Luke Beshar - EVP and CFO
Andrew Peters - UBS
NPS Pharmaceuticals, Inc. (NPSP) UBS Global Life Sciences Conference September 19, 2012 9:00 AM ET
Andrew Peters - UBS
Good morning everyone and welcome again to the 2012 UBS Global Life Sciences Conference. My name is Andrew Peters and I’m the member of the Biotech research team here at UBS. It's my pleasure this morning to introduce Luke Beshar, Executive Vice President and Chief Financial Officer of NPS Pharmaceuticals. Again after the presentation there will be a breakout in the Julliard Room downstairs. Luke.
Thank you, Andrew and good morning everybody. I’m delighted to be here on behalf of NPS this morning.
The Safe Harbor statement in front of you should be considered on the record for the balance of this morning’s presentation. Really excited to be here today, NPS really is the cusp of major breakthrough in our corporate existence and corporate development. We enjoy a value of proposition quite unique is defined by really three key tenants.
The first tenant being we have two near commercial orphan product candidates with bottom and top line potential. Gattex or short bowel syndrome, we are expecting NDA approval by the end of this year.
Natpara, our rhPTH 1-84 for hypoparathyroidism where we expect to file that BLA in middle of 2013 and launch the product in 2014. And in two earlier stage we have very exciting products NPSP 790 and 795, our calcilytics compounds where we are developing them in the potential for autosomal dominant hypocalcemia with hypercalciuria or we like to call ADHH (inaudible) describe it. That’s an ultra-orphan disorder that we think has great promise in the medium term.
Second tenant is our valuable royalty based portfolio. We have a royalty from Amgen for the sales Sensipar it's a 10% royalty. Sensipar has been growing 15 to 16% for the last 5 or 6 quarters. It's currently at about $900 million revenue rate which is about a $19 million royalty rate to NPS. And that royalty has been partially monetized such that about 32 million or exactly $32 million of that royalty is utilized to service in advance we got from Amgen. And the balance comes to the company in a current cash basis. So, we are currently getting [55 to $60 million] a year from that royalty and that we expect that it continue to grow. And certainly in mid 2015 when the advances paid off the 100% of those as royalties will come to the company which we expect to be well in excess of $100 million a year at that point in time.
And then the third tenant is our strong operation position. We have $135 million in cash. We have essentially no debt, we have $17 million of recourse debt which is a convert which is well in the money and is expected the convert in 2014. And then finally we have a management team with a proven track record of developing and launching orphan products and utilizing outsourced business model to leverage our in-house expertise.
Let’s move on to our first product which is Gattex and short bowel syndrome. Short bowel syndrome is a highly disabling order, it's managed with parenteral nutrition and intravenous fluids. That this order typically occurs after resection of the intestine, generally in connection with Crohn’s vascular disorders, increasingly bariatric surgery, gunshots, trauma wounds and when more than 50% of the intestine is resected and the intestine fails to adapt. This is [sufficient] to the GI track in order to sustain life. There is just not enough track to transfer the necessary fluids and nutrients.
And the patients in order to continue to live they rely on parenteral nutrition. Parenteral nutrition typically they are plugged into an IV, 5 to 6 nights a week, 10, 12 hours a night. So, very light, you can add that, you can lead the serious life threatening complications of cormobities including infections, blood clot and long-term liver damage. It's also very socially and personally constraining. (Inaudible) 12 hours a night for 5 to 6 nights a week, when you are on the IV it has taken such a high quantity of fluids directly into the blood stream, you need to urinate every 30 to 60 minutes. These patients typically take the IV in the evening so they can try to sustain a normal lifestyle during day hours, which that means they really get full nights rest.
And then the last aspect is these patients unfortunately face a reduced five year survival. So, the goal of any SPS therapy is to improve the structural and functional integrity of the remaining GI. And Gattex, is the GLP analog that does just that. We believe it's going to be a first-in-class treatment for adult short bowel syndrome.
GLP-2 is a 32 amino acid peptide secreted after meal ingestion. It's got about 7 minute half life and it expands the intestine mucosa, stimulates intestinal blood flow, increases the intestinal barrier function and enhances nutrient absorption.
Gattex or teduglutide is a GLP-2 analog with one different, the only difference is that we substituted the glycine for the alanine in position 2 which extends the half life from 7 minutes to 2 or 3 hours. And it's administered [subcu] once a day and we enjoy patent protection at least until April 2020.
You can see how in the chart the results of our pivotal registrationl study which we call STEPS which is a 24 week study. The primary endpoint of STEPS was a 20% to 100% reduction in parenteral nutrition at weeks 20 and 24 versus base line. You can see on the left side of the chart in front of you that 63% of the patients achieve that endpoint with the p value of 0.002. And on the right side you can see our secondary endpoint which is reduction in volume, you will see that about a third of the volume was reduced at week 24 versus base line for the patients which is a 4.4 liter reduction, again with a very strong p value of less than 0.001.
Another way to look at this is as I mentioned patients typically are on parenteral nutrition by the 7 nights a week. And the patients were given no protocol in terms of whether they reduced the number of hours per day of the PN infusion or whether they reduced the number of days per week of PN infusion.
You can see here in chart of you that at the end of the STEPS study over half the patients reduced their parenteral nutrition by one or more days a week. Now put that in perspective, imagine if you (inaudible) 5 days a week and you can’t sleep for 5 doses a week and also you are given one or two days back, like how substantial a difference in your quality of life that can afford to you.
We have a ongoing open label study which is called STEPS 2. It's a two year study that will last who patient have less visit in first quarter of 2013. We did interim analysis of that earlier this year, and it demonstrated that Gattex increasing and long-term effect of [entrée] bowel syndrome. It increase the number of patients who reduce their PN infusion by at least 3 days a week from 10% at the end of 24 weeks to 24%, so almost a quarter of the patients have reduced 3 or more days of parenteral nutrition and 8% achieve complete independence from PN and IV fluids while in Gattex during the extension study. So, these patients are not recent short bowel syndrome patients, some of those 7 patients, 7 of the 88 that weaned off entirely were on parenteral nutrition for 20 or 25 or more years. It's a very dramatic change in their life style for very short period of time.
We have a number of exciting milestones for Gattex here with the balance of the year. The NDA as I mentioned is on file with the PDUFA date of 12/30. 120-day safety update has been submitted, the preapproval inspections that our contract manufacturers and corporate facilities are ongoing with no exceptions, no notable exceptions. And our advisory committee meeting is little than 4 weeks away.
We have been preparing that for almost a year, we are very excited about it. We are ready for it and anxious to have our opportunity to discuss this with the FDA advisory committee on October 16. The briefing documents have been submitted. We expect the FDA to present documents at the end of the month. All of which of course we posted on the FDA website two days before the meeting.
On the EU side we are very pleased to report couple weeks of ago, that our partner Takeda secured approval from the European Commission for market authorization of Revestive, which is the brand name for Gattex in Europe that will marketed by our partner Takeda in the EU, the label is not been public, discussed or released yet, but it isn’t actually (inaudible) it's in the translation process right now and that we expect that to be disclosed within the next 2 to 3 weeks. But what we can say is that we are very happy and pleased with the EU labeling. We think it's very fair and we think you will be happy when you see this as well.
Now little bit on to commercial aspect as we get to the end of the development phase of Gattex. We have been really focusing on five strategic objectives for our commercial launch readiness. First is to make sure we have the right leaders, we do that and we’ve successfully accomplished that. Eric Pauwels is our Chief Commercial Officer. He has got extensive orphan experience having launched four orphan drugs with their likes of companies of Shire, TKT, Genzyme and others.
We have really gated our commercial build up based on milestones. We have cleared 2 of them already the Phase 3 results and the NDA acceptance. The next upcoming milestone that will gate that will free up additional funding will be by the advisory committee and then finally the commercial build-up that will be completed upon the NDA approval which we expect again at the end of the year.
The third aspect of the strategic initiatives is really patient identification. And in orphan drug space, certainly that we expect, we know the prevalence of somewhere in the 10,000 and 15,000 but you really need to look at in an addressable point of view which is from a bottoms up as appose to a (inaudible). So, we are identifying each patient one at a time and that short bowel syndrome patients are very complex scenario. You have the GI surgeon who does a resection, that tends to be done at a center of excellence than that patient will return to his or his local community where the (inaudible) by the local GI doc. The PCP home infusion and nutrients. So, it's a number of touch points.
So, we are really mapping out that flow to make sure we understand where the touch points are and what the best way to access those patients. We are deploying a number of patient sourcing tactics clear the low hanging fruit is looking for patients or finding our patients that were enrolled in our development programs. We are on that, we are parting with patient efficacy groups. We are leveraging internet social media activities. We did launch Shortbowelsupport.com. And we are building registry after that. We are leveraging the deployment of MSLs. We deployed 8 MSLs starting about a year ago and they have been networking with thought leaders and centers of excellence. And then finally we are evaluating the potential of collaboration with home infusion companies.
The fourth tenant of our commercial focus is access and reimbursement. Our market access studies have supported our belief that the pricing and its product will be relatively inelastic and should enjoy orphan or ultra-orphan areas of amounts of reimbursement. About 85% of the patients have commercial coverage of which about 60 are commercial 30% Medicare and about 10% Medicaid. And then we build out a couple number of key operational elements. We are doing a health economic based value proposition that will be ready at launch. We have in place a co-pay and co-insurance support and we have a go-to-market strategy with limited to specialty pharmacy networks.
The final tenant of our commercial focus is what we are calling the NPS advantage. And the NPS advantage is really all about offering our patients a burden free access to Gattex. It could be a personalized service driven by a hub, manned by NPS cared coordinators. Those care coordinators will coordinate clinical services and really avoid any additional burden on the prescribers.
The NPS advantage will mitigate the patient’s reimbursement challenges. We will literally step-in when the doc writes the scrip and walk to that patient through the reimbursement if there is a REMS the initial taking of the drug and the weaning off of PN and any of the support adaptation needs for the duration of their administering Gattex.
So, that’s our first product we are very excited about. We are almost equally excited about Natpara. Natpara is being developed in hypoparathyroidism. Hypoparathyroidism results from when you have insufficient parathyroid hormone. The hypoparathyroidism is a rare complex endocrine deficiency which is our guess our estimate is about 80,000 prevalence in the U.S. When the patient has insufficient PTH, it causes a drop in serum calcium and a spike in serum phosphorus. The calcium plays an essential role in the muscle, skeletal and neuron functions and cardiac contraction.
Complications from hypoparathyroidism range from acute life threatening episodes to long-term irreversible damage. Typically the symptoms are neuromuscular with the most prominent being numbness in the extremities around the mouth. Tetany seizures, muscle cramping, cardiac function because of prolonged QT, cataracts, calcification of the brain and other soft tissue has difficulty concentrating our patients describe it as [brain lock] and psychiatric and psychotic symptoms.
The current standard of care is ingestion of massive amounts of oral calcium and vitamin D. So, some of our patients are hypoparathyroidism patients take up to 40 or 50 calcium pills a day in order to deal with the symptoms. Hypoparathyroidism is highly symptomatic disease and what the patients do where they literally pop a pill as the symptoms return as they go back to day to day life. When they are taking that much calcium 2 things; one, that (inaudible) have it with their GI, and secondly, the calcium that they are ingesting has to end up somewhere. And typically including classification in soft tissue such as the brain, the kidney and other areas of the body.
There are some recent research presented in ENDO. There were investigators from Mass General and Brigham and Women’s Hospital had a cohort of 120 patients that they study for 7 years. The profile of those patients map very, very well with our broader market researchers about three quarters of the hypoparathyroidism patients are female with an average age in the 50 to 55 years old. These patients suffered several renal effects. They had basal ganglia at least 8% of them had one hypocalcemic seizure. And the third, we are evaluated in emergency department or hospitalized for hypoparathyroidism. All of which support our view that hypoparathyroidism and its treatment carry unexpected high burden of disease.
Natpara, we believe it will be a major advance is treating hypoparathyroidism. It's the only bio-engineered replica of the full length endogenous 84 amino acid peptide. The mechanism of actions is no brainer, so it's identical to the (inaudible). It will be available in four doses as most hormone therapies are so we can allow for personalized treatment. And we enjoy patent exclusivity through ’28 and even more importantly because it's a BLA, current legislation will give us mark and exclusivity assume year 2014 launch through 2026.
The right side of your chart here shows the results of our Phase 3 pivotal registration trial which we call REPLACE. The primary endpoint of that trial was a triple endpoint, greater than 50% reduction in calcium supplementation, greater than 10% reduction in vitamin D supplementation while maintaining normal serum calcium levels. You can see that 53% of the patients achieve that endpoint with the highly statistically p value of less than a 0.0001, actually I think six or seven zeros in front of that one. And then 43% of the patients achieved total independence from supplementation at week 24 versus baseline with a similarly high or strong p value.
We have a number of key milestones in a Natpara as you look at our 2012 and ’13, ASBMR next month will be releasing additional abstracts on the REPLACE trial. We recently completed the largest epidemiological study in conjunction with the Hypoparathyroidism Association and the Mayo Clinic. 374 patient’s cohort, those data are being analyzed and will be released at future presentations. On the regulatory front, we reached our BLA target for the minimum number of patients on Natpara for one year. We had a very successful pre-BLA meeting with the FDA earlier this year and we are on track to file the BLA by mid 2013.
So, in summary we have a transformational period for NPS it's going to begin now, it has begun now, we will go through the next 6 to 12 months. With the approval of Revestive in the EU, the upcoming advisory committee and then the approval of Gattex in the next 3 to 4 months and launch shortly following thereafter. We are very excited about Gattex and Natpara with the upcoming ENDO meeting and the BLA submission in mid 2013 and the launch of 2014 gives us much, excited about at NPS.
So, just in summary we have two near-term commercial orphan product candidates with a very strong potential for both the top and bottom line results. We have a valuable royalty based portfolio that does give us a financial underpinning that we think differentiate us from most of our peers out there. And we have a strong operational positions both reflect the cash and the balance sheet broadly and our outsourcing business model which maximizes our operational effectiveness.
So, that’s the end of our prepared remarks this morning. We now will adjourn to the Julliard Room for questions-and-answers. Thank you for your time. Have a good morning.
[Q&A session not available]