Lou Ferrari - President & CEO
Matt Lowe - J.P. Morgan
Savient Pharmaceuticals, Inc. (SVNT) 31st Annual J.P. Morgan Healthcare Conference Call January 10, 2013 3:00 PM ET
Matt Lowe - J.P. Morgan
Hi there. I am Matt Lowe of the J.P. Morgan Biotech team. Next company to present is Savient Pharmaceuticals. We will have a breakout afterwards in the Olympic Room. If I could just ask everybody to please put their cell phones on silent that would be great. And I will now hand over to the President and CEO, Lou Ferrari. Thank you.
Thank you. Before I get started with the presentation, I just want to thank you all for coming and also I wanted to say to please feel free to view our publicly posted documents which are the 10K and our 10Q and our 8K that are freely available and accessible to everyone.
So for those of you who have not heard about KRYSTEXXA or pegloticase, KRYSTEXXA is basically a PEGylated uricase which is the pure enzyme that dissolves or resolves uric acid and also dissolves the crystals that uric acid will form. The product was granted orphan status in the United States by the FDA. Usually that entails less than 50,000 patients within the United States. Our current list price is $29.62 that is the result of two price increases that we had taken in 2012 of approximately 29%.
Our gross margin is approximately 80% and our goal is to continue to drive that better or higher. We have exclusive rights globally and we are currently entertaining as some of you may or may not know, we recently as a matter of fact I believe it was Tuesday morning received the approval at the EMA for approval for KRYSTEXXA in European Union and we are currently in discussions to resolve and get us partner for Europe. That is our goal and we intend to do it with a partner. However, we still reserve the opportunity if the conditions or if the terms are not to our liking, we would still be able to go with it alone.
We have patent protection till 2026 and the overall RCG market in the United States and I will talk a little bit more about this is approximately 120,000, but the space that KRYSTEXXA plays in, which is mostly in tophaceous gout, we believe to be quite a bit smaller, perhaps half of that and we have inventory supply to go through 2014.
This will just give you a quick idea of what the gout market looks like in terms of growth in the United States. The growth of this market looks approximately 3.5% annually of the total population. Currently, in the United States, there are about 9 million patients that currently have gout; of that approximately, 3 million or so are actually treated and you can see how we derive our number of approximately 120,000 in the RCG or Refractory Chronic Gout market. The way we were able to determine that is we work with a leading life sciences company market research company and we looked at approximately 3,000 charts with approximately 500 physicians across the United States and it was determined there were approximately 120,000 of these patients that met that determination or that definition.
The goal of gout therapy, I mean, I will say this to you, gout is probably one of the easiest diseases or conditions to diagnose, but it also appears to be one of the most un or misunderstood diseases or conditions in the United States; easy to treat, yet for some reason or another, many of the physicians do not get patients to go, which is below six or a uric acid level of six, and you can see on the right, what we need and this was a key opinion leader, stating this, you need better treatments for tophaceous gout.
Currently, there really is nothing on the market that treats tophaceous gout with the degree of rapidity or the ability to resolve tophaceous gout in such a short period of time as KRYSTEXXA. In our clinical trials, most of our patients resolve their tophaceous gout in less than six months and currently most of our patients are on the drug less than six months. They are very poor - the treatment of gout as I have said earlier is very poor by standards in the United States and that also leads to flares, its lost time at work and so on, KRYSTEXXA as a treatment for gout as you will see is beyond compare when it comes to resolution of this condition.
This is a I will say a typical RCG patient, you can see the deformities in the hands and I will only say this as I show you this that is not by any means the worst ones that I have seen or that many of your key opinion leaders or key opinion leaders across the country have seen. That is pretty much one of the ways that that will present. You can see the accumulation those knobs or the bumps are the accumulation of crystals in the joints. What happens in this condition is serum uric acid which is not controlled as it continues to rise or does not get below six, you precipitate out crystals; usually those crystals accumulate in the joints thereby leading to pictures or situations like this. I can also tell you that we have also had patients that have been confined to wheel chairs due to this condition, this disease of which KRYSTEXXA has helped resolve that situation and got them back to functionality.
You can see this is just a chart showing the efficacy of a drop in uric acid with KRYSTEXXA and how KRYSTEXXA helps lower uric acid; very important to note with KRYSTEXXA everyone drops their uric acid below one within 24 hours of administration, so you can imagine the amount of uric acid that this is moving out of the system. There are no products that are currently on the market, no other any products that are coming to the market that exhibit this degree of efficacy; I think that's important to note. This is a typical patient as we've seen at baseline before treatment with KRYSTEXXA. This is the same patient six months later. And I will only tell you this is a typical result of a responder. We have approximately 42% of our patients that do respond to treatment and you can see the difference. Usually these patients will even have, they would either have trouble doing the most basic function which is just closing your hand, difficulty eating, tying a tie, etcetera.
That while treatment with allopurinol currently exist and Uloric most patients with this type of gout could take approximately three to five years to resolve if they were treated with oral drugs, if they resolve at all. I'll give you some of our highlights in 2012 and the most exciting piece for us now is that we've just received the EMA approval, but our educational programs in terms of educating the rheumatology group and physicians in the United States on KRYSTEXXA has continued in earnest.
We have what we call a [KPIT] program where we provide the first two doses free to any patient who a physician feels he wants to avail themselves to. We have our website up and running called check out your gout and for some reason you might have seen Jim Belushi as a spokesperson for gout, not for KRYSTEXXA but for gout. We've had our publications in the journal of rheumatology. We've had the International Journal of Clinical Rheumatology present data on pegloticase and RCG. We've had those publications and we've had the presentations at EULAR this past year.
As I said we had our approval in Europe. We currently in Europe have six medical science liaisons on the ground in Europe. They are focused mostly at this point in Germany, France and UK. So they have been already for the past six months been educating rheumatologists in Europe on KRYSTEXXA. We currently have what we call a main patient program. This was the ability for us to provide the product free of charge to any patient that key opinion leaders or any rheumatologist felt that should go on to KRYSTEXXA and they were able to gain access to the product free of charge thereby gaining experience since none of the patients that were in our clinical trials were from Europe.
Our clinical development plan: the clinical development plan and the one that is already underway and moving along quite rapidly right now is our dialysis program. The point in the dialysis program is very simple. We will not take a large number of patients, but it will show that patients who take KRYSTEXXA, who are on dialysis and what we will try and show is that patients who are on dialysis that KRYSTEXXA is not removed with dialysis. That's very important since patients who have refractory chronic gout like any other dialysis patient probably go for dialysis treatment three times a week. Therefore you will not have to dose KRYSTEXXA each and every time that they would go through a treatment and by the way dialysis is not a very good way of removing uric acid and doesn't do a very good job of it.
So these patients as we know and there are approximately 450,000 patients in the United States that are on dialysis, and these patients probably follow at least what we see in the regular population. So there are at least a few thousand patients in this group that need treatment and the treatment that they are getting right now is probably sub-par, meaning the doses of allopurinol and/or Uloric that are given in these patient population is very low and probably very ineffective.
We're exploring the immunogenicity of the product. To that extent, we're trying to show or look for ways where we can reduce the immunogenicity of the product. This is what leads to the high degree of non-responders. We believe it maybe the pegloticase, the PEGylation of the enzyme that might be leading to the immunogenicity. So there maybe a way for us to overcome that. That study, the protocols are being written as I speak and we will probably begin these studies probably by the end of the first quarter of this year.
Organ transplant, for those of you who may or not know, many of these situations, you should not or cannot give the oral treatment for the treatment of gout and these patients who have RCG have very little option. So we're looking to show that you can give it safely in patients with organ transplant and a larger study that will follow the immunogenicity study is the induction and maintenance. What the induction and maintenance trial will do, it will show that you can start a patient on KRYSTEXXA for a period of time and then transition them to an oral drug, which you may be able to keep them off for a long period of time afterwards. We had eight abstracts presented at this past ACR meeting, well received and the most important one was our open label extension trial showing that we had patients on the product up to 36 months.
This will just give you an idea of the patient population that I just described and the studies that we're going to through in our clinical development plan: dialysis, transplant and induction and maintenance.
So, our progress continues outside of the US. KRYSTEXXA will now be available probably in the second half of the year with the EMA approval. As I said, we received the marketing authorization. We have our team in place now as I told you about the MSLs and we have an acceleration or we are seeing an uptake an accelerated uptake as you would imagine at this point with our name patient program.
Our financial summary, we’ve have had seven consecutive quarters of KRYSTEXXA sales growth all have been over double-digit growth. Last quarter we had a 13% increase in net sales to 4.5 million in Q3 over Q2. We have completed a financing and debt restructuring where we raised approximately $43 million in net cash proceeds. We have extended the maturity date to approximately 50% of our existing notes to May of 2019 and we currently have a 118 million or 116 million in cash and short term investments as of September 30, 2012.
So, right now we feel that we are well positioned with cash. We believe that will take us through at least at this point not including any upfront payments or any other income from Europe into the middle of 2014. What we also did this year or this past year, we right sized the organization. We took our sales force down by approximately 35% or our entire workforce not just sales force. We have now approximately 40, 45 people in the field that includes our MSLs sales people and sales management, and our focus is now been basically only on rheumatology and nephrology with podiatrist who are now referring patients with chronic tophaceous gout to rheumatologist.
So we have a couple of mile stones and we’ve had a great year and now 2013 appears to be getting off to a great start for us. We continue our goal of course is to continue to commercialization of KRYSTEXXA in the US. We look forward to whether partnering and I think we will and our goal is to partner a successful launch in the EU. We will identify those commercial partners hopefully, and as I said very shortly. And the key cornerstone for us in the company is the clinical development plan and our investment in the clinical development plan.
We are well positioned with our product. We are the only product as I said that's approved for RCG. We have a long term patent on the product and a great opportunity in the US now and outside of the US, broaden the market opportunities globally. We have had a lot of interest in countries such as China, Japan, Middle East, etcetera, so a great opportunity for us going forward.
We plan to expand the indication, the utility of the product. I think the indication and maintenance trial will get us there. We have a good strong financial profile, and as I said that does not include where we think we will be in the European market and we continue to execute and our goal of course is to build shareholder value for all shareholders in Savient.
And with that I am I'm finished.
[No Q&A Session for this event]
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