Vivus, Inc. (NASDAQ:VVUS)
2014 Wells Fargo Healthcare Conference
June 17, 2014, 8:15 AM ET
Dana Shinbaum - Corporate Development & IR
Seth Fischer - CEO
Matthew Andrews - Wells Fargo Securities
Matthew Andrews - Wells Fargo Securities
Okay, so good morning, everybody. My name is Matthew Andrews. I am a biotechnology analyst here at Wells Fargo. Thank you for joining us.
To kick off the conference, we have Vivus Incorporated. As you may know, they have two approved products on the market, Qsymia for obesity and STENDRA or SPEDRA for erectile dysfunction.
Joining us are Dana Shinbaum, Corporate Development and Investor Relations and Seth Fischer, the CEO.
So without further ado, I'll let Seth give us a 20-25 minute presentation and then we'll have five to ten minutes of question and answer. Thank you.
Good morning. So I would like to provide an update on Vivus. Obviously, we'll have some forward-looking statements. So here's our safe harbor.
So I just wanted to get through the priorities for the company for this year. First is to drive Qsymia demand. We need to increase third party coverage for Qsymia and I will say it's not just Qsymia, it's weight loss products in general enhance our direct-to-patient programs, established a Qsymia commercial alliance and maintain positive momentum for STENDRA and SPEDRA alliances around the world. So let's first take a look at the obesity market and Qsymia.
So clearly obesity is a global problem, but just in the U.S. alone, we have over 110 million U.S. adults that are obese or overweight with a comorbidity, which is exactly within the indication for Qsymia and you can see that only -- we only have with drug therapy, approximately 2% penetration of the market today. So there's clearly a big opportunity to help patients that are obese and overweight.
Qsymia's indication, as you can see from our prescribing information is patients that have a BMI of greater than 27 BMI with one comorbidity or greater than 30 BMI with no comorbidity.
This will just give you an idea of the magnitude of the effect of Qsymia for patients. As you can see, in the last study, the EQUIP trial, you can see that in fact that placebo offered about six pounds and that was on a diet and exercise alone and on Qsymia, as you can see on the Qsymia dose, 37 pound weight loss, but the thing that's most interesting I think is that you can see very rapid weight loss.
You can see at 16 weeks, you have very rapid weight loss that continues all the way through the study period of 56 weeks and you can see the low dose at 18 pounds and the high dose, the top dose at 37 pounds.
In the CONQUER study, you can see again placebo had about six pound weight loss and we saw very strong -- again rapid weight loss, sustained weight loss, 30 pounds for patients, so anywhere from 12% to 14% of weight loss.
Somebody can fix this for me? Thanks. Okay. Also the magnitude not only is that the magnitude effect, but also the consistency of effect, you can see with the mid dose, we had 83.5% response rate, which is incredible drug response rate for the product and at the top dose, we saw patients greater than equal to 5% weight loss. After 28 weeks of treatment, almost 90% of patients that in fact did have weight loss with the product.
Also we see the beneficial effects of the weight loss on all the metabolic parameters we measured and you can see that they are all statistically significant, as you can see both at the mid dose and the top dose whether you are looking at blood pressure, HDL, triglycerides, weight circumference, HbA1c, fasting glucose, you can see all of them showed nice improvement.
Also, some of this has been recently published last year in diabetes care. Dr. Garvey published the significant profile of Qsymia on pre-diabetic patients and you can see within this study, you saw up to a 78% response rate compared to placebo and progression toward Type II diabetes, which is very positive for the product when given to patients.
And also you can see there's obviously been a lot of noise around phentermine products, but in fact, in the cardiovascular effects of phentermine to prior maintenance study published in a journal of hypertension by Dr. Jordan, you can see that major adverse cardiac events, composite end points that has a ratio of less than one and we really did not see a significant effect on hypertension; so another positive effect for the product.
There's also been many of the associations that have been getting more involved in recognizing obesity as a disease. You can see in the clinical endocrinologist last year had their own guidelines come out and for the first time, they included drug therapy as an interim step between lifestyle changes and surgery.
So in fact, you can see as the most profound part of that therapy, they did less phentermine to prime ADR, which is in fact Qsymia and we've seen this recognition continue with many of the other associations with AMA last June recognizing as a disease.
[JM] (ph) has published articles on it and then you can see with JACC, the American Heart Association, American College of Cardiology and The Obesity Society, all recognize that guidelines should in fact be used and drug therapy needs to be a part of those guidelines.
So let's talk about the current commercialization of the product. Since I arrived with the company in September of last year, we made quite a few changes in how we're promoting the product and also some of the ways that we are discounting the product as well.
So the first thing we did is when we came out in September of 2012, there was no set obesity targets, meaning doctors that were clearly writing for anti-obesity agents. There was phentermine in the market, but other than that, we really looked at the comorbid conditions of obesity.
So things like diabetes, hypertension etcetera and we targeted those doctors that were writing high volumes in those comorbid conditions. But as we arrived to September of 2013, you could get a better idea of who was actually going to pick up and write anti-obesity agents. And there were some of these physicians that we were calling on that actually were non-responsive to use in drug therapy.
So we targeted our sales force to those doctors that were writing anti-obesity agents, that's not just Qsymia, that's all anti-obesity agents. We analyzed and we redefined the territories and we also did a number of pieces of market research to better understand the motivation of those physicians and as you can see, in March of this year, we reconfigured and redeployed the sales resources against our highest value targets. So we did have some disruption in the January and February timeframe as we had to retarget our sales force.
Also as far as the healthcare providers, we wanted to make sure that we were continuing to provide them ongoing education and then what we found from our own market research is when would a primary care doctor move from diet and exercise as a failure to in fact discussing obesity with the patients themselves.
And what we found was that while endocrinologists were quite comfortable having a discussion with the patient that was 27 BMI with one comorbidity or greater than 30 BMI, a primary care physician really when started to have that conversation to that patient, probably achieved about 35 BMI.
So we've identified that, that is the high need patient where an intervention really is important. So we found that this did provide an avenue for Qsymia trial and adoption.
Also we had a free trial offer, which was encouraging. We don't sample the product. So our free trial offer allows patients to try the titration dose, the low dose of the product to see if they can tolerate the product and we maintained that free trial offer.
But we had another program, which was a Pay-No-More-Than $75, and this was only for the recommended dose and the mail order was only for one month and when we went into retail, it became available for three months.
The only problem with that is that month four, the patients would see a huge rise in their costs, so therefore that was a cause of discontinuation. Also if the doctor wanted to take advantage of the four doses of Qsymia, they really didn’t because in fact, it was only available for the recommended dose.
So titration to a higher dose wasn’t happening. So we changed that program and we redefined the offers to a $75 off cash prize, which in fact last throughout the year and is available for all four dosage forms and a co-pay if you have a co-pay above $60 with your third party payer, we'll buy down the co-pay up to $75. So if you are up to $135, we'll buy you down to $60, if that happens to be your co-pay.
Usually above $100 is really co-insurance, if not really a co-pay, so -- but we'll buy them down to $60 and then we've also afforded the offices reimbursement support services through a number of different third party groups.
To give you an idea about where the TRx volume has reached, you can see 46,000 scripts for April 2014, about 4% growth versus March of 2014. We saw the usual seasonality that we would see through the winter months, November and December primarily. That also extended in the January and February.
Part of that I think is because winter extended a little bit, more rough around the U.S., but more importantly, we were disrupted during that time as we redefined the message and redefined the targets and hopefully now we absolutely see the results of those changes.
Also just to give you an idea of whose prescribing the product? You can see on the left is the prescribers and on the right is the number of our -- percent of our prescriptions that they actually provide.
So you can see endocrinologists by far are the biggest prescribers for Qsymia, but also you can see contribution from a number of different specialties, PCPs being the largest, but also the widest number of docs you’ve got to go call on.
So it's a pretty wide target where these are cardiologists. NPPAs are more type audience to be able to call on.
And my belief about this market, so what we hear about a lot of sales reps in the competitive set, in fact it's probably a debate whether this will be a specialty product in the near term or whether it will be a broadly based primary care product.
Our focus is more than OB towards specialty. Primary care will come over time, but it's certainly not ready for primary care at this time point in my mind.
If we take a look at our insurance coverage, so you see two different bars on this graph here. The darker bar is if you look at coverage including FTOs, obviously nobody has to pay for FTOs because it's free medication.
So we thought to give you a more appropriate look at what the coverage actually is. We would take out FTOs and really see what third party is paying for. So you can see today about 37% of the scripts are actually paid for by third party insurers in the market today, which is nice progress from where we were in October of 2013.
Still we have a way to go. Our yearend goal is to be at 50% coverage. That means 50% of our scripts being paid for by a third party.
Also we see a broader coverage and this was very interesting to the company that the U.S. Government suggested that federal employees should have medication covered, obesity medications covered.
Hopefully this is a step in the right direction seeing that federal employees will have the ability to get obesity medications, but in fact Medicare today still can't get obesity medications. So hopefully it's a step in the right direction and we'll see CMS modify their position on obesity medications in the future.
Also we've reached out with direct-to-patients. We do not have a direct-to-consumer campaign, but we did reach out through a direct-to-patient. Shari Belafonte, who you can see in the corner of the slide, reached out to us saying that she had taken Qsymia. She had great weight loss with it. She has a family history of hypertension and obesity along with diabetes in her family. So she was very interested in the product.
She reached out with us on a satellite media tour. You can see to date, there has been about 46 million impression and about 225 TV broadcast. Also Shari is working with our patients that actually take Qsymia to help them better understand the weight loss that they'll appreciate that if you go to the inspiredlosing.com, you can see some of our patients that are actually being interviewed by Shari Belafonte.
So let's talk about our clinical profile. First of all, we have a European strategy and as you know, we were -- we did not get approval in Europe. We wanted to meet with the European authorities to see if there was a pathway to approval in Europe.
We did go forward with our approved protocol from FDA on our CVOT to see if in fact the CHMP and the SAWP felt the protocol was the right protocol for our trial and if in fact they would accept an interim analysis of our CVOT for our submission in Europe, therefore getting approval.
They did through our dialogue say that although non-binding that they would accept an interim analysis for our submission. You can see that we also made changes to that protocol. We resubmitted that protocol to FDA to revise the overall protocol.
The other part is a centralized approach to Europe for Qsymia also affords 10 years of market exclusivity, which was also important to us versus a decentralized approach to Europe.
Just to talk briefly about our ACCLAIM trail, this is our cardiovascular morbidity, mortality trial. You can see the primary efficacy endpoints is time the first occurrence of nonfatal MI or nonfatal stroke. The number of subjects in the trial is 11,000 to 16,000. There'll be about 450 sites around the world.
We've now received our feedback from FDA. We're incorporating that feedback. We are currently analyzing and looking to begin that trial and you can see the budget is anywhere from $180 million to $220 million because we can't totally know when we'll have enough subjects into the trial. So therefore that's where the variance is.
Also the patents, we had two important patents that came issued in the fall of 2013. This further extended our patents. You can see a number of places in the world that we saw have patents pending, but that extended our patent to 2029.
Now recently we have had a paragraph four challenge. The ANDA filers Actavis or Actavis and the notice received was 7th of May, 2014. We have filed a lawsuit defending our patents, which was filed 12th of June and this gives us a 30-month stay. So you can see there that either we'll -- 30-month stay, we're going to run out of time and therefore the FDA could approve that product.
More appropriately, I would say we'll be in court by that time and we certainly will defend out patents and we certainly believe in our patents and in fact that we'll win in a court trial, but you don't know, that's why you go to trial.
Then to update you on STENDRA, so STENDRA is our erectile dysfunction product that we've patterned around the world. You can see that we've already made a request to the FDA for the [15-minute set] (ph) of action. Our PDUFA is 20 September 2014.
Auxilium has already launched the product. We believe they are off to a very nice start with the product. Menarini has 40 countries in Europe and you can see Australia and New Zealand and as of April 2014, they've launched in five countries.
We're also pleased with their launch and Sanofi is preparing the market to launch in Africa, Middle East, Turkey, CIS and Russia and Latin America is yet to be licensed. So that's the one other territory that we'll still license for the product.
So to just give you the financial update from our first quarter 2014, you can get an idea of our overall sales for Qsymia was $9.1 million. You can see our license and milestones and then if you go to the bottom, you could see our cash position at the end of the quarter, we had $316 million in cash and then you get in the comparison of where we did have a decline from quarter to quarter in prescriptions as I discussed earlier in the slide.
So again our priorities for the year for Qsymia is to drive Qsymia demand and increase our third party coverage for Qsymia, enhance our direct-to-patient programs, establish a commercial alliance and maintain our positive momentum for STENDRA and SPEDRA around the world.
So with that, I can open the floor to any questions.
If you go back to your pie chart on Qsymia, your big sections there that weren’t tabulated…
On the pie chart, let's go back, I can't get back toward here, so…
But while we're trying to get there…
Yeah go ahead.
What are you realizing in net price to you for this product?
Our net price at the end of the first quarter was what, Dana, $77, this one here, right. Yeah, there you go. Those are primary care. You maybe can't see the writing in there. That's the primary care audience. That's family physicians, internal medicine, primary care.
Okay. And on your erectile dysfunction, is that delivered by pill?
Yes, it's a pill, yes. It's a PDE5 inhibitor.
Yes, I was just going to ask with the rise in obesity in say India and China, do you see an opportunity in that part of the world and do you have a plan for that?
Yes. So we're looking at in fact filing in those countries as well. There's no question that obesity especially in the U.S., but China is very much I mean, you can even talk to bariatric surgeons. They see very large growth in China.
I would say, when you are number one food restaurant in China is KFC, that tells you a lot about where that country is probably headed.
Hi, I am going to ask a [semi-dumb] (ph) question, but you said that you see primarily -- you see this primarily being a specialist market. So why do you say that as opposed to PCP?
No, I am talking about where it sits today. So in 2014, right now primarily it is a specialist market. So you see this very high tier of primary care -- well first of all you see weight loss clinics around the U.S. right?
And then you see this very high tier of family practice physicians, but you have a whole group of family practice physicians that unless they are requested, they probably will not write and then the question is how much do they repetitively write?
So that says to me that it's going to take a while to develop that part of the market. They are also not as equipped to deal with payer issues as some of the specialty markets. So it's just a matter of learning.
Endocrinologists tell us that a lot of their patients will come to them as referrals from primary care who basically says I don't really know how to deal with your issue. So that's why I say that it's a lot of education and that's what we are putting our money toward as the education in primary care, yes.
Do insurance companies like Blue Cross and UnitedHealthcare cover your product?
It really depends on the state and also depends on who the employer or the plan management group is. So yes, there's places United covers us. Yes, there's places Blue Cross, Blue Shield covers us. So I'll give you Blue Cross, Blue Shield in North Carolina covers the products.
So it really depends on where you are at as to really be able to give a total answer to that. So nationally, I can't say that, but I can say that in particular market. So our sales people each have a coverage form. So that when they go into a doctor's office, they can actually talk to them in their state or in their area.
Here's the employers that currently cover obesity medications or here are the insurers that currently cover obesity medications because it does differ by parts of the country and employers.
And you have dedicated people to go after the insurance coverage?
Yes we do.
So Seth, just to follow-up and couple of questions in here, on the specialty versus PCP market evolution, does that suggest you are going to keep a small sales force, à la a 120 reps like you have now or could you expand that over -- in the near term?
Yes, so we have 150 reps and we continue to evaluate the potential for expansion to cover further audiences. We watch very carefully not only the growth of Qsymia, but the growth of the anti-obesity agents overall.
It certainly has to make sense to deploy reps against those physicians. So like I said some physicians that are writing one or two scripts a year, that's a very expensive call to make. So that's something that we do continue to look at and evaluate.
The good news is with a contract sales organization, we have the ability to go toward expansion at any given time.
And on the cardiovascular outcome study, do you need to go back to FDA or CHMP, now that you have the agency's initial feedback on the protocol?
I don't believe that we've seen anything so far that would tell us that we need to go back to the agency or back to CHMP. I think we pretty well understand the direction they've given us overall.
It's been pretty much aligned. So I don't see many big differences between what we had in feedback, but I think we feel better than we got the feedback as opposed to just proceeding without getting that feedback.
And you briefly mentioned this in your prepared comments, but in the briefing -- FDA briefing documents for the advisory committee, in the appendix that talks about the study being about 11,500 patients.
So why such a broad range right now, potentially it's 15,000 to 16,000; what's the issue there that's drive that?
So the issue -- the issue is a couple of things. One is that it's an adaptive trial design. So we have the ability to go to a certain stop point that FDA agrees to, to take a look at the trial and then see whether we should proceed with a superiority continuation of the trial. So therefore you will get to more patients.
The other thing in the variance in the patients that you see on the slide is also -- it's also about events, right. It's all event driven. So you don't know exactly how many patients you are going to need to go through to get to those events. But there is -- so there is really two things that are actually going on in the numbers.
So for that preplanned analysis, that stopping point…
…would indicate whether you upsized the study. Is that initially safety or is that efficacy?
No, no, it's clearly the safety portion, the trial, and whether you show a clear break from the competitive -- of their comparative set. So that's really -- so it's really an extension of that trial to keep going toward more events.
So it's primarily safety and there is an opportunity to demonstrate superiority based on how the event…
Correct. Now within that trial itself, there is a number of other measures, which obviously in the metabolic area, which are also very important to the company.
So to the gentlemen's question in the back, I think it was Slide 18 if you could pull that up.
Yes, so 37% of scripts are paid for by third party coverage, what do you think -- what does the company think is going to take to get U.S. private payers to significantly improve coverage over the long term meaning, no coverage to tier three, tier three prior off to tier three, tier three to tier two?
What's going to put that switch because our market research with U.S. payers suggest out of eight, only three plans -- private plans cover any of the drugs right now that are skeptical of the long term benefit. So what's the company and your advisors think is going to take to get U.S. private payers to really jack up coverage and approve it.
So it is interesting. We are seeing plans that in fact the first time around so to speak maybe even the second time around, said there was no interest that are in fact coming back to us now and there is interest.
We've also seen places like Caremark depending on who they are covering, put us at tier two. We've also seen some plans we moved prior authorization. So I would say that there is progress being made.
I believe that the federal government getting engaged here and also covering the product is also a big move that will send a message to insurers as well, but I think it's a two-way street because I've never seen the federal government necessarily lead the way in coverage.
It's really going to be some large insurers as you know and that came on Board, they're currently doing their own look at the category. They're running their own clinical trial to see what improvements they see within their patients and we really -- I believe that they're just really beginning that trial.
So we're going to expect that to take a year. We've afforded them the pricing that puts us at tier two for that trial, but we are seeing more and more interest in that.
Also with the federal government, the Obama Care if you will did afford CMS about $5 billion to look at chronic disease areas of which we've applied for the opportunity to have them look at obesity. We are not the only one that sent an application and about obesity.
Actually I am sure the other companies in the space Orexigen, Takeda, ASI, Arena, I think they all applied for that, as well as many of the insurers applied for that as well.
So what would happen is part of that $5 billion potentially will be set aside to allow trials to be done and demonstration projects on obesity. So that's something we're looking forward to hearing from the federal government on.
So I think it's a lot of things that are going on in the space that will enhance coverage.
And then just lastly, I guess with Shari Belafonte, when did that program start? I apologize if I missed it and how is scripts -- are you starting to see pull through with the scripts related to this direct-to-consumer not DTC direct-to-patient campaign.
So, we ran the 1st March right, the end of March. So -- and March is when we first televised the Shari Belafonte and where the outreach took place. It's really hard to discern.
We know that we had more web traffic during that time as seen by the web -- the web that we pointed people to. And then once they go to that website, that then they can direct themselves to Vivus. So we do know that we did create quite a bit of noise. How much that turned into scripts that's really hard to calculate.
Matthew Andrews - Wells Fargo Securities
Okay. Well, thank you for your participation. Thanks everybody.
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