Amryt Pharma plc (AMYT) on Q2 2022 Results - Earnings Call Transcript
Simon Loughrey: On the call today to discuss the second quarter 2022 financial results are Dr. Joe Wiley, CEO; and Rory Nealon, the Company's CFO and COO. In addition, Dr. Tracy Cunningham, Chief Medical Officer; Jordi Casals, President, EMEA; Dr. Helen Phillips, Head of Medical Affairs; 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 pursue 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 this 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 actions 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 may speak only as of the date of today's press release and conference call, Thursday, August 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 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 exceptionally strong operational and financial results for Q2 2022. We delivered record Q2 revenues of $68.5 million, which represents 9.2% growth year-over-year. On a constant currency basis, revenue growth was 13.6%. In addition, if we exclude the impact of a sporadic LATAM order in Q2 2021, then the year-over-year growth was, in fact, 35.3%. Metreleptin continues to perform very well with Q2 revenues at $46.4 million. Year-over-year growth was 7.8%, but again, excluding the impact of that LATAM order in Q2 last year, the product delivered very impressive growth of 49.9%. This strong revenue performance drove EBITDA before restructuring and acquisition costs of $13.3 million in Q2, which represents our 10th consecutive quarter of positive EBITDA generation. We ended the quarter with total cash of $90.7 million. As previously announced, the Board has approved a share buyback program of up to $30 million through March 2023. This buyback program was recently initiated and is underway. Given the strong performance of our business year-to-date, and notwithstanding the impact of the strong U.S. dollar on our euro revenues, we are today 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 continued confidence in Amryt's business prospects. We are delighted to announce on June 23 that the European Commission approved Filsuvez for the treatment of partial thickness wounds associated with the dystrophic and junctional EB in patients six months and older. This is a major positive development for European patients that suffer from this devastating disease and was made possible by years of hard work from all the Amryt team. Once again, I would like to formally thank my colleagues here at Amryt, together with the patients, caregivers and physicians for their commitment in getting this product approved. We see the approval of Filsuvez as one of the most significant milestones in Amryt's history today. It now means we have four approved and growing commercial products, and we anticipate that Filsuvez 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 on our significant growth plans. Moving now to our commercial products. Beginning with Metreleptin on Slide 5. As I mentioned, revenues for the second quarter were $46.4 million, representing 49.9% adjusted growth year-over-year. Metreleptin continues to deliver significant growth in the EMEA driven by market expansion and its broad label that covers the treatment of both general and partial lipodystrophy. Growth drivers in the quarter included Italian reimbursement for partial lipodystrophy and expansion in the Middle East and to Turkey. Metreleptin continues to deliver significant growth globally, and we expect this momentum to continue with more patients coming on treatment given their high unmet medical need. Our plan is to seek a label expansion for Metreleptin in the U.S. to also include the treatment of partial lipodystrophy, and we initiated a global Phase III study in PL in Q4 last year. Let's move to Lomitapide on Slide 6. Lomitapide revenues for the second quarter were $17.4 million. We continued to increase the numbers of patients on therapy in the EMEA. However, revenues in this region were impacted by the strong U.S. dollar. In July, we were successful in winning a new Lomitapide tender in Saudi Arabia. We estimate that this will be worth approximately $6 million in annualized revenues. We are currently conducting a pediatric study for Lomitapide in HoFH, and we expect to have data in Q4. Assuming positive data, we will seek approval for Lomitapide to treat children with HoFH in both the U.S. and Europe. Now on to Mycapssa on Slide 7. Mycapssa as the first and only somatostatin analog oral capsule 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. We initiated a relaunch of Mycapssa in late Q4, having acquired the product through Chiasma earlier in 2021. Product delivered $4.5 million in revenue in Q2 compared to an adjusted $4.4 million in Q1, which allowed for forward ordering that took place in December 2021. The key pillars of the Mycapssa relaunch are: number one, new market positioning; number two, broader healthcare provider outreach and number three, enhanced patient services. With regards to the new positioning, in April, we launched new messaging, emphasizing consistent control. We have the opportunity to engage directly with the broader endocrinology community and to unveil our new messaging at the ACRO, AACE and ENDO meetings during Q2. At ENDO, we presented new data from the open-label extension portion of the Phase III OPTIMAL and MPOWERED studies supporting the long-term safety and efficacy of Mycapssa in patients who had previously been biochemically controlled on monthly injectables. As previously outlined, our plan was to leverage our existing infrastructure to expand the sales focus beyond the PTCs into community endocrinologists. And in terms of our healthcare provider engagement year-to-date, we have added 58 new prescribers and 93% of these are community-based positions. We have also increased both the reach and frequency of our HCP engagement with sales costs increasing by 31% since Q1, of which almost 80% are now in-person visits. This positive momentum of in-person calls continues to increase as COVID restrictions decline. In addition, consistent with the strategy we outlined when we acquired Chiasma, we have streamlined our patient support efforts, adding a clinical education team in Q1, a field reimbursement director in Q2 and improving the patient hub. As a result of these efforts, time to fill prescription was 25 days in Q2 as compared to 35 days in Q1 and 61 days at the time we acquired Mycapssa. The numbers demonstrate that our relaunch strategy is yielding positive results, and this momentum has translated into encouraging sales early in Q3. I'm happy to report that July was a record sales month for Mycapssa since the acquisition, and we expect this momentum to continue through the second half of 2022. Now to Filsuvez. I'm on Slide 8. As I stated at the beginning of the call, the European Commission has approved Filsuvez in the EU for the treatment of partial thickness wounds associated with the dystrophic and junctional EB in patients six months and older. This is the first time that Amryt has successfully advanced a therapy through development and onto the market. The EASE trial that supported our application was a major undertaking and was, in fact, the largest trial ever conducted in EB. The approval speaks to the capabilities and execution of our R&D and regulatory teams. Our commercial plans to launch Filsuvez in the EU are now well advanced, and we already have the infrastructure in place to bring Filsuvez to market and to execute on our growth plans for the product. We expect first shipments to patients in Germany and Greece in Q3 this year. In parallel, with the initiation of shipments to these markets, we are proceeding with market access applications in each of the larger countries, followed by the smaller countries in turn. We hope to have formal reimbursements that will enable us to launch in these additional markets by early 2024, with broad access throughout Europe expected during 2024 and 2025. Finally, I would note that EU approval can be the basis for submission of marketing authorization applications in other EB markets, such as the Middle East and LATAM, where we also have our own medical and commercial infrastructure in place as well as a fully established distributor network. Turning to Slide 9. You can see here the key centers treating EB across the major markets in Europe. This demonstrates that EB is a natural fit with our business model. That is treating rare diseases with a high unmet need where there are small numbers of patients being treated by small members 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 in Europe. As we already have the medical and commercial infrastructure in place across Europe, the incremental cost for us to launch Filsuvez is minimal. Regarding our NDA in the U.S., we continue to believe there is a compelling opportunity to bring Filsuvez to EB patients in this market. We received a complete response letter from the FDA in Q1. At the time, the agency asked us to submit additional confirmatory evidence for the effectiveness of Filsuvez in EB. We have considered our regulatory strategy very carefully, taking into account the approval in the EU and have decided to pursue a formal dispute resolution process with the FDA. This process will provide an opportunity to escalate our scientific disagreement within SEDAR. We believe that the strong value of data from both the EASE EB trial and three other partial thickness wound studies should support FDA approval of what we believe to be a vital therapy for EB patients. EB patients are desperate for treatment, and we are committed to identify the most expeditious path forward. Turning to Slide 10. Let me run through our expected news flow for the rest of the year. Now that Filsuvez approved in the EU, we expect our initial shipments to patients in Germany and Greece in Q3. For the ongoing EMEA review of Mycapssa in acromegaly, we are expecting an opinion from the CHMP in Q3. For Metreleptin in Europe, we are expecting further positive reimbursement approvals in the second half. And finally, we expect to announce topline data from the Lomitapide pediatric study in HoFH in Q4. So as you can see, 2022 continues to be very busy with what we believe are multiple potential value-creating milestones ahead of us. Let me now turn the call over to our CFO and COO, Rory Nealon, who will provide more details on the Q2 financials. Rory?
Rory Nealon: Thanks, Joe. Starting with revenues, and I refer you to Slide 11. Given Joe has already covered revenues in detail, I will just remind you of the headline numbers and provide some color on a couple of items. We've seen an overall 35.3% growth in the same period last year after allowing for the $12.1 million Metreleptin order to LATAM in Q2 2021. We have yet to experience a significant LATAM order in 2022. This growth was largely driven by the significant 49.9% increase in Metreleptin revenues, again, allowing for the impact of the $12.1 million of LATAM revenues in the same period last year. As I said last quarter, Metreleptin has been on market for nine years now and to be growing by 49.9% year-over-year is really impressive. In the U.S., which was effectively stagnant when we acquired the product in 2019, it is growing 14.5% year-on-year, which is an example of the ability of Amryt to turn around and acquired assets. Finally, before moving off revenues, I'll just note that we have reaffirmed our revenue guidance at $260 million to $270 million for the year, and this is despite the impact of the strong U.S. dollar. Using the Q2 2021 FX rate for our revenues â our revenues would have been $2.8 million or 4.1% higher for quarter two. I will touch on the impact of FX rates again in a few minutes time. The next item I'd like to touch on briefly is our gross margin performance, net of third-party royalties and excluding the impact of non-cash items, which once again exceeds 75% for the quarter. This is consistent with the pattern of our gross margin, which has averaged a little over 75% for the previous six quarters. The Q2 margin of 75.6% is 0.5% higher than our Q1 number of 75.1% and is almost identical with the same period last year. As noted previously, we expect to see this creep up as we move through the year and into future years through a combination of Mycapssa revenues, which we expect to increase over time and also with the introduction of Filsuvez revenues. Regarding the non-cash items that we adjust out in calculating our adjusted gross profit, I refer you to Slide 12 on the detail of the footnotes. These non-cash items include the amortization of our intangible Metreleptin, 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 $3.7 million for the quarter. Also, included is the non-cash amortization of the fair value step-up of acquired Mycapssa inventory of $2.2 million. The key point to note is about all of these items that 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 our R&D spend. Given the acquisition of Chiasma on 5 August last year, comparing H1 or Q2 with the same period last year is not a reasonable comparison. Accordingly, I draw your attention to Slide 13, which shows the progression of our R&D and SG&A costs before restructuring expenses and non-cash items, such as depreciation and amortization over the last six quarters. As is evident from the table, you can see a steep change in our R&D and SG&A spend in Q3 last year, which is to be expected with the introduction of Mycapssa. Bear in mind, we only owned the Chiasma business for two months during quarter three. Since the acquisition, we've been paying the ongoing open-label study costs 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 also completed the NET PK study, the data from which we released on 8 March and which shows a linear response at the higher dosing level of Mycapssa. Regarding this NET study and following discussions with the FDA, we are aiming to complete an observational study and commence our Phase III study in NET with carcinoid syndrome by Q1 of next year. As a reminder, this is a significantly larger market than our acromegaly market, which is estimated 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 $27.8 million. This is comparable with $28.9 million in Q4 last year and $27.3 million in Q1 being the three full quarters since we acquired the Chiasma business. The increase in SG&A spend from approximately $18 per quarter, as was the case in Q1 and Q2 last year to an average of $28 million per quarter for the last three quarters suggest the impact of the Chiasma acquisition on our SG&A has been up to $10 million per quarter or $40 million annually. Other reasons for this $40 million annual increase in SG&A spend include the ongoing increase in our operational spend as the core business grows and also the pre-launch prep work for Filsuvez launch. As noted last quarter, this increase in spend largely associated with the Chiasma acquisition is significantly less than legacy Chiasma Management's expected 2022 spend on operating expenditure on a stand-alone basis. Anyone who knows the Amryt story will know of our ability to acquire a business and affect significant reductions in operating expenditure over a short period of time, largely driven by our ability to affect genuine synergies and also by transitioning a sizable number of non-customer-facing functions and roles from Boston to Dublin, where we can source comparable talent at more competitive rates. I would now like to focus on EBITDA, which is a key metric for us. In this regard, I'll draw your attention to Slide 14, where we adjust our Q1 operating loss for non-cash items and get to adjusted EBITDA of $13 million or $13.3 million before Chiasma restructuring and acquisition costs of $300,000 for the quarter. This EBITDA before such exceptional costs of $13.3 million for the quarter is the 10th consecutive quarter of EBITDA profitability and compares to $7.2 million in Q1 and $5 million in Q4. Our press release and Joe have both alluded to the impact of exchange rate movements on our revenues. During the quarter, approximately 48% of our payroll and operating costs were in euros and 31% of our revenues were in euros. This resulted in a natural hedge to a large extent, with the delta being approximately $2.9 million higher euro revenues than euro cost during the quarter. Being this close to a natural hedge means that the movement in the exchange rates, whether positive or negative, should have a negligible impact on our EBITDA number for the quarter. However, it can have a bearing on our headline revenue numbers as was the case this quarter. On a constant currency basis, that is using the exchange rates from Q2 last year, our revenues would have been $2.8 million higher this quarter. Beneath the operating loss line in our income statement, you will note the change in the fair value of the contingent consideration and the CVRs, both of which are payable on success with our Filsuvez products. I will touch on these in a little more detail when I get to the balance sheet. Finally, in that section of our income statement, you'll note a $6.8 million charge for the net finance expense for the quarter, which consists of $3.1 million in non-cash accounting charges and $3.7 million in cash interest. Moving on to our balance sheet. Cash and net debt are obviously key metrics for us. As you'll see on Slide 15, our cash balances were consistently increasing prior to the Chiasma acquisition. Without significant capital expenditure, our quarterly EBITDA would be expected to convert into positive cash flows as was the case prior to the Chiasma deal. With the acquisition of Chiasma, our cash has declined in the last four quarters with the rationale being as follows: in Q3, we used Amryt cash to pay the remaining $21.6 million of the Chiasma debt, which is obviously a one-off event. Over the course of Q3 and Q4, we also paid $21 million in deal costs from both sides with approximately $30.5 million of this pace in Q4 and the remainder in Q3, again, a once-off event. And finally, in H1 this year, we paid out the bonuses for the 2021 financial year and $20 million to our two largest outsourced manufacturers who manufacture the API for both our Metreleptin and our Mycapssa drugs. The payment for our Metreleptin API is a timing thing with one manufacturing run each year, which in this case, saddle Q1 and Q2. And the payment for Mycapssa API was a commitment we inherited when we acquired Chiasma. We now have significant inventory of this API and will soon be able to significantly reduce our spend on this material. 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, we experienced exactly the same thing when we acquired Metreleptin and that there were significant pre-acquisition inventory purchase commitments, which we were able to reduce gradually over time. On an overall basis, our net debt at the end of March was $139 million, consisting of $91 million in cash, net of our convertible debenture of $125 million and our term debt of $105 million. Excluding our convertible debenture, 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 debt of $14 million. Before closing on our financing, I would just like to remind you of the highlights of the recent debt refinancing, which completed during quarter one and which are outlined on Slide 16. We replaced our term loan facility with a new $125 million term debt facility, of which $105 million was drawn at 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 have been drawn and the remainder of which is available for drawdown at our discretion. As well as the significant reduction in the interest rate on the facility, we've extended the repayment date from September 24 to February 2027, which means that we have no medium-term financing risks, which is key in the current environment. Before concluding, I'd like to cover the various milestones and CVRs that were and are linked to the success of our Filsuvez product. You may recall, we have various milestones and a royalty payable to the original owners of the Filsuvez product. One of those royalties is in the amount of â¬10 million, which is a once-off payment on the first to occur of an FDA or EMA approval of Filsuvez. Given the recent EMA approval, this amount was paid in July of this year and will appear in our Q3 accounts. I will remind you, we also have three CVRs resulting from the acquisition of Aegerion, namely $35 million payable on an FDA approval for Filsuvez, $15 million payable at an EMA approval. And finally, $35 million of Filsuvez sells more than $75 million in any 12-month period prior to 30 June 2024. An FDA approval was unfortunately not forthcoming by the deadline date of 30 June 2022, and hence, the CVR has lapsed. The EMA approval did come through before the deadline. And accordingly, the company will pay out $5.7 million to holders of the relevant CVRs in September this year. This appears as a short-term loan note on our balance sheet as at 30 June. And of course, the revenue CVR is still live with a deadline date approximately two years from now. These changes in our various CVRs have had an obvious impact on the carrying amounts on our balance sheet with resulting changes being processed through our income statement as non-cash accounting transactions. To conclude, I would just like to provide a quick update on the share buyback program. Shareholders approved the form of the share purchase program on 3 March this year, and we announced the Board approved a plan to acquire up to $30 million over the next 12 months on 9 March. Following a 30-day cooling off period, our program commenced on 5 July of this year. We'll report the quantum of transactions on a quarterly basis going forward. That is the end of my comments. I'll now hand you back to Joe.
Joseph Wiley: Thank you, Rory. I am now on Slide 17. Let me summarize by reviewing where Amryt's stands today. The approval of Filsuvez in the EU means that we now have a portfolio of four approved and growing commercial products, each of them addressing large, attractive markets, and our growing revenues are driving positive EBITDA. We have a track record of successful acquisition, integration, execution, performance and growth. We are currently leveraging these capabilities in the ongoing relaunch of Mycapssa and intend to do the same with the launch of Filsuvez in Q3. We have the global commercial infrastructure, financial flexibility and experienced team to execute our plan to drive new product launches and growth. Finally, we also 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: Thank you. Your first question comes from the line of Brandon Folkes from Cantor Fitzgerald. Please ask your question.
Brandon Folkes: Hi. Thanks for taking my question and congratulations on the quarter. Maybe just on Filsuvez in the EU. Have you had pricing discussions in Europe? And just any commentary on how each country is looking at pricing maybe compared to your initial expectations? And then certainly, how does pricing expectations in Germany and Greece, if they have been set compared to your expectations? Thank you.
Joseph Wiley: Thanks, Brandon. Good question. We will be able to discuss pricing in Europe directly on this call. We do, however, have Jordi Casals who's our President of EMEA. So I will ask him to make some remarks on this. However, the question you've asked is, is our pricing expectations being matched so far? I think the answer to that is yes. So we are seeing a robust demand for Filsuvez as the first and only approved therapy for EB in Europe. Jordi, do you want to speak more generally about the process and the rollout in Germany, the repricing period in Germany then the negotiations and also what we're planning to do in Greece?
Jordi Casals: Yes. Hi. Good afternoon. Thanks, Joe. Yes, we just are starting now on the process in Germany on the six-month repricing process and then the pricing station and with the health authorities in Germany, this is a normal process, and it could last up to one year process in Germany, but we will have a free price on the six first months of the year. The same thing we are doing in the process in France and Italy and the rest of EU five countries, and this will go in the coming months and quarters of this year. And regarding the Greece and other EMEA markets, which are potentially seek opportunities of on demand from the patients perspective, we are approaching as well as sort of NPS as well in the reimbursement process. So this will be the way we're going to work, but we don't have yet any insight on the pricing, but we have really high expectations on this.
Joseph Wiley: So Brandon, I'd just add to that, we have a reach out actually from a number of pricing reimbursement committees across the region, which is unusual. Ordinarily, we're the ones reaching out to them. But certainly, in the case of one or two of the countries, they've actually reached out to us proactively and are really interested in getting this drug on to market and available to patients given the unmet need. So we're encouraged by that.
Brandon Folkes: Great. Thank you very much. Congratulations again.
Operator: Your next question comes from the line of Cathy Novak from Jones Research.
Catherine Novack: Hi. Thanks so much for taking my questions. Congrats on the quarter. I'm curious if you can give us a sense of Mycapssa per subscriber breakdown for the community versus academic center. Just wondering why most of the growth seems to be coming from community new community prescribers rather than initial focus on academic centers where it seems like there would be a little â would make more sense resource-wise?
Joseph Wiley: Yes. Thanks, Cathy. Let me just make some initial comments, and then I'm going to hand over to Sheila, our President of the Americas, to discuss in more detail. My comments really reflects the strategy. So when we identify Chiasma as an acquisition target, it made a lot of sense for us to combine the two companies because we already had a significant presence in the rare endocrinology space in the U.S. with both a commercial footprint and medical footprint, et cetera, given our Metreleptin business. And what we saw was an opportunity, particularly given that the previous management team, unfortunately, there was a global pandemic when they launched that product and access was a huge issue, particularly in academic centers that you have referenced, the so-called PTCs or pituitary treatment centers. So we said we'll combine the two sales forces, and we'll continue to focus, of course, on the KOLs in the PTCs. But in fact, half of the patients and half of the endocrinologists are â more than half the endocrinologists, but half patients are treated in the community. And we're already there and we've got a presence. So by focusing also on that, we felt that we could really drive adoption. And you see that now in the numbers that we announced today with over 90% now of new prescribers coming from those efforts in the community. So Sheila, maybe I'll hand over to you, and you can add more color to that.
Sheila Frame: Sure. Thanks, Joe. And Cathy, you'll recall that, as Joe has said, the focus of the previous team was in the pituitary centers. And at least in our experience, we have made the assumption that in order to get a first prescription written you need in any specialty area sort of eight to ten to maybe 12 calls to get that first prescription written. And because of the pandemic, they just could not get into the pituitary centers, of which there's 37 in the U.S. So when we did the original look at, okay, how can we improve this performance in the context of our strengths at Amryt as well as the strength and the depth in acromegaly that the previous team had, we felt that the opportunity was going to actually come from leveraging the focus in the community. And when we looked at the acromegaly patient distribution, it's about half in pituitary centers and about half in the community. But having said that, our label, as you'll recall, is also a switch label â the pituitary centers tend to treat naive patients. So while they're important to understand the opportunity that Mycapssa presents for patients, the real opportunity for Mycapssa today is really in the community. And so I think with our focus now repositioned the product, really focused on consistent control, really focused on switching that the patient opportunity, we believe, is definitely in the community. Although as Joe said, with our medical affairs focus, we're staying focused on those 37 pituitary centers, but with our commercial focus, we've really penetrated now into the community, and that's where we believe the future opportunity, and we're certainly encouraged with the growth that we're seeing. So when I step back and look at it, we had a relaunch in the pituitary centers to reposition the product. We had a first launch into the community.
Catherine Novack: Got it. Thatâs very helpful. Thank you.
Operator: Your next question comes from the line of Douglas Tsao from H.C. Wainwright. Please ask your question.
Douglas Tsao: Hi. Good morning. Thank you. And thanks for taking the questions. Just to follow-up, I mean, I guess, as you look at the Chiasma opportunity, it sounds like given the focus on switching patients, do you think â is it right to interpret that you think really where a lot of your volume ultimately will be driven is going to come from the community rather than academic centers where typically patients are treated initially in our treatment-naive patients?
Joseph Wiley: Yes. Thanks, Doug. I'm going to hand this pretty much straight over to Sheila again, but I would note that it's happening already. So as I alluded to in my formal remarks, July was a record month for Mycapssa. So we're seeing this momentum now in early Q3, really deliver results. So Sheila, I'll hand it over to you now.
Sheila Frame: Thanks, Joe, again. I mean, based on what we see, about half the patients are initiated in the pituitary centers because they often, of course, start with surgery and then they're discharged. And about half of those patients who aren't cured from surgery, then go on to need a somatostatin analog treatment long-term. So what we're finding again is just in the community, the awareness level of Mycapssa and its value was very low when we took this on last fall. And so what we're really focused on right now is essentially taking an approach. This is the first launch into the community. We're driving up that awareness. We're getting lots of access in the community because that's where our strength is. And then on the medical affairs side, we're staying focused on those pituitary centers because, of course, that's where the thought leaders are, and they will continue to influence the value of Mycapssa into the community. But definitely, we're seeing that the uptake is coming from the community at least right now and not where we're really focused from a strategy perspective.
Douglas Tsao: Great. Thatâs very helpful. I'm just curious, how many calls on physicians in the community does it take to drive that initial script?
Sheila Frame: Yes, it's a great question, and it's one that we continue to refine our data on. Of course, we were merging two data systems between the two organizations. So I only have very early data. I would just say, generally speaking, in any specialty area, it's upwards of eight to 12 calls on average to get the first script written and certainly, that seems to be what we're finding. But again, I just don't have a specific number yet because I only have Q2 data essentially of the two where I can go back onto a look back. Is it different in the pituitary centers versus is it different in the community right now, but we're certainly finding it's about that. Now you'll often see in other areas that we've had the privilege of working in around that sort of 14 to 20 calls, you start to see an acceleration. And then beyond 20, you see another sort of incremental step-up as physicians start to get feedback from the initiation or in their patients, then they start to become a bit more â they're more comfortable with it. They get experience with it, they know how to handle it. And so I think we'll start to see that acceleration as these additional prescribers get the first patients coming back, then they'll start to see them. So the community physicians have, let's say, around five acromegaly patients depending on the area, of course, but the ones that we're focused on will each have a handful of acromegaly patients. Acromegaly patients who are stable, often will only see their physicians every six to 12 months. So the complexity of making sure that our targeting is really clear and specific and that we're able to track some of those patients is very helpful. So those are all areas that we continue to focus on in terms of enhancing our commercial skill set.
Douglas Tsao: And just also, are you seeing any difference in how long it takes once that script is written to the patient going on to therapy? And getting approvals from payers?
Sheila Frame: So yes, we are. And I think as we put in the presentation this morning, at acquisition, it was taking about 60 days to go from the patient enrollment in the program to delivery. And we've dropped that to 25 days in Q2 from 35% in Q1. So it was the third leg of the stool, right? So our strategy was to reposition the product in terms of consistent control. The second was expand our reach into the community and leverage our strength. And the third area was really to improve patient services. And so certainly, we're seeing a significant improvement through our hub of really getting those prescriptions not only through the payer access, but also improving the services to the patients. And in that regard, we added these clinical nurse educators to support patients through the transition and also a field reimbursement leader who's also working with not only the commercial team, but also with physician offices in order to facilitate that process. So we've made significant strides in the first half of this year, and we're certainly very optimistic about where we're going to go in the second half.
Douglas Tsao: Okay. Great. Thank you so much.
Operator: Your next question comes from the line of Max Herrmann from Stifel. Your line is open.
Max Herrmann: Right. Thanks very much for taking my question and congrats on the quarter. Just on Myalept. Obviously, it's been a core driver to the business over the last few quarters. I wonder what you can update us in terms of what you're getting in terms of market penetration, price, where you're starting to see if you are getting some saturation in terms of patient numbers. You must be getting in the U.S. given that continued growth, pretty high penetration there. So any sort of color you can give us on number of patients out there? Are there more patients out there than you anticipated, I guess, it's behind my question.
Joseph Wiley: Sure. Thanks, Max. So maybe I'll get Jordi first to jump in because, obviously, we're seeing significant Metreleptin growth at Myalept in Europe, Myalept in the U.S. So Jordi maybe you can speak to the EMEA region first and the growth that we're seeing, the penetration across territories and new market expansion. And also give some color as to how we see that growth continuing and then we'll hand over to Sheila for the U.S.
Jordi Casals: Yes. Great. Thank you. Yes, this is a very strong performance, mainly in some EMEA new markets like GCC, with Qatar, Saudi as well in Turkey, where we have a strong growth in a number of patients and getting more experience in the treatment as well. As Joe, commented during the presentation, the PL reimbursement approval in Italy has significantly increased the patients benefit of Metreleptin and helps us to grow and expand the number of patient benefits. So we've seen this constant growth also in the rest of EU markets. And this is the main driver is the disease awareness, finding new patients and of course, the efficacy of the treatment on all these places. Also, we are getting closer in the second half of this year in some markets. So we do expect to get reimbursement, mainly in Netherlands and Portugal, Sylvania. These are markets where we have started reimbursement process a few months ago, and now we are in the later stage of getting these processes. So this will keep growing the demand and the steady growth of these markets. And that's all from my side.
Joseph Wiley: Thanks, Jordi. So Max, I think the message there is that we expect this growth momentum to continue, right? We don't see that slowing down because we see that we have the opportunity to expand geographically with reimbursement success in different territories, plus growing the existing markets where we are already reversed, such as the UK, where we're again seeing robust growth. So we see that growth momentum continuing across the EMEA region. Sheila, maybe I'll hand over to you to talk a little bit about how we're seeing the U.S. given that Rory alluded to during his formal remarks that when we took over Metreleptin in the U.S., it was largely stagnant, whereas, in fact, now, we delivered 14% growth in this quarter. So maybe you could give some color as to how we're achieving that.
Sheila Frame: Sure. Thanks, Max, for the question. And we're certainly very excited about the future potential and ongoing opportunity that Metreleptin presents in this market in the U.S. So what we've actually done this year is we have added patients, we're not quite at the number that we think is achievable for 2022. But certainly, what we've done is we've kind of reallocated resources, and we're likely going to invest a little bit more in a focused team that's entirely dedicated to this. So as you know, in a product like Metroleptin and in this space, it's really about patient identification and really finding that needle in a haystack. And so we do have good penetration in this marketplace, but there are also a number of patients that we believe are out there that we should be able to identify and bring into treatment. So that's really where our focus is. We're going to have a dedicated team, both medically and commercially I think, to really try to see how we can improve the speed to treatment for these patients and continue to grow this product. And of course, as we mentioned, we're also going to try and go after the PL indication eventually for the U.S., which, of course, gives us good runway in terms of future growth opportunities as we drive that PL Phase III.
Joseph Wiley: And Max, I just conclude saying that, of course, we alluded to in our remarks that in Q2 last year, we recognized a very significant 12 million-plus sporadic order that we received out of LATAM. We did not receive that order in this quarter. So if you reverse out the year-over-year, that gives that 49.9% growth, which is very impressive, obviously. But we do expect to see that order coming through, hopefully, in the second half of this year in LATAM as well. So we're enjoying growth globally from Metreleptin.
Max Herrmann: Thanks. Maybe just a follow-up in terms of what sort of penetration in a rare disease like this should you be expecting? I mean in the U.S., I think you talked about 300 GL patients. You must be getting pretty high in terms of percentage penetration of that. I appreciate you're now focused on finding more patients. Does that mean that, that 300 million is actually more like 330 or are you finding out the market opportunity was bigger than you anticipated? And what sort of penetration in other analog markets can you expect to get?
Joseph Wiley: Yes. So the prevalence of GL in the population is one per million. So as you alluded to, roughly 300 patients or so in the United States with GL. The prevalence of PL is three per million of population, we believe, but we assume that we are only going to see patients with severe PL go on to therapy. And that's consistent with what we see in the markets where PL is approved. So we feel it doubles the market opportunity where you have a PLGL label. In terms of penetration, we were nowhere close, in fact, to that 300 number you've alluded to. So there is significant opportunity to continue to grow the product. Certain patients will go on to the drug and come off drug for various reasons. So we have had a large number of patients who have been exposed to therapy, but there's no reason to believe that those patients could not come back on to therapy at some later point. And in fact, we do see that. We see patients who go on starting for a variety of reasons, go off therapy, but then come back to therapy later, given the high unmet medical need and really the lack of other options, outside of instant where they have instant resistance and fibers where they're also fibric resistant. There's really not a lot of interruptions in this pretty awful disease. So we think that there's quite a lot of growth ahead of us.
Max Herrmann: Thanks very much.
Operator: Your next question comes from the line of Brian White from Shore. Your line is open.
Brian White: Thanks for taking my question. Just a very big question on the Type C meeting for Mycapssa recently in NET. And I wondered if there's any further detail you could give us on that meeting, the outcome of the impact on the trial itself in terms of size and timing and whether or not it's easier to do a study or harder or the same as you were expecting? Thank you.
Joseph Wiley: Yes. Thanks for that, Brian. Good question. We have our Chief Medical Officer, Tracy Cunningham on the call. So Tracy, I'm going to hand that one over to you. This is the Mycapssa NET study.
Tracy Cunningham: Thank you, Brian. Yes, we had a very good meeting with the FDA was actually a correspondence rather than in-person meeting. One of the things that they recommended was in a bank of doing the study, which they accept was to do some more work to show the clinical meaningful of the endpoints, and they recommended performing a patient study. So that has started. And what that does is, it looks at how the definition of diarrhea and flushing episodes are to ensure that actually they're clinically meaningful. So that as I say is underway. That will be inputted then into the Phase III diaries, so that, that's captured. We anticipate then that the study will start at the beginning of next year. We don't anticipate any delays to the ultimate delivery of the study. In fact, what we believe is that this piece of work is going to strengthen our position when we file because we will have shown the value of these endpoints that enable us to move smoothly to submission assuming, of course, that it's a positive study.
Brian White: Okay. Thank you.
Operator: And your next question comes from the line of Mani Foroohar from SVB. Your line is open.
Unidentified Analyst: Good morning. on behalf of Mani. Thank you for taking our question. For Mycapssa should we expect an average refill time of about 25 days moving forward? Or do you think or anticipate that the time to refill could still improve? And secondly, as part of your patient services, will improved access be reflected financially? Should we think about it more in terms of the higher pricing? Or should it be reflected in other drivers of revenues?
Joseph Wiley: I'm going to hand those questions directly to Sheila, please.
Sheila Frame: Thanks. So I just want to be clear on the time â it wasn't time to refill. It was time from the enrollment to the patient getting first delivery is really what we measure in that 25 days. So I'm not sure. Anyway, just to be clear on that. So it started where it would take up to two months for a patient to actually get their first prescription filled, which we've dropped to 25 days. Do we think we can get that faster? We do. And then your second question related to â remind me?
Unidentified Analyst: And the second question is related to, in terms of improving access, whether it would be reflected through higher pricing or other drivers of revenue growth?
Sheila Frame: Definitely other drivers. I mean, the primary driver here is going to be the community increase in prescribers and access to that 50% of the acromegaly patients that we didn't focus on initially. So I think that's really where the growth is going to come from. From a market access perspective, certainly, we're working with the payers and trying to increase that. But we've had relatively good market access in terms of getting through, of course. In any specialty area you assume you've got prior authorization and in some cases, appeals and that kind of thing afterwards, but we certainly have pretty good access through the PBMs, and we're going to try to continue to work with them to enhance that.
Unidentified Analyst: Thank you.
Operator: We have no further questions at this time. I will now turn the call back to Joe Wiley for some closing comments.
Joseph Wiley: Thank you all for joining us today. We look forward to speaking with you and hopefully meeting with you in-person soon. Thank you.
