NPS Pharmaceuticals' CEO Presents at 32nd Annual JPMorgan Healthcare Conference (Transcript)

| About: NPS Pharmaceuticals, (NPSP)

NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)

32nd Annual JPMorgan Healthcare Conference Call

January 14, 2014 6:30 PM ET


Francois Nader – President and Chief Executive Officer


Geoff C. Meacham – JPMorgan Securities LLC

Geoff C. Meacham – JPMorgan Securities LLC

Good afternoon and welcome to the second day of the JPMorgan Healthcare Conference. My name is Geoff Meacham. I’m the Senior Biotech Analyst here at JPMorgan. it’s my pleasure to introduce NPS Pharma, one of the leaders in the orphan drug space. Our key drugs are Gattex and Natpara and speaking on behalf of NPS is CEO, Francois Nader. Francois?

Francois Nader

All right. Thank you, Geoff and good afternoon everyone. It is indeed my pleasure to give you an update this afternoon on NPS, give you an overview short on 2013, which was a banner year for us on multiple levels. But more importantly, I’ll give you a glimpse as to where we’re heading with the company in 2014 and years to come. And just as Geoff mentioned it, NPS is fully anchored in the rare disease orphan indication space and this is a space that we particularly like and enjoy.

And the reason for that after I give you a second to review the Safe Harbor statement is the fact that in our space, we really deal with the patients who need our drug, patients who are waiting for us and we were very fortunate to be able in 2013 to answer the demand and launch our first orphan products, Gattex and here in the U.S. and in Europe.

And as I said, 2013 was a particularly important year for us, because it was a transformative year, as you rarely see in companies of our size and our stage. We started – we started the year being still a development company, quickly morphed to a commercial company with U.S. asset, without the s, only one, Gattex here in the U.S.

and in March, another transformative event for NPS where overnight through the regaining of our global rights for our two products from Takeda, we became an international, a global company, which was followed very quickly in October by going back to our roots in development and filing Natpara here in the U.S.

So over the span of the last 12, 14 months, we moved through the whole spectrum of development, U.S. commercial, global commercial and filing another product. and this was really the foundation of our building for 2014, staring with Gattex or Revestive as we call it in Europe.

We’re certainly building on the very solid foundation that our commercial and medical team built in 2013 and continue the success story of the commercialization of Gattex in the U.S. But at the same time, as you will see it in a minute, we’re building an international infrastructure. We have the ambition to be in 30 countries, easier said than done, but I know that we will make it happen as we did with everything we promised we did.

And with that, we will go through two ways, starting with an inflation program. But also through the commercialization of Revestive in Europe and we’re not forgetting the pediatric indication program. I’ll talk about it in a minute where there is an acute – acute medical need in kids who suffered from Short Bowel Syndrome and it’s a great pleasure for us to have enrolled our first patient in our pediatric program back in December.

This is product number one and product number two is on its way, it’s Natpara and hypoparathyroidism. We filed the BLA back in October and we have a PDUFA date now scheduled for October 24 this year, 2014 and because it’s a BLA, we will be granted a 12 years exclusivity here in the U.S., which will take us to 2026.

We will be filing the EU marketing authorization this year, and in the interim, we will continue to build our pre-launch activities and ramp up our commercial infrastructure, given certain milestones, one of them being the Advisory Committee that we were informed by FDA that we will have and needless to say that we’ll certainly leverage on the success in launching orphan indications given our experience with Gattex.

So product one and two, however, as we all know in our space, it’s very important to have a pipeline, a portfolio to continue fuel the engine. and this is what we have for our clinical stage assets, two of them. we will be initiating our Phase 2a program with a product called NPSP795. it’s an ultra orphan indication; someone mentioned yesterday a nano orphan indication, first time I hear this word. but we will have probably hundreds of – maybe, 1,000 patients in the U.S. and maybe, two or three times this number globally and it’s a very, very rare condition called autosomal dominant hypocalcemia and will be rolling in this Phase 2a study by mid-2014. And we are now actively looking at acquiring new assets and licensing or other means to continue strengthening our pipeline.

So let me spend a bit of time as starting with Gattex, as we call it Revestive ex-U.S. If the primary indication, I think you all know by now is adult a Short Bowel Syndrome for patients who are dependent on parental nutrition. this is a condition, rare condition about 3,000 to 5,000 patients here in the U.S., about 10,000 to 12,000 globally where patients cannot absorb enough nutrients and fluid for their survival.

and Gattex is a GLP-2 analog and this is – GLP-2 is a naturally-occurring peptide. in the gut, what we did is, we switched one amino acid out of the 33, extended to half life and therefore, we have a GLP-2 analog. and with this product, we have, as I mentioned a – an exclusivity until October 2020 in the U.S. and August 2024 in the EU.

So how are we doing launch wise and by any and every metric, I think the Gattex the launch of Gattex in the U.S. in 2013 was a success. And we learned and heard from our physicians and they told us that they understand how the GLP-2 works and how Gattex works for these patients. we heard from the patients with a compliance and a dropout that was significantly lower than we expected, we heard also from the payers, who really understood the value that Gattex would bring to their constituents and therefore, we had a – or we have rather a broad reimbursement coverage. And we also heard through our care coordinators who interact with the patient day-in, day-out, very, very interesting story, very heartfelt and gratifying story was about patients responding to Gattex and some of them, coming off parental nutrition, having been after being hooked to a line four, five, 10, 15 years. And frankly, this is probably the primary reason we are in this business is when you hear those stories from the patient; it makes the whole difference in the world.

Now if we look at the metrics, we delivered what we say we will. we ended up the year with net sales of $31.5 million. We had a guidance of $28 million to $32 million. but before that, our original guidance was $25 million to $30 million. So we increased our guidance and method. We finished the year with 303 patients on Gattex, our guidance was 275 to 325, which was again, increased from the original guidance of 200 to 300 patients.

Just to put things into perspective, we believe that there is anywhere between 3,000 to 5,000 patients in the U.S. that would be eligible for Gattex. It simply means that about 10% of these patients are already on Gattex at month 11 after the launch and that’s quite a success. Not only that, but we logged in over 530 prescriptions, which will give us a good springboard if you will for 2014.

Compliance was a great success. remember Short Bowel Syndrome despite the criticality of the condition is a chronic condition, Gattex is a self-injectable product. So it’s an injectable and Short Bowel Syndrome is not symptomatic. despite all of the above, we had a compliance of 83% and a discontinuation of less than 10%.

Now we’re very bullish about the potential of Gattex going forward and we gave the guidance of revenues, net global revenues for Gattex and Revestive in 2014 of $110 million to $120 million. With that in mind, as I said, our ambition as a company is to continue our success here in the U.S., but also to launch Revestive globally. And when we look at the market potential out there, we have about 3,000 to 6,000 patients who are eligible for Revestive in Europe and about 2,500 to 6,000 patients who are eligible for Revestive in the rest of the world.

Now just to, as a reminder, Revestive is approved in the European Union, all 30 countries, the challenge for us is to sequence the launch in Europe and this is what we are doing. So we will – we will start with countries like – like Germany or UK or France where we believe that we can secure the higher price and higher reimbursement and the rest of the countries will follow.

At the same time, we are building our international revenues through named patient programs in countries like – like Turkey and countries like Brazil and others. but we are also embarking on an effort to register and have Revestive approved in countries outside of the U.S. and outside of Europe. And last but certainly not least, we’re putting in place is strategy for Japan. it’s a huge market for us and we have applied or we will be applying actually very soon for the orphan drug status for Revestive in Japan and we are in the process of implementing our development and regulatory strategy as we might know, we might have to conduct a bridging study in Japan to ensure that the product is approved and reimbursed.

Now as I said, we – the pediatric indication is extremely important. Why it’s important? First and foremost, it’s important, because of the patients. Can you imagine a kid, one, two, three years old, who will end up hooked on an IV line for the rest of their lives. and it is just those who make it.

So it’s very important for us. it was very important to better understand, characterize the needs of the pediatric SBS condition. and when you see the slide, we have a morbidity in this condition of about 20% to 30%. It’s hugely costly for the system about $1.6 million as an average cost over a period of five years. but also it’s very debilitating for the kids. So we embark on this program and basically, we initiated the pediatric program back in December and we hope to have top line results of the pediatric study later this year or early next.

Switching topics, I’d like to spend a little bit of time talking about Natpara. I can tell you that internally, at NPS, we’re really excited about Natpara. It’s a product that makes sense. And why does it make sense? Because hypoparathyroidism is a condition that is not terribly well understood, it’s not very well understood by the physician, but you can trust me when I say that it’s extremely well understood by the patients and we have this dichotomy, which is not unusual in condition when there is not an approved treatment, which is the case here for hypoparathyroidism where physicians can find them certainly a situation where they don’t have an approved drug to use, and therefore, they try to discount the tremendous problems that a situation like hypoparathyroidism might cause.

So as a reminder, hypoparathyroidism is causing about 70% of the cases by an expensive surgery of the neck, which again, the surgery is needed either for cancer or other reasons. But inadvertently, surgeons remove or injure the four or six parathyroid glands that we usually have. And when this happens, patients do not have PTH anymore, the parathyroid hormone is lacking. And therefore, well, it causes a problem, why? Because the parathyroid hormone, chief role in the body is really to regulate the serum calcium within a very tight range and ensure again, within a very tight range, this calcium-phosphate homeostasis.

Now we all know the role of calcium in building healthy bones. Unfortunately, many of us and the physicians do not remember that calcium is extremely important in the good functioning of our muscles, our skeletal system, our neuronal or CNS system as well. So these patients suffer from a multitude of different conditions, which makes the diagnosis even more difficult, because as you’ll see it in a minute, they come with different symptomatologies.

Now the key characteristic of this condition are two things, low PTH, low serum calcium. but also more often than not, we have high serum phosphate and there is a reduced serum level of 125 dihydro vitamin D. Now when we started developing this indication back in 2007, the first question that we asked ourselves – let’s look at the literature, well, it was a very short and quick look, because there was nothing out there that would characterize the burden of illness of hypoparathyroidism.

So we were left with the alternative of doing it ourselves, which we did with the Mayo Clinic and we developed a study called PARADOX. and PARADOX really interviewed 374 hypoparathyroid patients and we tried to understand from them their condition, why? Because there is this huge gap between the physicians’ understanding of the condition and what the patients are living everyday of their life.

and it was very interesting, because here is the top result, interestingly enough, what patients are being given, which is calcium and vitamin D is absolutely not good enough, why? Because 99% of the patients still have symptoms, interesting. So when we start digging further, we uncovered what was a big eye-opener frankly, for the medical community and a relief for the patients and this is what we uncovered. We uncovered that these patients suffer 80% of the time everyday.

So you do the math, that’s about 18, 20 hours everyday. 70% of them have comorbidities. 37%, over one-third have psychiatric issues and what I mean by psychiatric issues are conditions as serious as neurosis and psychosis. So patients who suffer from hypoparathyroidism end up being treated by psychiatrist and this is not something that patients really should endure. and last but certainly not least, 20% of the patients had employment issues, why? because many of them have something called brain fog. Brain fog means that they cannot think right and this is very debilitating.

Now when we dig a little bit further, we saw that just renal complications, the rate was five times to 17 times higher than the normal, four times the normal rate of seizures, 50% more basal ganglion calcifications, 50% of these patients have issues with their – with their bone system and 33% increase ER visit.

Actually, when we looked at the healthcare cost, it was about three times the normal cost of individuals in this age range. Well, let’s talk about age range, while we are talking for 70% of females in their 40s. So just think of a condition that affects females in their 40s, whether they have kids or work or both and having all these comorbidities. It’s so quietly challenged.

Now we’re – we are very fortunate, because our scientists replicated the native parathyroid hormone, we called it Natpara. It’s an 84-amino acid peptide and we developed it in four doses, so to adapt to each – to each condition and we filed it as I said in October this year with the largest clinical program ever conducted in this condition.

We are very pleased when the FDA informed us that the BLA was accepted and they gave us a PDUFA date of October 24. They also told us that we’ll have an Advisory Committee and they did not tell us when, so we are for the moment, putting it at second half of 2014. But we’re not stopping here. actually in 2014, we will be filing a Natpara in a number of countries in Europe and elsewhere.

The good thing is for this product, we filed it as a BLA. So assuming an approval in October 2014, we have 12-year exclusivity. So this will take us to 2026 and in Europe, assuming an approval next year, we have a 10-year exclusivity, which will take us to 2025.

What is really exciting about this product is when you list what an ideal product should do in the condition hypoparathyroidism, Natpara assumes to check all the boxes. So it’s not only increasing the serum calcium, decreasing serum phosphate. But also it promotes the renal calcium reabsorption, increases the bone turnover, improves a bone quality and improves quality of life.

Now when we look at the market opportunity for this condition, it’s about 180,000 patients worldwide and we divided them in two groups. First group is about 110,000 and these patients are doing okay. Doing okay means that their symptoms are under control, but unfortunately there are about 70,000 or about 40% who are not doing okay and these patients despite taking calcium and vitamin D are very symptomatic, have to go from time-to-time to the emergency room to have IV calcium. and this is the population that we will be targeting first, these 70,000. so if I look at the U.S. for example, to put things into perspective, we’ll have about 20,000 patients in the U.S. that will be our primary target.

Now it’s very important despite everything as said so far, to build a value proposition. and this is the value proposition that we will be taking to the payers, starting with the unmet medical need, as we characterize that by the fact that it is the last classic endocrine-deficiency disorder without an approved replacement, coupled with a burden of illness that I just showed you coupled with a very solid cost benefit analysis that takes into consideration the direct and indirect healthcare costs, and last but not least the value of innovation. and this is the value proposition that we will be taking to the payers here in the U.S., in Canada and in Europe.

Now let’s look forward and see where we’re heading with that. as I said, we have a very exciting product getting into Phase 2a. this is again, NPSP795 and the indication is autosomal dominant hypocalcemia and you will hear a stock more and more about this product second half of this year. it’s a lifelong genetic disease; it is caused by imitation of the calcium-sensing receptor gene.

Now this is a small molecule. there is no approved treatment for ADH, and as I said, we’re planning to start our Phase 2a study midyear. But at the same time, we’re building the rest of our portfolio and we’re actively looking and actually [ph] we’re actively being combed as well, it goes both ways. and basically, we’re looking at products that are in the rare disease space, preferably first-in or best-in-class. and we are looking as with many genetic diseases at also companion diagnostics via partnering.

Now let’s look at our financial scorecard quickly. we are in a strong financial position, finishing the year at $180 million. as I said, we expect our – not we expect, but our preliminary financial guidance for 2014 is two-fold. so $110 million to $120 million in global net sales for Gattex and Revestive and our operating expenses, because it’s an investment year will be in the $180 million to $200 million. And this is something that we keep present in everything we do, which is our scorecard and you can expect to hear from us over the year about all these different milestones that I alluded – that I alluded to in my presentation.

With that, I will conclude my presentation to just to say that we are very excited to be where we are today at NPS Pharma, and the future is bright, not only for the company, but more importantly for our patients. Thank for your attention.

Question-and-Answer Session

[No Q&A session for this event]

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