Amryt Pharma plc (AMYT) on Q4 2021 Results - Earnings Call Transcript
Operator: Good morning ladies and gentlemen. And welcome to the Amryt Pharma FY 2021 and Q4 2021 results call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. . Please be advised that today's conference is being recorded, Wednesday, the 9th of March, 2022. . I will now hand over to Amryt Pharma. Please go ahead.
Simon Loughrey: Thank you Operator. All the calls today is to discuss the Fourth Quarter and full-year 2021 financial results are Dr. Joe Wiley, CEO and Rory Nealon, the Company's CFO and COO. In addition, Sheila Frame, President Americas, and Dr. Mark Sumeray, Amryt 's Chief Medical Officer, will be available to answer questions. During the Q&A session. Joe will provide an update on the business and they're more, you will go through the financials in detail before I hand it 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 indications 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 anticipate, 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, March 9th, 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.
Dr. Joe Wiley: Thank you, Simon. I am on slide 4 of the presentation. We are pleased to be reporting strong operational and financial results for 2021, we grew total revenues by 21.9% to $222.5 million. As a reminder, we had originally issued revenues guidance of between 200 to $205 million for 2021, so we're very encouraged with the momentum we have experienced. In particular, I will highlight the very impressive growth that metreleptin delivered of 32.2% year-over-year. The product grew across all markets and regions. Total revenues in Q4 for $54.8 million growing by 28.9% year-over-year. This strong revenue performance drove our eighth consecutive quarter of positive EBITDA generation and generated full-year operating cash flows to forecast the deal costs of $29.8 million. We believe that we delivered EBITDA before restructuring and acquisition costs of $41.9 million in 2021 and $5 million in Q4. We ended the year with total cash of $113 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. During the year, we completed our acquisition of Chiasma. And as a result, we now have three products on the market. We are exploring new growth opportunities for each of these products, including the potential treatment of carcinoid symptoms in neuro endocrine tumors with Mycapssa, which I will discuss in more detail later in the call. Today, we are issuing guidance for 2022. We expect full-year revenues to be in the range of between $260 million to $270 million. This represents a 17% to 21% increase on 2021 and clearly demonstrates the board's confidence in Amryt's business prospects. Moving now to our commercial products. Beginning at metreleptin on Slide 5. Revenues for the full-year were $141.2 million which represented 32.2% growth year-over-year. U.S. metreleptin revenues grew 16% year-over-year. The EMA delivered 59% growth and growth in the rest of the world was partially 9%. Fourth quarter metreleptin revenues were $31.9 million, an increase of 44% compared with the same period in 2020. 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 plants is to seek a label expansion for metreleptin in the U.S. to include treatment of partial lipodystrophy, and we initiated a global Phase 3 study in PL in Q4. Let's move to the slide on Slide 6. revenues for the full year was $73.9 million, a decrease of 1.2% year-over-year. Lomitapide is growing strongly internationally, growth to the EMA was 9.4% by 9.5% in the rest of the world. We're conducting a pediatric study for lomitapide in HoFH, and we expect to have data in the second half of 2022, assuming positive data, we will seek approval of lomitapide to treat children with HoFH in both U.S and Europe. Now on to Mycapssa on Slide 7, Mycapssa has the first and only somatostatin analogue oral capsules is a genuinely differentiated product. Given the robust clinical data supporting it. And the patient preference for orals, we believe Mycapssa has the potential to become a standard of pharmacological care for patients with acromegaly. Having acquired this product in all this last year, we've recently initiated a relaunch in order to maximize its potential. The key pillars of the re-launch, are number 1, new market positioning. 2, broader health care provider research. And 3, enhanced patient services. The underlying message for our new positioning is that Mycapssa 's all delivery of octreotide may enable patients to achieve the stable controls they're hoping to achieve. We are using this message supported by positive clinical data across 3 Phase III trials to drive urgency with providers in order to understand the value of treating acromegaly patients with Mycapssa. Regarding our outreach with effect from late Q4, we have combined the two fields forces from AMYT and Chiasma, increasing the overall sales force by approximately 60% from the original team. We are now leveraging on metreleptin rest in the us to accelerate the adoption of Mycapssa beyond the pituitary centers and into the broader endocrinology community, which we estimate makes up approximately 50% of the markets. We have also combined our medical affairs teams to increase our share of voice in the field and across endocrinology. The focus of our enhanced patient services program has been to improve simplicity and reduce the time to medication delivery to the patient once the prescription decision is made. In Q1, we launched the Amryt clinical educator team to help patients directly as they begin therapy, provide support for transitioning to Mycapssa, and connect to other patient services. messaging and the new sales force is going to take time. However, as we emerge from the pandemic and the U.S. opens up, we are very encouraged to see that our re-launch initiatives are starting to have an impact. Mycapssa delivered revenues of $5 million in Q4, although that performance was enhanced by inventory stocking of approximately $1 million that we saw in December. Turning to slide 8; we issued a press release yesterday regarding our plans to develop Mycapssa in an additional indication for patients with carcinoid symptoms due to neuroendocrine tumors or NET. These tumors are abnormal growth of neuroendocrine cells occurring throughout the body, most commonly found in the GI tracts. They can metastasize and produce hormones that cause significant symptoms such as carcinoid syndrome, which includes diarrhea and flushing episodes. The addressable markets in NET is estimated to be worth approximately $1.9 billion globally, with the U.S. market opportunity valued at approximately $1 billion, which is very compelling. And Amryt is well-positioned to develop and commercialize this program. And now on Slide 9. Injectable somatostatin analogs are broadly used today at first-line pharmacological treatments for these symptoms. We believe however, there is a high unmet need for an oral option in NET similar to the acromegaly markets. And that's why we intend to pursue Mycapssa in this indication. We're pursuing this program based on our belief that Mycapssa at the potential to become a standard of pharmacological care for NET patients. Let me expand on this year for managed. As an oral version of octreotide, Mycapssa, if approved will have the advantage of a more convenient, less painful delivery for patients to receive their treatment, which could be administered at home. Furthermore, we think Mycapssa has the potential to provide continuous disease control as one would expect from a treatment that's taken twice daily orally. We have results from a survey of physicians treating patients with carcinoid symptoms associated with NET, which estimated that 30% of patients taking injectable somatostatin analogs are experiencing breakthrough symptoms at the end of their frequent cycles. We would benefit from the fact that there is already some of the with use of octreotide in this indication, both from the point of view of the regulators and as well as physician. We also know that Mycapssa has been shown to be equivalent to octreotide injections in the management of acromegaly. Yesterday we announced positive PK results that I will go through in a moment, and on the strength of these data, we have every reason to believe that this is a logical steps to take in terms of a development opportunities for Mycapssa. The results from the Phase 1 PK study with Mycapssa are summarized here on Slide 10. The objective of the PK study was to demonstrate that doses of Mycapssa up to 80 milligrams results in the desired bio availability and dose proportionality with an acceptable safety and tolerability profile. The result shows dose linearity in 20 milligrams to 80 milligrams. Affiliate achieves its objectives on the data supports the planned Phase 3 study in patients with carcinoid symptoms due to NET. Turning to Slide 11. The FDA has confirmed that are single positive Phase 3 study will be sufficient for approval in patients with carcinoid symptoms consistent with the 505B2 regulatory pathway previously agreed. The agency recommended that the primary endpoint of such a study should demonstrate the patients are able to maintain the base line level of stability during treatment with Mycapssa. In Q4 last year, we assembled a tail well, advisory boards to take into consideration key elements of the feedback we have received from the FDA. We've been working on a Phase III clinical study protocol and statistical analysis plan, which has been revised to address the FDA feedback. And the PK data we announced yesterday now enables us to proceed with our planned Phase III study design. Written responses to Type-C meeting requests are anticipated to receive in Q2. Our plan is to initiate the Phase III in Q4 this year. If all goes according to plan, we will be looking at top-line data in 2024. Not to all your Oleogel-S10 which we are delivering as a novel treatment for the cutaneous manifestations of severe EB, a rare and distressing genetic skin disorder that affects young children and adults. I'm now on slide 12. We announced last week that unfortunately, we received a complete response letter from the FDA regarding our NDA. This was obviously hugely disappointing. Not only for AMYT but also for the EP community. We believe that the Oleogel-S10 efficacy and safety data we have generated are compelling. The ease Phase III study with the largest randomized clinical trial ever conducted in this disease. And the first Phase III to meet its primary endpoint. The FDA has asked us to submit additional confirmatory evidence for the effectiveness of Oleogel-S10 in EB. We plan to hold an end of review conference with the FDA to understand what is required to achieve our goal of bringing all your job Estancia patients suffering from EB a devastating disease with no approved treatment options. EB patients are desperate for therapy. And we are committed to working collaboratively with the FDA to identify the most expeditious path forward. Meanwhile, the EMA review process for Oleogel, FTN, NEB is ongoing. Amortized, responded to outstanding questions given the rare disease, what are the only approved therapies, EMA has proposed dozen ad-hoc expert group comprised of both EB clinical experts on patients with EB. We consulted to provide external an independent EB specific advice. The ad-hoc expert group meeting is scheduled for March 15th. Turn to Slide 13. Let me run through our expected news flow for the year. For the EMA review of Oleogel, FTN, the ad-hoc expert group that I just referred to is schedules to meet on March 15th. The end of review conference to discuss Oleogel, FTN with the FDA is anticipated to happen in Q2. For the Mycapssa NET programs, we're anticipating written responses to a Type C Mason requests to be received in Q2. For lomitapide, we expect to announce topline data from the pediatric study in HoFH in the second half of the year. For the ongoing European Medicines Agency review of Mycapssa and acromegaly, we're expecting an opinion from CHMP in the second half. And finally, as I said, we're hoping to start at the Phase 3 study in NET patients with carcinoid symptoms in the fourth quarter. So as you can see, it's going to be another busy year with what we believe are multiple opportunities to create value. Turning to slide 14. As I mentioned earlier, given the continued strong performance of the company's three commercial products, the Board is today issuing revenue guidance for FY2022 in the range of $260 to $270 million, which represents growth of between 17% to 21% on FY2021. Given our revenue and EBITDA growth, which in turn drives positive operating cash flows, and our strong balance sheet, Amryt Board has approved a share repurchase program that underscores the confidence we have in the company's future prospects. Let me now turn the call over to our CFO and COO, Rory Nealon, who will provide more details on the full-year and Q4 finances. Rory.
Rory Nealon: Thanks, Joe. My remarks today will focus on slide 15 and 16 and we'll take longer than normal. Obviously, I'm to cover the Q4 and the annual financial results. The acquisition accounting from the recent Chiasma merger, the accounting applications resulting from the recent Filsuvez CRL from the FDA. And finally, I'll summarize the outcome of our recent debt refinancing. So let's start with the revenue. Joe has already covered the revenue performance by product and by geography. Just to remind you of the headline numbers, we've seen an overall 21.9% growth in our full-year 2021 revenues, or a 28.9% improvement quarter-on-quarter, which was predominately driven by the growth in our metreleptin revenue. Specifically, metreleptin revenues for the full year grew 15.9% in the U.S, 59.3% in EMEA, and 39.4% rest of world. I'll remind you that this product is approved in the U.S. in 2014, and for a product that has been on market for eight years now, this is a really impressive annual growth number and demonstrates the significant improvements we have made to our sales, medical affairs, and patients of '14 in the U.S. Outside the U.S. the metreleptin product is effectively to launch mobile with new patients being added in existing markets and new markets being opened as reimbursement mechanisms are negotiated. For example, patient numbers for metreleptin than in EMEA increased by 40% during 2021 and reimbursement mechanisms were agreed for France and the UK in quarter 1, 2021. Our lomitapide revenues are holding steady with amount of decline in 2021. Within this, the U.S. revenues have decreased by 11.8% following the introduction of competitive products. But this has been offset by the continued ongoing growth ex-U.S. In EMEA, our lomitapide revenues grew 9.4%, in particular, driven by growth from the Middle East. And for the rest of world, they grew by 9.5%. We, of course, all considering this from Mycapssa for the first time following the acquisition of Chiasma, which completed on 5 August. I remind you that our Q3 revenues were $1.4 million of which $1.1 million was in the month of September, which represents an annualized number of approximately $13 million. Our Q4 Mycapssa revenues were $5 million, albeit, Joe mentioned this was higher than expected due to a year-end stocking order from our distributors of approximately $1 million. And as of stocking order, quarterly revenues of $4 million or $16 million annualized is a better reflection of the underlying performance and imply to 23% growth rate compared to the run rate for September. We're particularly happy with this underlying growth in such a short period of time, especially when you consider that the various new initiatives to re-launch Mycapssa are still being rolled out. As Joe mentioned, the combination of our metreleptin and Mycapssa field teams was only completed in late November. The Lancet publication was announced on 4 January, and the long-term safety and efficacy data from the end products was released on 6 January. As a result, it will be Q2 and Q3 before we truly start to see the benefits of these new initiatives. Much like what the case when we first acquired Aegerion and took over at the metreleptin products. Just to remind you, revenues for metreleptin in the U.S. were relatively flat at $14.7 million to $15.8 million per quarter during 2020. But in 2021, we saw breakout following the introduction of various Amryt driven initiatives. What the revenue range per quarter in the U.S. being from $16.2 million to $18.7 million. Obviously, it's experience of rebooting products. It's something we're aiming to recreate with Mycapssa products. slide, I would like to item I would like to touch on as our gross margin performance, excluding the impact of non-cash items, which once again exceeds 75% for the quarter. The pattern in our gross margin over recent periods has been as follows: For the full-year of 2020 almost 73.5% quarter one last year was 75.6% quarter two 75.8% quarter three 75%, and then quarter four has increased to 78.8%. Obviously doesn't being relatively consistent quarter-on-quarter with an increase in Q4 and perhaps being driven by the slightly higher margins associated with the Mycapssa revenues. As I noted on our Q2 and Q3 results, which within these numbers, the mix varies by product and by geography. With the higher third party royalties on metreleptin making the products are lower margin products have compared to lomitapide, which is 2% third party royalties and Mycapssa, which is zero third party royalties. As a result, any future increase in my capsule revenues would cause our combined group margin to edge upwards. Regarding the non-cash items that we adjust out in calculating EBITDA, they consist of a number of distinct items that impact our gross margin. Firstly, there's 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 assets, which was $4.1 million in Q4. And finally, we once again had amortization of the fair value step up of acquired inventory, which is an accounting requirements following an acquisition, whereby required to fair value or uplift inventory acquired on the acquisition base, off to something approaching the future selling price of that inventory. The legacy step-up amortization on the Aegerion acquisition was fully amortized during Q2 in 2021 as all the acquired inventory from Aegerion acquisition that was fair valued was sold. And this was replaced with the Chiasma step up amortization with effect from Q3. During Q3, we amortized $400,000 from a Chiasma inventory sold during the quarter. And at Q4, we amortize a further $2.8 million for inventory sold during Q4. About 31 December, we have remaining amortization of Chiasma inventory, $41.6 million which will be amortized in the coming quarters if this product is sold. The key points to note about all of these items is they are non-cash accounting adjustments and have no bearing on the ability of the company to convert EBITDA profitability into operating cash flows. Moving on to our SG&A and R&D spend. Our R&D spend of $9.3 million for Q4 is a slight reduction on the Q3 spend of $11 million, and an increase on the average of $8.7 million for Q1 and Q2. The increase in spend in the second half of the year is largely driven by the increased R&D spend, which has come about following the acquisition of Chiasma. Ignoring the impact of Chiasma restructuring and acquisition costs or exceptional items, our SG&A spend for the quarter was $29.6 million. This compares SG&A costs excluding exceptional items of $17.8 million in Q1, $18.9 million in Q2, and $25.7 million in Q3. The increase from Q2 to Q3 of $6.8 million is driven by the two-month extra spending following the acquisition of Chiasma in August and is equivalent to the $10.7 million extra spend in Q4 for a full three months. This extra $10.7 million spend in Q4, in large part driven by the acquisition of Chiasma, is equivalent to an additional $43 million spend on an annualized basis as compared to Q2. I will remind you that when we acquired Chiasma, we know that after our planned operational spend in 2022 was expected to be approximately $90 million and our goal was to reduce this by approximately 50%. Based on the increased annualized run rates up spend in Q4 of $43 million, I believe it's fair to say we've already achieved our objectives and we will continue to see to extract costs from the business in the coming quarters. I would like to remind you all that this is the second time since 2019 that we have successfully acquired a business. I'm significantly reduced their cost base in a very short period of time. I'd like to think we've proven ourselves now and being very adept at extracting synergies from the business in a very efficient way. While it's a similar thing, if they're growing the revenues from the acquired business. The next key metric I'd like to focus on is EBITDA, which is a key metric for us given that has been a good proxy for our cash from operations. is what laboring this point. In 2020, we delivered $26.9 million of operating cash flows as compared to $30.4 million of EBITDA. In 2021, we delivered $29.8 million of operating cash flows before Chiasma deal costs as compared to $41.9 million of EBITDA. So as evidenced from these numbers our EBITDA does drive operating cash flows in the business. And as a business, we don't have significant capital expenditure. So borrowing the short-term impacts of an acquisition on the cash interest on our up $12 billion per annum, these operating cash flow feeds from to our cash balances. Within each 12-month cycle, that kind of course be some fluctuations within the quarters in part driven by cash collections from the large tender orders, metreleptin into LATAM, and also payments to suppliers for the annual production run of our various products. In fact, this latter point is something that was particularly prevalent following the acquisition of Chiasma in Q4 last year, and also in Q1 this year, which we get through a board time. In fact, the minimum annual production quantities that Mycapssa where manufactured and paid for in Q4 and more recently in Q. It's also coincide with our high-spend period for metreleptin. Obviously, as we move through a 12-month cycle, we would expect these timing issues on cash flow to even out. Coming back to the actual EBITDA numbers, I'll redraw your attention to slide 15 & 16, where we adjust our Q4 operating loss for non-cash items and get to adjusted EBITDA before Chiasma and restructuring and acquisition costs are $5 million for the quarter or $41.9 million for the year to date. Before restructuring and acquisition costs of $2.3 million for the quarter or $16.9 million for the full-year associate with the Chiasma deal. Our EBITDA before such exceptional cost of $5 million for the quarter is following on from EBITDA of $6.2 million for Q3. This is a reduction from the average starting $13.6 million for each of Q1 and Q2. But three principal reasons, namely. One, a reduction in the overall non Mycapssa revenues. From a $111.2 million in H1 to $105 million in H2. Following the significance, $12 million in lumpy orders for metreleptin and to LATAM in Q2. The second point would be an increase in our prelaunch spend and H2 probably Oleogel-S10, which would've been in anticipation of an FDA and EMA approval. And finally, and most significantly, the third is the on-going operating losses we assumed when we acquired Chiasma in August. If I exclude the impact of reduced revenues in the non Mycapssa business and H2 solving the lumpy LATAM orders in Q2, our EBITDA for H2 was approximately $11 million lower than the first half of the year. Obviously, the prelaunch spend for Oleogel and the bearing of it, but the integration of a loss making key outlet business also had a significant impact. In quarter one 2021, Chiasma on a standalone basis had operating losses of approximately $18 million. All other things being equal and given we acquired Chiasma on the fifth, one would expect approximately $12 million of operating losses for the two months of August and September being 2/3 of the $18 million loss are just alluded to. And a further $18 million for the three months in quarter four for a combined $30 million proforma operating loss for the five months since acquisition. In reality, Amryt has reduced this proforma of $30 million of operating losses from Chiasma, the less than the $11 million I just moved to. It's truly is a significant a rapid reduction in the Chiasma cost base by any standards. As I previously noted, Amryt has a strong track record of rapidly taking costs out of an acquired business. We did in our previous Aegerion acquisition in 2019 within two quarters and we've done so again with the Chiasma business. In particular, in both of these transactions, we have in our transitioning a sizable number of non-customer facing functions and roles from Boston to Dublin, which results in significant economies of scale. We're also leveraging off the significant previous experience of the managing team of Amryt's house of acquisition, integrating processes, and extracting synergies. Our EBITDA as also before, the impairment in our Oleogel-S10 intangible assets, $32.6 million for the quarter. Following the recent FDA CRL and the resulting days caused by the recent regulatory processes are probabilized, discounted future cash flows as Oleogel-S10 business suggests an impairment of the asset value of $32 million, which we've taken in Q4 These same factors also had an impact on the value of the CVRs and milestone payments on our balance sheet, which I'll come back to shortly. As we continue our discussions of both the FDA and EMEA, we revised our estimates as appropriate, and this will be reflected in our 2021 financial account. Beneath the operating profit offline in our income statement, you will note that the non-cash change in the fair value of the contingent consideration and the non-cash contingent value rights finance expense have changed significantly from previous quarters reflecting the timing of a CVR and milestone payment. Finally, in that section of our income statement, even though the $7.7 million charge for net finance expense for the quarter of which $4.4 million is non-cash and $3.3 million is predominately the cash interest accrued in the quarter on our convertible bonds and term dash. Moving on to our balance sheet. Cash and Net debt are obviously key metrics for us. While our cash is reduced from $143 million at the end of June to $113 million at the end of December, this is largely driven by Amryt using $21.6 million of its own cash to retire Chiasma , and also $21 million to pay both the $13.5 million of these costs being paid out in Q4. As noted earlier, the timing of payments to product manufacturers can large varying attached balances with significant manufacturing runs and the associated cash payments for saying for both metreleptin and Mycapssa occurring in both Q4 last year and also the current Q1. On an overall basis, our net debt at the end of December was $105 million consisting of $113 million in cash. Net of our convertible debenture of $125 million and our term debt of $93 million. Excluding our convertible debenture, which could reasonably be considered as my equity given the conversion prices compared to analyst estimates, our net debt converts to net cash of $20 million. Before closing on our financing, I will just like to highlight the recent debt refinancing we announced on 22 February. We replaced our term loan facility with a new $125 million term debt facility of which $105 million was drawn on closing. This facility consisting of an $85 million term loan facility which was fully drawn, 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 the following. Changing their payment day for the loan from September 24 to February 27, which is obviously significant in the current environment. Our reduction of almost half in the interest rate from 13% on the old facility to a blended rate of 6.8% of the new facility. Assuming the new facility is fully drawn, the introduction of a new financing partners average. There is a truly tier one partner and we're particularly happy to have another strong partner willing to support Amryt 's future growth. Before concluding I'll briefly discuss the acquisition accounting for the Chiasma acquisition, I will draw your attention to Note 5 and the financial statements, if anyone is interested the details, the accounting rules require us to fair value the assets and liabilities as of the date of acquisition to the best of our ability. And we're then permitted to update these valuations over the course of 12 months from the date of acquisition. In other words, before August 2022 There's those of this exercise shows that we paid $260.3 million in consideration way of Amryt shares, and we effectively paid an additional $10.2 million by assuming the outstanding capital employee shared options and RSUs. In parti -- in return, we received intangible assets being the value of Mycapssa, and goodwill of $254 million. We also received inventory with a value of $66 million being the fair value assessed, which as noted earlier approximates the future selling value of this inventory. The other big items we inherited were cash of $108 million on a third party debt type facility of $116.6 million. As noted earlier, this task was repaid on closing and we use a combination of the inherited Chiasma cash and $21.6 million of legacy Amryt cash to . That was the end of my remarks, I will now hand you back to Joe.
Dr. Joe Wiley: Thank you, Rory. I am now on Slide 17. Let me summarize by reviewing where Amryt stands today. We have a revenue generation portfolio that is now comprised of three approved commercial products that are growing and addressing large, attractive markets the company is EBITDA positive, driving strong operating cash flow. We have a pipeline of development stage assets with the potential to drive near and long-term growth. We have a track record of successful integration, execution, performance and growth. We are currently leveraging those capabilities in the on-going re-launch of Mycapssa. And finally, we have a global commercial infrastructure. The financial flexibility to execute our plans, as well as an experienced team to drive new product launches and growth. I will now hand over to our Operator for Q&A. Operator.
Operator: Thank you. Your first question comes from the line of Michelle Gilson from Canaccord, please ask your question.
Michelle Gilson : Hi, good morning. Thanks for taking my question. Again, can we start with Oleogel, and can you just help us understand where the application stands in the EU? And is the EU process has been quite independent from the FDA review process, or are the review procedures started to diverge at all? And then maybe you can explain to us how the procedure goes for they -- the ad hoc expert advisory meeting. And I'll start there. I have one follow-up.
Dr. Joe Wiley: Hi, Michelle. Thanks for that. Our Chief Medical Officer to talk to Mark Sumeray is on the phone, so Marks and processing in EU is an independent from the FDA on the process around the ad hoc uses.
Dr. Mark Sumeray: No problem. Hi Michelle. So the process with the marketing authorization application in the EU is independent of the NDA process with the FDA. They -- the process in the EU is reaching the conclusion of the review period. But unlike in the U.S., the rapporteur and the co-rapporteur countries involved in the EU review have asked for what's called an ad hoc expect group meeting. This is, as we said, is scheduled to take place next week. And the procedure is, it's a meeting that's held in private unlike the FDA's advisory committee meetings. The major objections discussed, and the Chair of the ad-hoc expert group will report to the CHMP shortly after the conclusion of that meeting recommendations. So depending on how the meeting goes, and we're obviously hoping and expecting that it will go well. If the recommendation to the CHMP from the ad hoc expert group is a positive one, then the CHMP may choose to adopt the positive opinion during the last week of this month. And we would hope to hear at that time. If the ad hoc expert group doesn't reach a positive conclusion, then the company would instead be expected to attend an oral explanation meeting during that same last week of March. And then depending on the outcome, the CHMP will make a decision at the end of April. So that's the timeline and the process. And I can certainly just come back to the beginning of your question again. The process really is independent of the FDA review process.
Michelle Gilson : Okay. And if I can follow up here. But I had a question on the Mycapssa PK. You -- maybe you guys can help us just understand NET market, how many patients are there with carcinoid symptoms? And how has octreotide been used in a setting for the long-acting SSPs? And then in the PK study, did you -- if we can dig into the AE profile that , did you see any increase in GI tox with the higher doses and exposures? And maybe you can kind of talk about if the primary endpoint of the pivotal study is the baseline stability with Mycapssa, how do you differentiate GI tox from Mycapssa versus worsening of GI symptoms related to the carcinoid syndrome disease?
Dr. Joe Wiley: Thanks, Michelle. Yes. So what we plan to do is we plan to host a separate analyst stay on any . I think the question you've asked warrants a fulsome explanation and an overview of the opportunity. I recently do not have time to do that in this call, given that all else is going on. So we decided that we'd hold a separate analyst call, we'll provide details with us to the market shortly, and we will go through the commercial opportunity as we see it in some detail on that call. Mark, I'm going to hand over to you on the PK study to the question was, do we see more GI symptoms and higher doses? And how might we think about differentiating the diarrhea of carcinoid syndrome rather, from potential toxicity?
Dr. Mark Sumeray: Yeah so Michelle with the shorter answer to the first part is no, we did not see an increase in GI adverse events in relation to the higher doses that we tested in the PK study. So we're actually very pleased with the outcome. I will say the PK valuations that we performed, not just in terms of the linearity of exposure across the dose range, but also in terms of tolerability. And that sort of links to the answer to your second question. We, as Joe said, we're going to go into more detail o a separate occasion. But we are defining the primary endpoints as maintenance of stability in terms of symptomatic control of disease, both in terms of number of bowel movements per day, as well as severity of flushing episodes. And we're going to look at the success of treatment with respect to the maintenance for that stability at the end of the double-blind treatment period versus placebo. We're not expecting any difficulty distinguishing between the kinds of GI, AE's that one might expect early on after initiation of treatment with Mycapssa versus the background symptoms of disease that these patients are very familiar with managing during the double-blind treatment period, which was a six -- will be a 16-week period. So we expect to be able to easily distinguish that.
Dr. Joe Wiley: I'd just add to that Michelle, just by way of reminder, the diarrhea that was associated with patients starting Mycapssa tends to occur early. So occurs early in the treatment cycle and it tends to be manageable with anti - diarrheal medication. So we wouldn't expect any contamination of the Dessis by the time we get to the primary end points because we wouldn't expect there to be any diarrhea associated with the products at that point.
Michelle Gilson: Okay. Thank you, guys so much for taking my questions, congrats on the year.
Dr. Joe Wiley: Thanks, Michelle.
Operator: Your next question comes from the line of Mani Foroohar from SVB Securities. Please ask your question.
Mani Foroohar : Hey, thanks. Taking the question and congratulations on the results as far a couple of quick ones. First on the integration and will re-launch of Mycapssa. How should we think about the incremental spend that's still there to be taken out? Are we most of the way through, do we still have to we still remodeling some additional synergies even above and beyond what you originally expected. And then secondarily, thinking about the path forward for all your Oleogel potential in the U.S., is there a time horizon we should expect to hear more to think about the immunization study, some more details on exactly what's going on in the CRL in discussion with FDA, etc.
Dr. Joe Wiley: Thanks Mani. On the integration and relaunch and the incremental spend and synergies, I'm going to ask Rory to take that question.
Rory Nealon: The way I think of the things and again, it's based on experience, not only just with a number of previous company's as well, it tends to be like an 80-20, 90-10 rule within the first two quarters, and not all companies do that. I think we're particularly quicker doing with the numbers. We tend to plan where we're ready to hit the ground running once the deal closes, when you saw that back in 2019 with Aegerion, when we became EBITDA profitable of the business in Q1 to the second quarter post-closing the deal. And now at this point in time, I would say the same again, it's the 90-10 rule, we've taken the majority of the expenses . There will be on-going savings, but money there will be not as significant and they tend to take longer to find, we work in a regulated industry and overlap synergies are the hardest to extract. And I would say it's also getting harder and harder for us to measure them because my colleague Sheila Frame is here with me but effectively she molded the two teams into one of this team. So we don't track them separately anymore. So I would say it's very hard to project it from your perspective minds trackers. I'd see some small synergies going forward, the bulk of the heavy lifting has been done.
Mani Foroohar : And Mark, the second question was on the FDA process with all your , the time horizon, and when will we know the nature of the additional confirmatory evidence that the FDA has requested?
Dr. Mark Sumeray: Yes. The process from here is that we put together a briefing document to go along with our meeting request so we can expect to take a few weeks to put together that briefing document because it will contain the company's views on the FDA 's position with respect to complete response, as well as any proposal that we might make to address their request for additional confirmatory evidence of effectiveness. They then will give us an end of review meeting within 30 days of us putting that meeting request in. And then we will obviously learn the outcome of that meeting, but would probably not communicate it until we have the formal written minutes from the FDA, which usually take a week or two after the meeting. So if you put all of that together, one might expect that we would have news, more clarity on the FDA 's thinking sometime perhaps mid to late May.
Mani Foroohar : Okay. That's helpful. Thanks, guys.
Dr. Joe Wiley: Thanks, Mani.
Operator: Your next question comes from the line of Brandon Folkes from Cantor Fitzgerald, please ask your question.
Brandon Folkes: All right, thanks taking my questions and congratulations on all the success. Let me just -- You're from me and maybe let me just starting on Mycapssa. One thing with Mycapssa as we've discussed it. And this was around the maybe approval was the actual powered by availability. How does that -- should what -- how did the Agency look at that when you go to the high doses and obviously you saw the Linea dose response. But do we get that on the in terms of variability, potential variability maybe at the high doses in the Phase II or do you think you positive with this data we saw yesterday? And then maybe secondly, anybody characterize what you are seeing in the mid-price market in the U.S. and how we should think about that in 2022. And then I guess maybe lastly, just awesome. All upfront. So the share buyback, obviously very positive. But given your history of acquisitions, and how do you balance a way to head at in terms of actually using net share buyback versus bringing in conditional assets in potentially an environment that's valuations maybe coming down. Thank you.
Dr. Joe Wiley: Thank you. Brandon. And so I'm just going to check that I understand the nature that first question. Are you asking about the variability and bioavailability and how we should think about that as higher doses?
Brandon Folkes: Yes. Obviously, yes. Given the relatively low lowered bioavailability, some pushback we got on the octreotide approval was that you could get the variability in patient outcomes. We didn't quite see that in the data, but I just wanted to know how do you think about that as we go to the higher doses in any key?
Dr. Joe Wiley: Okay. I got it. Mark, how do we think about potential for variability in patient outcomes in any with our recent bioavailability data?
Dr. Mark Sumeray: So Brandon, I think variability certainly is something that the FDA is aware of with respect to the exposure we achieved a different dose levels. And it is actually one of the reasons why the FDA has insisted on a clinical study, rather than just using a bio equivalents approach, which maybe in the early days of the regulatory interactions, Chiasma may have been hoping it would be possible to do but, because of the variability, one has to demonstrate that it's possible to dose the drug orally and achieved satisfactory disease control. The good news from our PK study is the main exposures that we achieved in terms of AUC from 20 milligrams single-dose is all the way up to 80 milligrams single-dose is linear. And we also know that we are covering what we expect to be the relevant dose range because we know how to extrapolate a dose of Mycapssa. Which, let's say is 20 milligrams, is equivalent to a 0.1 microgram dose of the Sandostatin octreotide injectable immediate release. So since we know how much patients require to control their disease in terms of the immediate release injectable, which on average is around 0.3 milligrams per day, we know that 60 milligrams of Mycapssa administered twice today should be the equivalent. So we have a good idea of what we're trying to achieve. We know that there's some variability, but we would expect that even with the variability we'd still be able to achieve adequate disease control given the similar exposure levels that we can get with the doses that we're going to be testing.
Brandon Folkes: Okay. Thanks, Mark. Sheila Frame, our President of the Americas, is also in attendance, so I'm going to ask Sheila to take a question on the mix of clients in the U.S. markets.
Sheila Frame: Thanks so much, Brandon. So we're very bullish actually on lomitapide. we have incredible six steps with the patients that we have on lomitapide. So while we've seen some impact from the entry of a competitor, we actually have very highly satisfied, highly stable patients on the U.S. base. And then the rest of the world, of course, lomitapide continues to grow. We've also got, as you said earlier in the call we brought in data that will be released later this year in terms of pediatric studies that were certainly, we remain very confident in the value that lomitapide brings patients with HoFH.
Dr. Joe Wiley: Thanks, Sheila. And then the question you asked on the share buybacks. So yesterday we announced that the Board approves a up to $30 million buyback over the next 12 months. Given the strength of sheet. As a reminder, we are an EBITDA positive business and have positive operating cash flow. We looked at our share price right now, Brandon, we see that we are significantly undervalues and therefore, the board feels it is an appropriate use of company company cash to acquire shares at these levels, at these significantly undervalued levels. In terms of looking for other opportunities if it doesn't actually affect fast, we continue our business development activities. We have dedicated business development resources and we've demonstrated in multiple times our ability to acquire assets and then make those assets and do really well with what's assets commercially. So that will be ongoing.
Brandon Folkes: Thanks very much, Joe. And thanks, Mark and Sheila.
Operator: Your next question comes from the line of Catherine Novack, from JonesTrading. Please ask your question.
Catherine Novack : Hi, guys. Good morning. Thanks so much for taking my question. I guess I have a couple on Mycapssa. As I mentioned earlier this year, you published Phase III empower data that showed come dramatic improvement over injectable SSA, particularly, when it comes to break your symptoms. I'm curious about how significant are these breakthrough symptoms when it comes to patients designed to switch away from injectables? And how does this factor into Mycapssa positioning in the U.S. given that the table -- these data aren't yet on-label here? And then my second question is about Mycapssa regulatory proceedings in the EU. CHMP as it has been -- looks like it has been shifted back to the second half from 2Q. So I was wondering if there's any additional questions that haven't been factored in. Thanks.
Dr. Joe Wiley: Maybe we'll take the second question first. Mark, do you want to answer that?
Dr. Mark Sumeray: Yes, sure. No, it doesn't reflect any hiccups or new questions or anything that we haven't expected in terms of the timeline. There is always some degree of flexibility and possibility of introducing so-called clock stops into the European Review process. And it's not unusual for the timeline to vary by an extra month or two as a result of these clock stops, which are sometimes requested by the agency, and will occasionally result from the company providing more information in relation to some of the questions that are being asked. And the agency will ask the company to accept more time for the review. So I can finish by saying there's nothing disconcerting about this.
Dr. Joe Wiley: Thanks, Mark. And Sheila, maybe you could answer the question on Mycapssa, which was the shows symptomatic improvements and specifically around breakthrough. And what percentage of patients do we believe suffer from these symptoms? And how do we think about that data in the context of U.S. label?
Sheila Frame: Thanks so much, Catherine, so I would start with, if you will recall, acquisition. We talked about one of the core strengths of Amryt is the medical approach that we take to the market. And we believe that that is the fundamental opportunity that we had with Mycapssa which is to not only use the empower data, but also we released earlier this year the open-label extension data, which actually start to demonstrate that potentially there are many more patients who towards the end of that injection cycle are starting to become symptomatic again. So through our pretty strong medical affairs presence, Joe's already talked about the extension to which we've moved our sales force from the pituitary centers into the community. And we're going to start to engage the thought leader around a discussion, in particular around so they really understand the symptoms that their patients may be actually experiencing on the longer-term injection. So there's a number of initiatives that we've started and undertaken. We also have a macro registry which was kicked off at launch and have a number of patients in that regard. So if I step back and say this is about a re-launch in this marketplace to position the value of Mycapssa in the minds of both physicians and the patients. So when we meet with the patient organizations in acromegaly, they described those emerging symptoms towards the end of that injection cycle as really quite significant and severe. So we believe that there's going to be a number of patients and their theaters. We're going to start to engage in that discussion as always with a relaunch of takes some time and I think we've kind of tried to reflect that in terms of what our expectations are going forward. But the strength of Amryt medical affairs strategy, leveraging the three Phase 3 trials that we have with Mycapssa and the value that it brings engaging with the patient audience. I think we believe is where the success will come with Mycapssa.
Catherine Novack : thank you so much.
Dr. Joe Wiley: That's covered.
Operator: Thank you. The interest of time we have for more questions; we ask to limit your questions to one. Your next question comes from the line of Douglas Tsao from HC Wainwright, please ask your question.
Douglas Tsao : Hi. Good morning. Thanks for taking the question. Just curious. Maybe if you could help us understand what you're expecting for metreleptin this year and obviously enjoyed incredibly strong year in 2021, there were some variability from a quarter-to-quarter standpoint. And so just curious, I mean -- I think 30% growth might be unrealistic, but I assume are just confirm sort of the range that you might be thinking in terms of growth for this year. Thank you.
Dr. Joe Wiley: Thanks Doug. Yes. So I think that one, we don't give guidance Doug, byproducts. We have given the overall revenue guidance for the year as you've heard of $260 million to $270 million representing significant growth year-over-year. We don't guide byproducts, but we do report byproducts as each quarter goes. So you'll be able to see quarter-to-quarter how the product is doing. I will say is that we have experienced significant growth, we expect further growth from metreleptin, and the great part about it is it's growing everywhere. And particularly as you see in the EMEA, given as more recently launched July 18, and also has a broader label. Which is why, by the way, where we've initiated the study for PL in the U.S. as well to try and get label expansion for PL in the U.S. So we expect significant growth to continue for metreleptin globally. In terms of the quarter-to-quarter question. Yes, you do see us in places like Europe and in the U.S., we supply the product just in time. So you don't see any lumpy ordering. However, that's not true in other jurisdictions, specifically in LATAM, we tend to see ordering for a period of time, definitely six months that can be actually a full-year sometimes. And when that happens, you see these lumpy orders affecting the quarter, so you don't see nice quarter-on-quarter growth because of that fact, you see this lumpiness. But if you look at the overall trends, the growth continues.
Douglas Tsao : Great. Thank you.
Dr. Joe Wiley: Thanks, ,
Operator: In the interest of time I would now like to hand the conference back to the speakers for any closing remarks.
Dr. Joe Wiley: Thank you all for coming. I believe there may have been some more questions, but we haven't -- we've run out of time, but thank you for coming. We look forward to speaking to you all in the near future. Thank you.
Operator: That does conclude our conference for today. Thank you for participating. You may all disconnect.
