Geoff Meacham - J.P. Morgan
Good morning. And welcome to the morning session for day three of the J.P. Morgan Healthcare Conference. My name is Geoff Meacham. I’m the Biotech Analyst here at J.P. Morgan. It’s my pleasure to introduce InterMune, one of the leaders in idiopathic pulmonary fibrosis or IPF space, and speaking on behalf of InterMune CEO, Dan Welch. Dan?
Thank you, Geoff. On behalf of the men and women at InterMune I thank J.P. Morgan for having invited us here today to update all of you on our progress in the company. We’ll make some forward-looking statements. We encourage you to take a look at our publicly disclosed document to inform yourselves as to the risks and opportunities of the company.
So this is our vision, this is where we are going, it drives our strategy, it guides our strategy and also informs ourselves as to our investments. And we expect to be in 2015 a biotech company focused on serving patients with unmet medical needs in both specialty pulmonary disease and orphan fibrotic disease. The world leader in IPF, we already claims this position. We intend to maintain that position and be among the top 20 U.S. small to mid size biopharmaceutical companies.
Successfully marketing Esbriet, our product for idiopathic pulmonary fibrosis in the EU, U.S. and Canada, and other markets of interest, where it’s a standard-of-care for IPF and also the backbone of combination therapy for this terrible disease. And we’ll be advancing our attractive and balanced R&D pipeline built primarily and firstly on Esbriet.
So what progress did we made in last year towards that vision? It was a very solid progress as you see. In the commercial side on the top of the slide we launched Esbriet in nine EU countries, including the two largest countries Germany towards the end of the previous year and France just before the end of last year in mid-November. The Esbriet launch in Germany is among the top five best ever orphan drug launches and I’ll show you some statistics supporting that statement.
We’ve obtained attractive pricing and reimbursement of Esbriet. We’re now priced to nine of those 15 countries at a price of around $34 -- $33,000 to $47,000 per patient per year and we’ve made very strong progress in pricing and reimbursement in the remaining six countries. I’ll update you on that for the year.
We approved -- we got Esbriet approved in Canada, the world’s ninth largest market and we’re closing in on the clinical side -- we’re closing in on the very lucrative U.S. IPF market where we announced the completion of enrollment in our pivotal Phase 3 study just a few days ago, we call this ASCEND and the topline results of which we expect in the first quarter of next year.
We are exploring opportunities in lifecycle management, notably new formulations, new indications and we have a research program with several antifibrotic compounds that will -- we hopefully we’ll be sharing a news about in the future.
I’ll focus now on the commercial launch of Esbriet also known as Pirfenidone, but first I’ll talk briefly about IPF. It’s a large and lethal orphan disease. The lungs scare up and nobody knows why, patients die very rapidly within two to five years of diagnosis.
On the right-hand panel you see when compared to very lethal cancers and also a pulmonary disease like pulmonary arterial hypertension or PAH. IPF ranks among the most lethal of these diseases, so it’s a very serious unmet medical need.
It’s also among the largest, we hear a lot about orphan drugs and ultra-orphan drugs, et cetera, IPF is among the largest orphan diseases to have secured that designation. So we figured -- we estimate there is 120,000 to 160,000 IPF patients in the U.S. and North America, and about 30,000 more or less new patients presenting at new diagnoses every single year. And until Esbriet no drug was approved in the European Union or Canada and sadly for U.S. citizens with IPF no drugs are approved in the U.S.
So Esbriet is the one and only drug approved for IPF and borrowing from Neil Armstrong’s footprints and stylizing in it to a set of lungs. This is our campaign. This is our image, positioning Esbriet as a big step forward in IPF therapy and the first treatment option to show to slow disease progression.
So let’s talk about the first steps in our program to bring Esbriet to market. Our strategy is to focus on the top five countries. If you take the top five countries listed there Germany, France, Italy, Spain and U.K. you already get to 80% to 85% of the market.
Interestingly, a way to think about it is the top five countries in Europe comprise a population basically the same as that of the United States of America. So and that gives you about two-thirds, sorry, three quarters of the EU market.
If you then add just 10 more countries you already get up to 80%, 85% by adding the countries that are listed. And that’s how we are focusing first -- and launching first in Europe, we are doing this alone by ourselves, building not only a company but a brand at the same time and it’s been very challenging and very exciting progress.
So here is our progress, these results Q-by-Q revenues in U.S. dollars in millions and essentially this is Germany, because we’ve really only launched in Germany so far, and you see a nice consistent steady growth, we released our unaudited results in Q4, notably the double asterisk there just reflects the fact that.
In the late third quarter we negotiate we -- the results of a negotiations with German health authorities resulted in an 11% price decrease which we expected, so the results would have been meaningfully higher than $8.2 million of course without that 11% increase. So the message here is steady Q-on-Q growth that’s what you expect out of European product launch and it builds into nice brand overtime.
You might ask, well, how is -- how are you doing in Germany? How does this -- how does those numbers you just showed me then compared with other launches? What we’ve done here is we’ve looked at 30 products with orphan products with the prevalence over 30,000 patients per year. So these are not ultra-orphan, these are big orphan drugs in Europe and we look, there were 66 of them that actually gain registration since June of 2010.
And if you look either on net sales since launch on the left-hand panel or you look on the right-hand panel in terms of patients on drug after 16 months, 15 months of launch, you see Esbriet in the top five, there is a mistake here, the Exjade should actually of course be Esbriet in blue.
So Esbriet $25.8 million net sales, ranks it in the top five, best ever launches, orphan drug launches and then patients likewise. So that’s probably the best analog you can choose to see how well Esbriet is doing and also many of these drugs are oncology drugs and as you all know that oncology drugs have among the fastest uptake of all.
The other thing I’ll bring your attention to is Tracleer which is an oral orphan pulmonary drug, pulmonary hypertension drug like Esbriet and we are doing remarkably better than Tracleer both in net sales and both in patients. So, in a word we’re doing, a couple words we are doing very, very well in terms of our launch compared to the relevant analogs.
So in pricing, reimbursement and launch, this is how we are moving. We expect to launch in up to 15 targeted markets, essentially we had only Germany in the Q4 2011 and the size of the box indicates the size of the opportunity. So this is a top five country.
In 2012 we made nice steady progress represented here, but you see the smaller flags. These are what we call the mid-sized countries those 10 countries that comprise around 10% of the European opportunity. And then late 2012 we added France, which of course is the blue, white and -- blue, white and red flag, and we launched, started the launch in mid-November.
And then, so it’s nice steady progress, but essentially all of ‘12 was largely Germany with a little bit of contribution from the smaller countries that really started promotion not until the third quarter of last year.
In the first half of this year, we expect to add three big flags Italy, the United Kingdom and Spain, and also add four other mid-sizes countries, in fact the first of which we already started launching in the top left-hand the black, yellow and red is Belgium, and we just started launching in that country last week. Second half of this year, we intend to focus on beyond the top 15 countries you’ll here more about that in coming months.
We also launched Esbriet in Canada last week. It’s Health Canada completed a priority review of October -- on October 1st last year, first drug approved and we expect to go through the reimbursement process which I’ll touch on in a minute.
Canada is very important market. It’s the ninth largest pharmaceutical market in the world. Lot’s of patients diagnosed, nice pricing here $35,000 to $42,000 U.S. Canadian. And the final price will be based upon a medium public price of several countries, three of which we’ve already priced in a very attractive price range that’s indicated here. So Canada will be a very important company -- country for us.
We’re now going to talk about the United States market and the ASCEND Phase 3 study and its rationale. U.S. market is very, very attractive, high prevalence and incidence, again it’s among the largest orphan drugs to have -- orphan indications to have receive that designation, 30,000 to 50,000 mild to moderate IPF patients, that’s the subset of total patients that we believe our data supports, that’s where we did our clinical studies, that’s our indication in Europe for mild to moderate, there is another 20,000 so-called severe patients that some of which will get Esbriet, but that would be beyond the label.
Very strong annual pricing we had expect, if you took the EU pricing of US$33,000 to US$47,000 that already becomes a big market in the U.S. But the U.S. analog pricing of the ERA drugs the endothelin receptor antagonist like Tracleer and Bosentan, those drugs are priced in the $70,000 to $75,000 per year and that’s the analog we used in Europe for Esbriet pricing.
It’s a small targeted prescribing audience about 3000 doctors prescribe IPF with any regularity and because of that we expect only about 100 sales reps to be needed in the United States, which then of course if you take the prevalence times the pricing and you have a small sales force you get very, very strong operating margins, so extremely attractive market.
And with that as backdrop I want to introduce Jonathan Leff, our Head of R&D, who will share with you how we intend to go after that market, register Esbriet with the study we call ASCEND. Jonathan?
Thanks, Dan. Pirfenidone is actually a very well studied molecule either by InterMune in our capacity programs as Esbriet in the 004 and 006 trials or by Shionogi under the trade name Pirespa in the SP2 and SP3 studies. Regardless the study results in all those studies have been remarkably consistent.
Notably at one year, studies have been extremely consistent and in both the 004 and 006 studies, as well as the SP3 Shionogi study, pirfenidone outperformed placebo at either 48 or 52 weeks. There was an unexpected finding in the 006 trial. However, in that the placebo group failed to progress in terms of forced vital capacity as we had expected. So if your placebo group is not progressing, of course, it makes it very difficult to show an inhibition of that progression rates.
So we thoroughly analyzed the capacity data set and we arrived at a set of parameters for a new, slightly modified inclusion criteria that would essentially enrich in patients more likely to progress in terms of disease progression. That in turn would, of course, make it easier to show in inhibition of that progression rate.
The main changes in the ASCEND trial are shown in red. ASCEND is a 52-week trial versus 72 in CAPACITY. We instituted an upper limit of FEC 90% predicted. We also lowered the lower limit of DLco to 30%. So a slightly more progressed population yet still in the mild-to-moderate area.
And importantly, we instituted an FEV1/FVC ratio of greater than 0.8, which is a much more pure restrictive disease population. And it excludes those with an emphysematous component which we theorize might have been part of the issue in the 006 trial at 72 weeks.
Now, after we devise these modified criteria for the ASCEND trial, we of course wanted to increase our confidence level that this was the right thing to do. So we went to an entirely independent data source our INSPIRE trial, which we had run with gamma interferon a very well-characterized data set of over 800 patients. We apply these inclusion criteria to the gamma interferon INSPIRE data set. And we found exactly the same thing that is greater disease progression which is what we wanted.
We, then to further increase our confidence level, went back to the capacity data set and we asked ourselves what would have happened if we had run the capacity program with the ASCEND inclusion criteria. That turns out to exclude roughly one third of the patients and we could model what we might have seen. And in fact, we saw increased disease progression and happily actually increased pirfenidone treatment effect as well.
Now, to show you graphically what I’ve just said, this is the pool data from the 004 and 006 trial. And this is forced vital capacity. As expected you see the progression rate in the placebo arm decreasing over time. And pirfenidone outperformed placebo at both 48 weeks and 72 weeks. I’m statistically significant. Notably, the 006 trial was also positive at this time point.
In the CAPACITY program, patients who would have qualified under ASCEND criteria, you see the intended effect, there is greater progression rates in the placebo group. And in fact, a slowing of the decline in pirfenidone treatment and a bigger treatment effect and these effects were seen at both 48 weeks and 72 weeks.
So we were quite encouraged by that results but even more encouraged when we looked at 6 minute walk test. All of these analytics were devised to produce a progressive population on forced vital capacity not 6 minute walk test, which doesn’t necessarily correlate.
But we found this the same thing, in the pooled population, there was an advantage to pirfenidone over placebo at both time points. And in the enriched ASCEND criteria population, there was also increased progression rates. So a faster decline in 6 minute walk distance. And in the pirfenidone group, there was not only a protection but a bigger treatment effect than we saw in the pool data and this held up at 48 and 72 weeks.
So, the ASCEND trial is well underway and I’m happy to report as Dan said this is a 500 patient trial. We randomized our 500th patient last month. There was such an exuberance interest and demand for patients and investigators towards the end. But there was a large number of patients in screening that we have accommodated. And I’m also happy to report that the last patient will be randomized today.
If you fast forward 52-week trial plus a 35-day safety follow-up that brings the last patient out to be February -- mid-February of 2014 with topline results of the primary and key secondary outcome measures in the second quarter of 2014.
I’ll now turn it back over to Dan.
Thanks Jonathan. So now let’s talk about our outlook for this year. What to expect from us is further progress towards our vision 2015 that I shared with you at the opening of this presentation. We expect consistent, steady growth of Esbriet in Europe and the nine countries already launched and in the six remaining EU countries that we expect to start launching by the middle of this year, notably the three, top three -- top five countries of Italy, U.K. and Spain.
We expect to be launching and we have in fact started the launch of in the first North American market, Canada, couple of days ago. We are working, of course. Jonathan who is spending a lot of time on ensuring very high study conduct -- high level of study conduct for ASCEND to deliver a pristine study to the FDA when it’s positive as we expect.
We will be making investments in our pipeline notably around Esbriet lifecycle management. We have a couple of line, new indications that we’re very interested in. And we hope to be sharing more about those in the future and advancing our antifibrotic research programs as well.
In terms of setting expectations, we’ve mentioned this in the press release but it’s worth amplification here for couple of minutes. In terms of those three big countries that are not yet launched in Europe, notably, U.K., Spain and Italy, there are some things to talk about.
So in the U.K., we expect to have the final decision from NICE in March. Many of you know who NICE are and they are the health technology assessment body in U.K. and they are among the most demanding and stingy health technology assessors in the world, very difficult to please them. And about two thirds of dossier that are presented to them for potential support for their support for reimbursement, two thirds of them get a preliminary assessment of no. And in fact we predicted that we would get the same and indeed, we did at the end of November.
Now, the statistics of the industry would say that half of those nos can go on or have gone on to get a yes from NICE. We have a very well thought out strategy to be on the right side of that coin flip and we hope to be gaining by March a final assessment that would be a yes. If we do, then we would be launching some weeks thereafter to hire and train the sales reps and then we will be all green lights in terms of reimbursement throughout the country. So that’s the timing there for U.K.
Differently and importantly in terms of expectations for revenues out of Spain and Italy is the following. And we try to represent here that in Italy, we expect to conclude the pricing and reimbursement discussions on which we’ve made good progress particularly last quarter last year. And assuming we get that, you need 45 days to publish those, the publication process before you can launch.
It will take some time to hire and train the reps, but unlike U.K. and the other countries there are regional procedures throughout the country that must be satisfied. They are largely bureaucratic and you knock them down one by one. You start to get traction. Some regions allow access right away so we’ll get some greenness if you will right away after launch.
However, it can take up to three quarters and nine months to knock down all of the regions so that we gain access for Esbriet to all IPF patients throughout the country. So that’s what’s indicated from the yellow to the green over time. So you should keep that in your mind as you think about the uptake of Esbriet in Italy.
Similarly, Spain, we expect to resolve pricing and reimbursement by the middle of the year launched around midyear and the same idea here, it’s a little bit longer in Spain were 12 months, up to 12 months can be required to clear all of the bureaucratic regional procedures. However, there are some you can access right away and some that will take three months, six months, nine or 12 months before it’s all green lights for reimbursement in that country.
So that’s important for you to consider as you also consider the revenue guidance that I’ll share with you in a moment. Finally, Canada you can think of this as a miniature Europe in a certain way. One third of IPF patients will be covered under private insurance. That can come sooner than the provincial government reimbursement, which can take as much as 12 months, maybe even longer to get the 10th of 10 provinces in the country.
Some countries -- some provinces will come sooner, much sooner and so you can see it’s indicated here just as a cartoon so to speak that overtime we expect to get all the provinces and all the private insurers to gain access for Esbriet to all the patients in Canada. We shared this guidance a couple of days ago before this conference projected Esbriet revenue and we’ve shared it in two levels.
First, a level that we feel somewhat sure about and those are the countries in which pricing and reimbursement has already been negotiated and the 2013 projected revenue is $40 million to $55 million. In those countries not yet launched, the ones I just talked about a moment ago, Italy, U.K., Spain and three midsized countries theoretically although we don’t expect it, the low-end of that range could be zero.
We don’t expect all countries to say no. That’s not been our progress so far. Every country has said yes so far but theoretically it’s possible. Up to $15 million and the background on that $15 million has a lot to do with the fact of those regional procedures that I just described to you.
So when you added up of course you have a range of $40 million to $70 million, a nice growth over the $26 million that we just reported unaudited revenues a couple of days ago.
Financial overview, looking forward, you see our full-year guidance. On the right, there is the revenue I just described. R&D is roughly unchanged although we’re feeling the full effect of the great job Jonathan has done in terms of enrolling all those patients you’d expect the R&D cost to go up.
SG&A, these costs are on the assumption that we are launching in all 15 countries, including Canada and we have full-year effects of places like Canada and France plus the new countries coming on board. So you see the total R&D. We do have debt described below the first of which is about two years away.
So in summary, IPF is a very large orphan market with extremely attractive, commercial potential, great pricing, focused marketing which results in high-operating margins. Esbriet has the first-mover advantage in this very exciting market and our launch so far in Germany ranks among the best-ever orphan drug launches in that country as I described.
I think we’ve delivered solid execution in 2012 on Esbriet pricing and reimbursement in Europe. During what I think could stand without a lot of argument was one of the most challenging economic periods in several decades.
2013, as you could think of it as the EU launch here for Esbriet where we expect to be in the market in all top five -- top 15 countries. And North America chapter begins with the launch couple of days ago in Canada and as we close in on the Phase 3 ASCEND study, it’s now fully enrolled and designed to deliver a very positive result and access to the extremely attractive U.S. market.
I thank you very much for your attention. We will be in the breakout room across the hall and to the right. Thank you.
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