and then Rory will go through the financials in detail. Before I hand over to Joe for his formal remarks, let me remind you that this webcast and conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict and which may be outside of the company's control, including, among other things, the development of its business, the trends in its operating industry, changing economic, financial or other market conditions. In light of these risks, uncertainties and assumptions, the events or circumstances referred to in the forward-looking statements may differ materially from those indicated in these statements. Words that express and reflect optimism, satisfaction with current progress, prospects or projections as well as words such as believes, intends, estimates, expects, plans, projects, anticipates and other similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Any forward-looking statements made speak only as of the date of today's press release and conference call, Wednesday, May 4, 2022, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this call. For more information, I would refer you to the forward-looking statements section of the full year financial press release issued earlier today as well as the company's filings with the SEC. At this time, I will turn the call over to Dr. Joe Wiley. Joe, Please go ahead.
Joseph Wiley: Thank you, Simon. I'm on Slide 4 of the presentation. We are pleased to be reporting strong operational and financial results for Q1 2022. We delivered record Q1 revenues of $59.1 million, which represents 22.1% growth year-over-year. Once again, this quarter, I would highlight the very impressive growth that metreleptin delivers of 25.7% year-over-year and the product grew across all regions. This strong revenue performance drove EBITDA before restructuring and acquisition costs of $7.2 million in Q1, which represents our 9th consecutive quarter of positive EBITDA generation. We ended the first quarter with total cash of $102.2 million. We also recently refinanced our debt facility, which further strengthens our balance sheet, significantly reduces our interest costs and provide strategic flexibility as Amryt looks to grow its global rare disease presence. Given the strong performance of our business year-to-date, we are reaffirming our full year 2022 revenue guidance of between $260 million to $270 million. This represents growth of 17% to 21% over 2021 and clearly demonstrates the Board's confidence in Amryt's business prospects. I would note that this guidance excludes any potential contribution from FILSUVEZ this year. As previously announced, the Board approved a share buyback program of up to $30 million. Year-to-date, we have not been able to buy back shares as we have been in a blackout period. I would note that this period has now ended. We recently reported some very exciting news regarding FILSUVEZ. On April 22nd, the CHMP recommended a positive opinion regarding FILSUVEZ's approval, and we expect the European Commission to make a final decision by the end of June. We see the CHMP opinion as the most significant milestone in Amryt's history to date, and it also represents a major positive development for patients -- European patients that suffer from this devastating disease. This was made possible by years of hard work from all the Amryt team. I'd like to take this opportunity to formally thank both my colleagues and all the patients, caregivers and physicians for their commitment and efforts in getting us to this point. If FILSUVEZ is approved, we will have 4 commercial products, and we anticipate that it will be another major growth driver for the business in the coming years. We already have the team, financial flexibility, systems and global infrastructure in place to bring FILSUVEZ to market and to execute our significant growth plans. Moving now to our commercial products. Beginning with metreleptin on Slide 5. Revenues for the first quarter were $37.6 million, which represented 25.7% growth year-over-year. U.S. metreleptin revenues grew 24.7% year-over-year, and the EMEA delivered 22.8% growth. As a reminder, metreleptin was approved in Europe in 2018 and is still relatively early in its growth trajectory and also has a broader label than in the U.S., encompassing both general lipodystrophy and partial lipodystrophy. Our plan is to seek a label expansion for metreleptin in the U.S. to include treatment of partial lipodystrophy, and we initiated a global Phase III study in PL in Q4 last year. Let's move to the final Slide 6. Lomitapide revenues for the first quarter were $17.8 million, which was up by 0.7% from Q4 2021. I would note that lomitapide increased by 7.1% quarter-over-quarter in the U.S., which is pleasing considering the competitive landscape. We are currently conducting a pediatric study for lomitapide in HoFH, and we expect to have clinical data in the second half of 2022. Assuming positive data, we will seek approval for lomitapide to treat children with HoFH in both the U.S. and in Europe. Now on to MYCAPSSA on Slide 7. MYCAPSSA as the first and only oral somatostatin analog oral capsule. It's a genuinely differentiated product. Given the robust clinical data supporting it and the patient preference to orals, we believe MYCAPSSA has the potential to become a standard of pharmacological care for patients with acromegaly. Since Amryt acquired Chiasma, we have spent considerable time integration with 2 companies, which has gone very well. We initiated a relaunch of MYCAPSSA in Q4. The key pillars of this being, number one, new market positioning; number 2, broader health care provider outreach and number 3, enhanced patient services. The underlying message for our new positioning is that MYCAPSSA, the first FDA-approved oral therapy achieved consistent biochemical control in acromegaly. This message is supported by positive clinical data across 3 Phase III trials, with the use to drive urgency providers in order to understand the value of creating acromegaly patients with MYCAPSSA. We have combined the 2 sales forces, increasing the overall sales force by approximately 60% from the original team. We are now leveraging our metreleptin reps in the U.S. to accelerate the adoption of MYCAPSSA beyond the pituitary centers and into the community endocrinology, where the remains a strong opportunity to educate physicians on our label and on the value of MYCAPSSA for patients. We have also combined our medical affairs team to increase our share of voice in the field and across endocrinology. Our fully built out and trained sales and medical teams were in place by January. The easing of restrictions around COVID means that they now have better access to physicians, and we are already starting to see greater reach, including to both PPC and community endocrinologist. To give you a sense of the progress, prior to the acquisition, Chiasma was averaging less than 4 calls per week, and these were primarily virtual. As of March this year, we are approaching 4.5 calls per day, with the majority of these now taking place in-person. The focus of our enhanced patient services program has been to improved simplicity and reduce the time to medication delivery to the patient once the prescription decision has been made. In February, we launched the Amryt clinical education team to help patients directly as they begin therapy, provide support for transitioning to MYCAPSSA and connect to other patients core services. MYCAPSSA delivered revenues of $3.4 million in Q1. The Q4 revenues in 2021, as we pointed out on our last call, were enhanced by forward ordering of approximately $1 million due to inventory build in December. If we adjust for this inventory build, the underlying growth sequentially at MYCAPSSA in Q1 was 11%. We expect a more accelerated growth trajectory for the fall through the rest of 2022 because of key momentum building events, including the hiring and onboarding of both our field and medical sales team, the ramp-up of our key customer relationships and the data we continue to publish for MYCAPSSA. Turning to Slide 8. We have plans to develop MYCAPSSA in an additional indication for patients with carcinoid symptoms due to neuroendocrine tumors or NET. We estimate that the addressable market in NET is approximately $1.9 billion globally, with the U.S. market opportunity valued at approximately $1 billion, which is very compelling. Injectable somatostatin analogs are broadly used today as first-line pharmacologic treatments for these symptoms. We are pursuing this program based on our belief that MYCAPSSA has the potential to become a standard of pharmacological care for NET patients with carcinoid syndrome. As an oral version of octreotide, MYCAPSSA, if approved, may have the advantage of a more convenient, less painful delivery for patients to receive their treatment, which could be delivered at home. Furthermore, we think MYCAPSSA may have the potential to provide continuous disease control is developed as an oral daily medication for NET. The FDA has confirmed that a single positive Phase III study will be sufficient for approval in NET patients with carcinoid symptoms consistent with the 505(b)(2) regulatory pathway previously agreed. In March this year, we announced positive results from a PK study showing the doses of MYCAPSSA up to 80 milligrams result in the desired bioavailability and dose proportionality with an acceptable safety and tolerability profile. This data now enable us to proceed with our planned Phase III study design. We have been working on the protocol and statistical analysis plan for this Phase III study that has been revised post FDA feedback and written responses to a Type C meeting request are anticipated in Q2. Once we have this feedback, our plan is to initiate the Phase III in Q4 this year. If all goes according to plan, we would potentially be looking at top line data in 2024. Moving to Slide 9. Now on to FILSUVEZ, which we are developing as a novel treatment for the cutaneous manifestations of severe EB, a rare and distressing genetic skin disorder that affects young children and adults. As I stated at the beginning of the call, there has been a very positive reach in development with the CHMP recommending positive opinion regarding FILSUVEZ approval. The CHMP has indicated that the product will receive a broad label that covers the treatment of partial thickness rooms associated with dystrophic and junctional EB in patients 6 months and older. We anticipate that the European Commission will make a final decision by the end of June. If approved, this would potentially set us up for a launch in the EU in the second half of this year. This is the first time that Amryt has successfully advanced a therapeutic through Phase III and to this late stage in the regulatory process. The EASE trial was a major undertaking, and was in fact the largest trial ever conducted in EB. It's positive news from CHMP, speaks to the capabilities and execution of our R&D and regulatory teams. I would like to reiterate my thanks to my colleagues at Amryt, the patient and everyone involved in this program. Regarding our NDA in U.S., we announced earlier in Q1 that we received a Complete Response Letter from the FDA. The FDA has asked us to submit additional confirmatory evidence of the effectiveness for FILSUVEZ in EB. We plan to hold an end-of-review conference with the agency to understand what is required to achieve our goal of bringing FILSUVEZ to patients in the U.S. EB maybe patients are desperate for a therapy, and we are committed to working collaboratively with the FDA to identify the most expeditious path forwards. The FDA briefing document for FILSUVEZ was filed on Monday this week, and a Type A meeting has been requested. We anticipate that this meeting will occur within 30 days of filing. In parallel, with the regulatory activities, our launch initiatives for FILSUVEZ in Europe are now well advanced. For FILSUVEZ, we already have the infrastructure in place to bring those products to market and to execute on our growth plans for the product. You can see the key centers treating EB across the major markets in Europe on Slide 10. This demonstrates that EB is a natural fit with our business model. That is treating rare diseases with a high unmet need with our small numbers of patients, being treated by small numbers of physicians at small numbers of centers, meaning that we can successfully address the market opportunity with a commensurately small commercial footprint. I would note that we have already demonstrated our strong track record in executing this strategy with our existing products, lomitapide and metreleptin. And as we already have, the medical and commercial infrastructure in place across Europe, the incremental cost for us to launch FILSUVEZ in Europe is minimal. If approved, we intend to proceed with launch in Germany in H2 this year, in parallel with market access applications in each of the major countries, followed by the smaller countries in turn. We hope to have formal reimbursement that will enable us to launch in these markets in the latter half of 2023 and into early 2024. In addition, we anticipate that there may be significant demand for named patient sales for FILSUVEZ in Europe post launch. Finally, I would note that EMA approval may also allow us to launch FILSUVEZ in other EB markets, such as the Middle East and LatAm, where we also have our own medical and commercial infrastructure base as well as a fully established distributor network. Turning to Slide 11. Let me run through our expected newsflow for the year. As we've discussed, the European Commission's approval decision on FILSUVEZ is anticipated by the end of June. For the U.S., the End of the Review conference to discuss FILSUVEZ NDA with the FDA is anticipated to happen in Q2. For the MYCAPSSA NET program, we're anticipating written responses to a Type C meeting request to be received in Q2, and we are hoping to start Phase III studies in Q4. As I just mentioned, if we receive approval of FILSUVEZ in Europe, it will allow us to initiate commercial launch in Europe in the second half of this year. We also expect to enhance top line data from the lomitapide pediatric study in HoFH in the second half. And finally, for the ongoing European Medicines Agency review of MYCAPSSA in acromegaly, we're expecting an opinion from CHMP also in the second half. As you can see, 2022 continues to be very busy with what we believe are multiple potential value-creating milestones throughout the rest of this year. Let me now turn the call over to our CFO and COO, Rory Nealon, who will provide more details on the full year and Q1 financials. Rory?
Rory Nealon: Thanks, Joe. And starting with revenues, and I refer you to Slide 12. Joe has already covered the revenue performance by product and by geography, so I won't repeat what has already been said. Rather, I'll just remind you of the headline numbers and provide some color on a couple of items. We've seen an overall 22.1% growth in the same period last year, which was driven by the ongoing growth in our metreleptin revenues, as Joe said, of 25.7% and from MYCAPSSA with our lomitapide business being relatively stable compared to the same period last year. Metreleptin continued to perform in all regions, with each region showing growth on the same period last year. Most impressive is the 24.7% growth within the U.S. market. As I said last quarter, this is a product that has been on market for 9 years now and to be growing by 24.7% year-over-year is really impressive. In fact, I believe it is a perfect example of the commercial acumen that Amryt brings to the table when we acquire an asset, and this growth in metreleptin have been brought about quite a significant improvements we have made to our sales, medical affairs in patients support teams in the U.S. The same metreleptin endocrinology-focused team was merged with the MYCAPSSA endocrinology-focused team in late Q4, and we are confident that this same commercial acumen will start to have an impact on the MYCAPSSA revenues in the coming quarters. Before moving off revenues, I would just like to elaborate on these MYCAPSSA revenues for the quarter. I'll remind you that our Q3 revenues were $1.4 million, of which $1.1 million was in the month of September, which is our first full month of owning the assets. With this number of $1.1 million representing an annualized number of approximately $13 million. Our Q4 MYCAPSSA revenues were $5 million, and you will recall from my comments last quarter, but I noted that the Q4 number was higher than expected due to a year-end stocking order from our distributors of approximately $1 million. I also noticed that the net of stocking order quarterly revenues of $4 million would have been $16 million annualized, and this was a better reflection of the underlying performance of the business in Q4. Allowing for this $1 million stocking order in Q1, the true underlying performance in Q1 would have been $4.4 million, which is the 11% growth Joe alluded to earlier. I also noticed that the net of stocking order quarterly revenues of $4 million would have been $16 million annualized, and this was a better reflection of the underlying performance of the business in Q4. For our lomitapide asset, it is worth noting that our revenues in the U.S. have increased by 7.1% over Q4, and this is very pleasing given the competitive landscape in the U.S. Finally, before moving off revenues, I would just note that we set our revenue guidance of $260 million to $270 million for the year, and we have achieved 22.7% of the lower end of the range in just the first quarter, which is impressive given the ongoing growth in the business. The next item I'd like to touch on briefly is our gross margin performance, excluding the impact of non-cash items, which once again exceeds 75% for the quarter. This is consistent with the pattern of our gross margins, which has averaged a little over 75% for the previous 5 quarters. This margin of 75.1% is a little lower than where we would like to be and is in part driven by the higher mix of metreleptin revenues, which is our lowest margin product. We would expect to see this creep up as we move through the year, in particular with the increasing mix of MYCAPSSA revenues and also in line with the introduction of FILSUVEZ revenues. Regarding the non-cash items that we adjust out in calculating our adjusted gross profit, I would refer you to Slide 13 and the detail in the footnotes. These adjustments consist of a number of distinct items that impact our gross margin. Firstly, there is the amortization of our intangible metreleptin and lomitapide assets of approximately $10.7 million per quarter, which has been the case for some time now. In addition, we now also have the amortization of the MYCAPSSA intangible asset, which was $3.7 million for the quarter. Also included is the amortization of the fair value step-up of acquired MYCAPSSA inventory of $1.6 million, which, as you know, is an accounting requirement following an acquisition whereby we are required to fair value or uplift inventory acquired on the acquisition date up to something approaching the future selling price of that inventory and then amortize that non-cash accounting adjustment of the related inventory is sold. The key point to note about all of these items is that they are non-cash accounting adjustments and have no bearing of the ability of the company to convert EBITDA profitability into operating cash flows. Moving out to our SG&A and R&D spend. Given the acquisition of Chiasma on 5 August last year, comparing Q1 this year with the same period last year is not a reasonable comparison. Accordingly, I draw your attention to Slide 14, which shows the progression of our R&D and SG&A costs before restructuring expenses of non-cash items such as depreciation and amortization over the last 5 quarters. As is evidenced from the table, you can see a step change in our R&D spend in Q3, which is to be expected with the introduction of MYCAPSSA. Since the acquisition, we've been paying the ongoing open-label study cost for both the MPOWERED study in Europe and the OPTIMAL study in the U.S. In fact, you will have seen us release results from these ongoing studies on 11 January and 13 April, respectively, both of which are coming to a conclusion. We are also completing the PK study, the data on which we released in 8th March, and which shows a linear response at the higher dosing levels of MYCAPSSA, which creates a path forward for our NET study. Regarding this NET study, we are expecting feedback from the FDA to our Type C request on the protocol for this Phase III study in NET with carcinoid syndrome, following which we anticipate commencing our Phase III in Q4 of this year. As a reminder, this is a significantly larger market than our acromegaly market at $1.9 billion globally compared to $800 million globally for acromegaly. Ignoring the impact of the Chiasma restructuring and acquisition costs or exceptional items and non-cash items such as depreciation and amortization, our SG&A spend for the quarter was $27.3 million. Again, a comparison with the same period last year is not appropriate given the Chiasma acquisition, and this is evident from Slide 14, where you can see the increase in spend in Q3 following the acquisition in August. The increase in spend from approximately $18 million per quarter, as was the case in Q1 and Q2 to $25.2 million in Q3 is not reflective of the true impact of Chiasma, given we did not own the business for a full quarter in quarter three. Rather, the increase from $18 million per quarter to $28.9 million in Q4 is a better reflection of this impact. And the good news is we've reduced it further to $27.3 million in Q1, given the ongoing savings we are making in the combined business. Comparing the current quarter of $27.3 million to the pre-Chiasma run rate of $18 million per quarter, adjusted out to approximately $9 million per quarter or $36 million annualized. This is predominantly driven by the impact of Chiasma, but also with the ongoing cost increases associated with the growing business and prelaunch prep work for associated to that launch. Either way, this $36 million annualized increase of approximately half the annual operating spend, which we -- Chiasma were planning on a stand-alone basis. Once again, this demonstrates our ability to buy businesses and integrate them phenomenally quickly while driving costs down. This is the second time we've acquired a business from the last 2-plus years, where we've dramatically decreased the cost base of that acquired entity in less than 2 quarters, the first case being Aegerion. In both cases, we've been able to do so through genuine synergies and also by transitioning a sizable number of non-customer-facing functions and roads from Boston to Dublin, where we can source comparable talent at more competitive rates. I would like to think we have now proven ourselves as being very adept at extracting synergies from a business in a very efficient way, while simultaneously growing the revenues from the acquired business. I would like to focus on the EBITDA, which is a key metric for us. In this regard, I will draw your attention to Slide 15, where we adjust our Q1 operating loss for non-cash items and debt to adjusted EBITDA of $6.8 million or $7.2 million before Chiasma restructuring and acquisition costs of $400,000 for the quarter. This EBITDA before such exceptional costs of $7.2 million for the quarter compared to $5 million in Q4 or a 44% increase quarter-on-quarter. I will also note that this is the 9th consecutive quarter of EBITDA profitability within Amryt. Before moving beyond EBITDA, it's worth pointing out the impact of the exchange rate movements on the business, in particular, the dollar/euro exchange rate, given the U.S. dollar is our functional currency and the only other currency of note that we trade in is euros. Approximately 48% of our payroll in operating costs during Q1 are in euros and 21% of our revenues in euros. This results in a natural hedge to a large extent, with the delta being approx $6.7 million of higher euro denominated costs in quarter 1. Using constant currency exchange rate, it is worth noting that our revenues would have been approximately $900,000 higher in Q1 if we were to apply the same exchange rate in Q1 2021. Beneath the operating loss line in our income statement, you will note there's a relatively small charge for the small chain to the change in the fair value of the contingent consideration and the CVRs, both of which are payable on success with our FILSUVEZ products. Regarding the contingent consideration payable to the original developers of our FILSUVEZ products, the recent CHMP recommendation will ultimately trigger the payment of a EUR 10 million milestone payment to the original owners of FILSUVEZ and which will likely get paid out in early Q3. Regarding the CVRs, we don't anticipate that the FDA CVR will get paid out, which is originally $35 million given the FDA would need to change their mind and approve FILSUVEZ for the U.S. market before the end of June this year. However, the EMA CVR, which was originally $15 million will now be paid out, albeit at a lower amount of $5.7 million, given the sliding scale, which applied based on timing, namely, $15 million of approval is forthcoming by the end of December 2021, the 0 typical if approval is forthcoming by end of June this year. Given the CHMP recommendation on 22 April, this sliding scale has resulted in this reduced $5.7 million payment or $0.0095 per CVR, which will be paid out to CVR holders in approximately 4 months' time per the terms of the CVR instrument. Finally, in that section of our income statement, you will note an $11.1 million charge from net finance expense for the quarter, which is higher than normal, which is predominantly due to the once-off early repayment fee associated with the debt refinancing process we announced during the quarter. Moving on to our balance sheet. Cash and net debt are obviously key metrics for us. As you'll see on Slide 16, our cash balances have been consistently increasing prior to Chiasma acquisition as our quarterly EBITDA generally converts into positive operating cash flows. With the Chiasma acquisition, our cash has declined over the last 3 quarters with the rationale being as follows. In quarter three, we used Amryt cash to pay the remaining $21.6 million of the Chiasma debt, which is obviously a once-off event. Over the course of Q3 and Q4, we also paid approximately $21 million in deal costs from both sides, but approximately $13.5 million of this amount paid in Q4 and the remainder in Q3, again, a once-off event. In Q1, we also paid out the bonuses for the financial year 2021. And finally, as I noted last quarter, the timing of payments to product manufacturers could also have a large bearing on the timing of our cash flows, with the majority of payments for both metreleptin and MYCAPSSA occurring in both Q4 last year and the current Q1. This is evidenced by the $13.9 million reduction in our payables in Q1 and the $5.8 million increase in our inventory in Q1, as noted in our cash flow statement. These movements were exacerbated with the acquisition of Chiasma and that significant supplier payments and increases in inventory for API for MYCAPSSA in particular, have resulted in Q4 and Q1. As we always do in the aftermath of an acquisition, we are currently seeking to reduce our inventory levels and ensure a more efficient use of our working capital. Some of you will recall experience the exact same thing when we acquired metreleptin and after our significant pre-acquisition, the inventory purchase commitments, which we're able to reduce gradually over time. On an overall basis, our net debt at the end of March was $121 million, consisting of $102 million in cash, net of our convertible debenture of $125 million and our term debt of $98 million. Excluding our convertible venture, which could reasonably be considered as quasi-equity given the conversion price as compared to analyst target share prices, our net debt converts to net cash of $4 million. Before closing on our financing, I would just like to reiterate the highlights of the recent debt refinancing, which completed during the quarter on 22 February, and which are outlined on Slide 17. We replaced our term loan facility with a new $125 million term debt facility, of which $105 million was drawn on closing with the facility consisting of an $85 million term loan facility, which has been fully drawn and a $40 million revolver facility, 50% of which has been drawn and the remainder of which is available for drawdown at our discretion. The key substantial benefit of this new facility includes a reduction of almost half in the interest rate from 13% on the old facility to a blended rate of 6.9% on the new facility -- assuming the new facility is fully drawn. A change in the repayment date of all principal on the loan from September 2024 to February 2027 is obviously significant and the introduction of a new financing partner, a Amryt. As I mentioned in the last quarter, Ares are truly a Tier 1 partner, and we are particularly happy to have another strong part willing to support Amryt's future growth. Before concluding my comments on the financials, I will note that we filed our 20-F for the 2021 financial year with the SEC on Friday. And obviously, there's a lot of information about the company and that document or those of you who may be interested. Finally, I would just like to note that you should expect us to file a couple of F3 registration statements in the coming days. The first 2 are a matter of housekeeping, whereby we convert our 2 previous F1 into F3s, which we are now permitted to do having been listed on NASDAQ for more than 1 year. The third F3, we wish to file as a shelf registration statement, which is again an example of good corporate housekeeping, which the vast majority of companies file once they have been listed on NASDAQ for more than 1 year. While on the topic of our capital structure, I would like to reiterate what Joe said about our share buyback program. This program was approved by shareholders of 3 March, and we announced the Board approved plan to acquire up to $30 million over the next 12 months on 9 March. As Joe mentioned, we have not initiated this program to date given we're in a blackout period, and we are committed to do so with immediate effect. That is the end of my comments, and I will now hand you back to Joe.
Joseph Wiley: Thank you, Rory. I'm now on Slide 18. Let me summarize by reviewing where Amryt stands today. We have a revenue-generating portfolio that is now comprised of 3 approved commercial products each of them growing and addressing large attractive markets. FILSUVEZ is approved in Europe this year, this will bring our total number of commercial products to 4. Our growing revenues are driving EBITDA, and this in turn results in strong positive operating cash flows in our business with a track record of successful acquisition, integration, execution, performance and growth, and we are currently leveraging those capabilities in the ongoing relaunch of MYCAPSSA. In the near-term, we believe the anticipated approval of FILSUVEZ in Europe will be a significant driver of growth for Amryt. We have the global commercial infrastructure and financial flexibility to execute our plans as well as an experienced team to drive new product launches and growth. Finally, we have a pipeline of development stage assets with the potential to drive near-and long-term value. I will now hand over to our operator for Q&A. Operator?
Operator: . Your first question comes from the line of Max Herrmann from Stifel.
Max Herrmann: Congratulations on the quarter. A couple, if I may. Interesting to see that Myalept in the U.S. where it's been, as you've said, for many years is achieving dynamic growth. I would wonder if you could kind of outline a little bit more detail for what's driving it? Is that purely patient numbers? Are you finding more patients? Just how is that growth being achieved? And then secondly, you also talked about the opportunity for FILSUVEZ in the named patient or named patient sales. I wondered whether you are looking at using a commercial managed access type organization to do that? Or how would you approach that?
Joseph Wiley: Thanks, Max for your questions. So let me start by, just to tell you a few words about Myalept in the U.S. because you're entirely right. When we acquired Myalept in the Aegerion acquisition, it was a product in decline. And we said at the time that we were going to apply our rare disease philosophy and strategy to turn that product around. And as you just pointed out, we have done that successfully. It doesn't happen overnight. As you know, it's -- but over time, we have turned that product, which was a product in decline to now a growth product again. In terms of that strategy, you've heard me say this many times, and we see the -- our rare disease philosophy is that with 3 legs to the rare disease do, and they are namely your commercial team, your medical affairs team and your patient services team. And you need all of those free to act in unison and to have a very strong presence. And you've heard today on this call how we were applying that exact philosophy and strategy to my cuts and now, right? That doesn't happen overnight. But when you apply that successfully, then you can be very successful. You could argue it's a fourth leg by the way, which is market access. So, I would accept it as possibly for rather than just 3. But maybe I'll hand over to Sheila, who is our President. Sheila, do you want to address the question of what's driving growth to new patients -- is the new patients coming on therapy.
Sheila Frame: It's all of what you just mentioned, Joe. Thanks, Max, for the question. I think the synergy that we get between making sure that we continue with a very strong medical presence, patients are well supported, so they stay on therapy as well. And I think finally, the commercial infrastructure and the opportunity that we have leveraging both our field community team, medical affairs with the experts as well as really strong both market access as well as patient services. So it's a combination of all of those things that continue to drive growth. And yes, we do find new patients fairly consistently. We have an inside sales team that are absolutely phenomenal at identifying patients, which, as you know, is the hardest part.
Joseph Wiley: And your second question, Max, was on FILSUVEZ. Our anticipation of potential significant demand for named patient sales and how we might address this. We're pleased to have Paul Greenland, our President of EMEA on the call. So Paul, I'll hand that question to you.
Paul Greenland: Yes. Thanks, Joe. And Max, thanks for the question. I mean this CHMP positive opinion is extremely exciting for the EB community across Europe has caused a huge amount of interest. And we are expecting that once -- assuming we get the EG positive opinion at the end of June, that we will have significant demand for FILSUVEZ. But as you're aware, in Europe, the reimbursement process in most markets takes some time. So in most of the larger European markets, there are recognized named patient programs. And we will be looking to make FILSUVEZ available as no patient sales through those programs while we're waiting for final reimbursement. But we won't be using an external vendor for this because we have extremely sort of strong experience from our other products in the European market. And I highlight here Myalept, which has also been through the similar process of reimbursement process and named patient sales. So we have a very experienced team in Europe, very competent, capable team who understand how to make the product available through the named patient programs, and we're expecting to get a say, significant demand through those while we wait for reimbursement.
Operator: Your next question comes from the line of Mani Foroohar from SVB Securities.
Mani Foroohar: Could you give us a quick update on where we are in the process of conversations around the FDA opportunity for -- the U.S. opportunities for FILSUVEZ, where those conversations are between yourself and the regulatory body and sort of give us a sense of what the goalposts are on the possible outcomes in terms of potentially in a future study, a path to approval, if any? And does your experience with the CHMP and EMA informed that at all?
Joseph Wiley: Yes. Thanks, Mani, for the question. I'm going to ask Tracy Cunningham, our VP of Clinical Development, to address it more specifically. But as I said in my structured words, the -- we have requested now the End of Review conference. So we submitted the briefing document to the FDA on Monday. Clearly, the CHMP positive opinion is very helpful. And we have brought that up clearly in that briefing document because they have given a positive opinion on the exact same data. So with that, maybe I'll handover to Tracy, just to give a little bit more color, Tracy, on the possible outcomes and our strategy overall with the FDA and path to approval with the other question.
Tracy Cunningham: So thank you, Mani. So yes, obviously, as Joe said, we're delighted with the positive opinion from the CHMP in Europe. And although obviously, the 2 agencies are independent to each other, one would anticipate that the FDA is cognizant of that decision. And of course, that will be included within our briefing book. With respect then to the post really, the first thing is we have submitted the meeting request for an end of conference review meeting. What the FDA are required to do is to schedule a meeting within 30 days. And that meeting will be very important to us to really understand what their thinking is and what additional information they require us to provide them with. Certainly, we are very confident of the data that we have and would hope that we can have a hopeful discussion with them to understand -- go forward. They have not specifically called out the need for an additional study, which is obviously very interesting and we will need to talk to them about that. The next step then will be -- our intention -- our hope would be to have a resubmission and that would be determined then as to what class of a resubmission. But clearly, the conversation with the FDA is critical to understanding that first.
Joseph Wiley: Mani, I'd just add to that as you know, the metric for approval with the FDA is substantial evidence of efficacy. And that's ordinarily requires 2 well-controlled Phase III studies. However, in orphan diseases, you're often relying on a single pivotal study. And the term additional confirmatory evidence comes from the 2019 guidance by FDA, which is when you are relying on a single pivotal study, what additional confirmatory evidence that they would require. So that's where that term comes from.
Mani Foroohar: That hits on exactly what the question is. To what extent should we think about, again, those same -- what are the goalposts for additional affirmatory evidence that isn't an additional study. To what extent should we be looking to the EU view, the history in burn and use in burn patients or potentially any application of real-world evidence, presuming this becomes a commercial asset in the EU and any other countries that recognize the value of EMA approval?
Joseph Wiley: Yes. So there was one thing that they brought up in the CRL and that was that in our 3 positive Phase III studies that weren't in EB, there were 2 split thickness skin graft donor site wounds and one in second degree burns that they were intra-patient controlled studies, and therefore, weren't blinded to the primary end points, which we accept that is true. An intra-patient is use one single wounds and using one side with the products and the other side with the standard of care or you use one patient with 2 similar wounds. But the primary endpoint was a clinical endpoint where that was not blinded. However, the pictures taken on each of those wounds. And those pictures were sent to a panel of independent raters who were blinded, and they did confirm that data. Now the FDA pointed out that there was some missing data, which is true in those pictures. And the reason for that is that at the time, the people who run that study felt that there was potential for bias because you could see a little bit of gel in some pictures that was remaining and they excluded those pictures. We actually, we run the analysis previously for the EMA, in fact, because they pointed this out as well. And when you rerun it including them actually the P values get better, not worse. And ultimately, the EMA was happy with that and approved Episalvan in the past in that partial-thickness wound indication. So, we have added that data into this briefing documents. And on the onsite we don't know. It's unknowable until we go into the meeting. We obviously have a strategy we're providing this additional data with they've brought it up. But we don't know what else they're seeking. They did say that we -- your method of use -- sorry, the methods of action data is in normal healthy keratinocytes rather than EB keratinocytes, and which is the first time they brought this up. That does come up again. If you go back to that 2019 guidance, they say, "what constitutes additional confirmatory evidence." And one of the things they say there, if you read that document is mechanism -- the mechanism of action data rather in the disease. So, we are actually starting that work right now. So we're doing that anyway, and getting that -- showing that in EB keratinocytes. So we'll see, we just don't know. Tracy, do you have any additional commentary that you want to add to that?
Tracy Cunningham: No. I guess, as Joe said, really, what we need to is understand what their thinking is. We've also -- as you know, with the European Medicines Agency, we had the opportunity to present to an ad hoc expert group, and that comprised of EB physicians and patients and also to the oral explanation, which was member state the representatives. And during those discussions, we had the opportunity, we talked a little bit further about the pivotal study and about the -- in particular, some of the secondary endpoints that had really strong clinical value for patients and physicians, and we did some additional analysis, looking in particular at same frequency and looking a little bit further up that, and we'll be providing that information also to the FDA. So some of the learnings that we had from those interactions have also come into this next step with the FDA.
Operator: Your next question comes from the line of Catherine Novack from Jones Research.
Catherine Novack: I have one on the commercial opportunity in pediatric HoFH. I'm curious how significant this opportunity obviously ultrarare indication? And are the prescribing practices, competitive landscape comparable to the adult population? And then, I was -- for my second question, can you give additional details around the expected inflection point of the MYCAPSSA commercial launch in the second half of '22? What are some of the factors driving this inflection? And how does this new market positioning differ from the initial launch?
Joseph Wiley: Sure. So let me address the HoFH -- you have to get to HoFH a little bit first, and then I'm going to hand over to Sheila. So the -- we estimate that 25% of the patients are pediatric patients. We have got some pediatric patients on therapy actually around the world on a named patient basis, so some of those are actually free of charge patients where we're treating children who are in desperate need. So about 25% of the patients, we -- but it's the similar model factoring, right? Small numbers of patients, high unmet need, small number of patients being treated by small numbers of physicians, often small numbers of centers, and therefore, we can address that with our commercial footprint. Sheila, I'm going to hand over to you on the MYCAPSSA point. I'll just say, though, Catherine, a little bit like the conversation that we had earlier the question about Myalept in the U.S., and it's really -- we've been driving growth of that, which is a big turnaround. It took time, right? It just -- you can't click your fingers and make it happen overnight. It does take time. But with the application of our methodology in rare diseases, you can look to that product as an example of what we can do when we apply that methodology correctly. So the question was on inspection points, Sheila, do you want to take that?
Sheila Frame: Sure. Thanks, Catherine, for the question. So, let me just share that there are a couple of things to think about when we acquired MYCAPSSA. The focus of the commercial team was primarily on the pituitary centers in the U.S. There's 39 of them. And as we look to the opportunity that we had with the Myalept field force that we had calling on community endocrinologists, we've now expanded our focus to about 2,000 endocrinologists in the U.S., many of whom still have not heard of MYCAPSSA. So as the market opens up and we're much more back in-person promotion, then we are both repositioning MYCAPSSA with much stronger messaging around the value that MYCAPSSA brings around sustained control. And also, we're introducing it now to the community treaters. So while still a very rare treatment, very rare disease and acromegaly. About half the patients are actually treated in the community. And so, we've combined our field forces. We've added additional resources behind a nurse clinician team that Joe mentioned during the presentation to support patients as they come on to oral therapy and titrate to the right dose, and we also have significantly improved our patient services, so that we're reducing the time from the time the prescribing decision is made through to when the patient actually gets the medication. We significantly improved that service since we acquired the product. So we've got a fairly new team, all trained, all in the field and a repositioned message as well as now going into the community and supporting them both from a nurse and a patient services perspective. So all-in-all, I think we're -- we've got a very exciting Q2 and Q3 in terms of our activity levels. We are very close with the patient organization. We're going to start to try some different approaches, both with reimbursement support -- additional reimbursement support. So we've got a lot going on. As Joe said, though, it does take time, right? You're both relaunching and launching, essentially relaunching in terms of the PTCs and launching effectively into the community. So it's going to take us some time, but we're certainly very optimistic about the impact that this product can have for both patients and certainly for the community that are treating acromegaly.
Operator: Your next question comes from the line of Michelle Gilson from Canaccord Genuity.
Michelle Gilson: I have one on Myalept. You mentioned before the great work that your team has done to really turn this product around following the acquisition of Aegerion and if we inject growth into the U.S. market. But one of the things you didn't mention was if you're seeing a COVID effect in Q1 for Myalept, then can you address if there was a bolus of patients or as you saw the increased access to endocrine physicians, did this COVID headwinds, I guess, did the easing of the COVID headwind lead to an increase? And how much of that Myalept growth is really sustainable moving forward in the U.S.?
Joseph Wiley: Thanks Michelle, I'm going to hand that question straight to Sheila, please.
Sheila Frame: Thanks, Michelle. So, I don't think that it's COVID related necessarily. I mean, it is now well supported and well informed sort of choice for these patients. I think the -- again, the strength of our medical affairs team, I think, is second to none in the industry in terms of the support medically that we have for patients on Myalept and for the treaters. And also, I think our inside sales team has really helped make our field team incredibly effective as they go and meet with clinicians. So I haven't -- I can't say that there was some kind of a bolus because of COVID, I think it's a pretty high need, high impact, both product and disease. So, I have not seen that. I think it's just a sustained effort and focus of our team that continues. Certainly, as we added additional resources on endocrinology, we've certainly added some new physician prescribers in that regard. So there's certainly probably broader awareness. But I think that's probably the best explanation I can give.
Michelle Gilson: And if I can have a follow-up. Did you guys take any price increases in the new year?
Joseph Wiley: Sheila, again, I'll hand it to you. I will say you, though, Michelle, if you look back at the Aegerion history, the price was it being increased for a couple of years before we acquired this and actually in the year we acquired this -- it was 9.9%. We have taken some price increases, but we have not taken that level of price increase other than that year of acquisition, which is already really baked in. But rather look at what would be more reasonable in terms of an inflation price increase. And despite that fact, the product was declining, it's revenues were declining despite those price increases historically on the previous management's stewardship, and despite decreasing that price being a more inflationary price increase, we have increased revenue under our ownership as we've added patients. So do you want to take the question, Sheila?
Sheila Frame: Yes, we took a 4.5% price increase in January, Michelle.
Rory Nealon: And it's probably worth saying that you're referring to the U.S. market ex-U.S., we just tend not to get price increases.
Sheila Frame: That's right. And that was on Myalept.
Operator: Your next question comes from the line of Brandon Folkes from Cantor Fitzgerald.
Brandon Folkes: Maybe just on MYCAPSSA. I appreciate all the color you gave today, but can you just talk about the current persistency of patients on therapy, are patients staying on therapy when they have been transferred across? How does this compare maybe to some of the patients that you inherited?
Joseph Wiley: Thanks, Brandon. And Sheila, I'll let you take that one.
Sheila Frame: Okay. Thanks, Brandon, for the question. So Brandon, we actually have a very high compliance rate in terms of patients taking the medication. The persistency in terms of length of time is still pretty new in terms of the number of patients as we add them. But we're certainly seeing a good foundation of patients that are staying on therapy long-term. Some do pop off, although some are now coming back as well. So I think, again, as we continue to expand our reach and our depth into the endocrinology space, we're watching this pretty carefully. But certainly, we are getting fantastic feedback both from patients and in terms of their ability to take the product and to stay on it and the way in which they're feeling. So we're pretty pleased with what we're seeing so far, and we continue to monitor it.
Brandon Folkes: And maybe those patients that do fall off, do they fall off in the titration phase or later on in therapy?
Sheila Frame: It was one of the challenges that we had when we took it over, Brandon, where we did find that -- so endocrinologists tend to see these patients only every 3 months. And even when they're on their foundational injection, they often don't see the physician, right? They're getting the injection either by a nurse or delivered at home, so they don't often see it. So in our case, what's been really helpful is the addition of our clinical nurse educators because what they're able to do then is actually help the patient get titrated early enough that they get the sustained control that they need. And so that's certainly an area that we've seen some significant improvement in terms of making sure that the patients are getting titrated to the right dose, because certainly, initially, that was taking a lot longer than we expected.
Operator: Your final question comes from the line of Mani Foroohar from SVB Securities.
Mani Foroohar: I guess, a relatively boring financial one. As we think about the buyback and the use of your balance sheet as a tool as you guys continue to grow EBITDA, how should we think of that as a tool in our toolbox going forward about the current valuation is the right projection? Half has generated EBITDA, approximately equal in your generated EBITDA? Or is it sufficiently -- or is it a sufficiently opportunistic tool that we shouldn't think of the buyback as an ongoing part of your financial strategy?
Joseph Wiley: So Mani, I'll start by apology. I think you got cut off earlier. Apologies for that. Rory, I will let you take the question.
Rory Nealon: Mani, it's obviously -- well, just to reiterate what we said, we were caught by the blackout period, both by a combination of having an indication of what was happening with the EMA and also the results. In terms of why we're looking at it to be quite candid, it's probably the best M&A opportunity we can see these days in terms of looking to buy our own stock. We're trading at a little over 2x the metreleptin and lomitapide revenue. So right now, with our share price where it's -- and that's putting 0 value under MYCAPSSA on the EB assets. So right now for us, and you know we're quite M&A focused. This is probably the best buying opportunity for us at the moment. We haven't revealed what our strategy is, to be honest, in terms of price targets, how it will kick in, when it will kick in, et cetera, et cetera. So forgive me for not going into that. I'm not so sure, Joe, do you have anything else you wanted to add to that?
Joseph Wiley: No, I think you've covered it well, Rory. Yes.
Rory Nealon: Yes, okay.
Simon Loughrey: Okay. Operator, I think that's it. We're out of time.
Joseph Wiley: Okay. So thank you all for joining today. One thing that didn't come up so much on the call today is the opportunity for FILSUVEZ launch in Europe. We are very excited to have the first -- potentially the first ever approved treatment for EB. We see a significant market opportunity to drive growth of this product in Europe. And as third mark, we also will -- if this part is approved, we'll be able to use that approval in other markets outside of Europe, too, which also excites us about the growth potential of FILSUVEZ as we look to launch ex-U.S. So with that, I would like to thank you all for joining today, and we look forward to speaking with and seeing you all soon. Thank you.
Operator: That does conclude our conference for today. Thank you for participating. You may all disconnect.
