The Medicines (MDCO) Q3 2018 Results - Earnings Call Transcript

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About: The Medicines Company (MDCO)
by: SA Transcripts

The Medicines Co. (NASDAQ:MDCO) Q3 2018 Earnings Call November 8, 2018 8:30 AM ET

Executives

Krishna Gorti - The Medicines Co.

Clive A. Meanwell - The Medicines Co.

Christopher Visioli - The Medicines Co.

Analysts

Jessica M. Fye - JPMorgan Securities LLC

Umer Raffat - Evercore Group LLC

Adnan Butt - Guggenheim Securities LLC

Joseph P. Schwartz - Leerink Partners LLC

Joel L. Beatty - Citigroup Global Markets, Inc.

Jay Olson - Oppenheimer & Co., Inc.

Madhu Kumar - B. Riley FBR, Inc.

Operator

Greetings, and welcome to The Medicines Company Third Quarter 2018 Earnings Call Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Krishna Gorti, Vice President, Investor Relations for The Medicine Co. Thank you. You may begin.

Krishna Gorti - The Medicines Co.

Thank you, Melissa, good morning, everyone, and welcome to The Medicines Company's Third Quarter 2018 Conference Call. I'm joined today by our Chief Executive Officer, Clive Meanwell; our Chief Financial Officer, Christopher Visioli; our Chief Development Officer, Peter Wijngaard; our Chief Corporate Development Officer, Christopher Cox.

Earlier this morning, we issued a press release reporting our third quarter 2018 financial and operating results. The press release is available in the Investor Relations section of our website. Before we begin, I'd like to remind you that our discussion during the call will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by those forward-looking statements.

Additional information regarding these risks and uncertainties is discussed under the forward-looking statements legend in this morning's press release, as well as in our periodic report filed with the Securities and Exchange Commission, which can be obtained from the SEC, or by visiting the Investor Relations section of our website.

During today's call, we will also discuss certain financial measures that were not prepared in accordance with the U.S. Generally Accepted Accounting Principles. Please refer to this morning's press release for the reconciliation these non-GAAP measures to the most directly comparable GAAP financial measures.

With that, I'll now turn the call over to Clive. Clive?

Clive A. Meanwell - The Medicines Co.

Thank you very much, Krishna, and good morning, everyone. Thank you for joining us today. During the third quarter of 2018, we continued our strong momentum and the execution of the inclisiran development program delivering against the spring of 2018 objectives.

First, we continued to successfully advance inclisiran through Phase III trials and other key development steps. As of Monday, this week, more than 2,900 patients have received three of the four planned doses of inclisiran in the ORION-9, ORION-10 and ORION-11 Phase III trials. And we had accumulated more than 2,100 years of patient safety data for exposure to inclisiran. By the end of this year, all of the 3,660 patients remaining on study in these trials will have received a third dose of inclisiran and accumulated inclisiran safety data will exceed 2,300 years.

In the extension of the large ORION-1 Phase II Trial, 259 patients have received a total of 4 or 5 doses of inclisiran to-date. Our ongoing blinded review of data from the Phase III trials, as well as data from the ORION-1 Phase II extension trial show no material safety issues, and the data are at least as favorable as those generated and published from the ORION-1 Phase II trial.

In late September, the Independent Data Management Committee reviewed unblinded safety and efficacy data from the Phase III trials for the fourth time, as planned, and recommended continuation of the trials without modification. Their review included safety data from 1,899 patient years exposure to inclisiran at the planned dose. And at the time of the review, 648 patients have received three of the four planned doses of inclisiran in the Phase III trials.

While the IDMC sets its own schedule, we anticipate further reviews in 2019, as we continue to improve inclisiran safety data at the rate of five patient years per day. The quality and timeliness of data coming in from the Phase III trials and the ORION-1 Phase II extension trial meet or exceed expected quality standards, and we complement investigating sites working closely with our clinical operations team.

In the meantime, long-term carcinogenicity studies and reproductive toxicology studies have continued with no material safety findings. Manufacturing programs for active pharmaceutical ingredient and prefilled syringes also continue on schedule and without incident. We are now successfully using prefilled syringes in our Phase III trials.

Finally, we've recently reached independent agreements with regulators both in Japan and China with respect to the bridging clinical studies required for potential marketing authorization in those two markets. Both agreed programs require clinical studies which are straightforward to execute based on International Conference on Harmonization E5 guidelines, and which add modest incremental patients to the global program.

In total, we estimate studies of only 700 patients, 400 in Japan and 300 in China will open up these major territories. We expect to perform the studies with partners when the time is right.

Second, as planned, we began enrolling patients into the ORION-4 cardiovascular outcomes trial of inclisiran, which is being conducted together with Oxford University in the United Kingdom and the TIMI Study Group here in the United States. The first patients have been screened, entered, run in, and received study treatment.

As previously stated, we expected to enroll 15,000 eligible atherosclerotic cardiovascular disease patients, 55 years of age or older, on high-intensity statins, with entry LDL-C levels around 100 milligrams per deciliter within one to two years. Patients will be treated with 300 milligrams of inclisiran or matching placebo given on Day-1, Day-90, and every six months thereafter. Expected follow-up will be for a median of four or five years, depending on the results of the first and only interim analysis.

The primary objective of ORION-4 is to evaluate the effect of inclisiran treatment on the incidence of major adverse cardiovascular events. The primary endpoint is a composite of coronary heart disease death, myocardial infarction, fatal or non-fatal ischemic stroke, and urgent coronary revascularization procedures.

The secondary endpoints include a composite of coronary heart disease death or myocardial infarction and cardiovascular death.

The trial is designed with overwhelming statistical power, more than 99% to demonstrate lowering of major adverse cardiovascular events, and 90% demonstrate a reduction in cardiovascular death. Given the well-established relationship between participants' baseline risk, absolute LDL-C lowering, and modifiable major adverse cardiovascular events or MACE, experts leading the trial believe that the design will yield a cardiovascular outcome risk reduction of at least 25%.

Details of the trial's methods in patients have not changed since we first described them, and we expect that they will be published in a peer-reviewed publication following the completion of enrollment. A summary is currently available at ClinicalTrials.gov.

We've recruited approximately 150 investigating sites in the United Kingdom and the United States. The trial has been set up using so-called quality-by-design features developed by the Clinical Trials Transformation Initiative, a collaboration between the FDA, other regulators, academic institutions, investigative groups, and industry representatives. We reaffirm that we expect the total cost of ORION-4 through its completion to be approximately $150 million.

Third, as we announced this morning, we received an issue notification from the U.S. Patent and Trademark Office indicating that our so called composition of matter patent for inclisiran will be issued on November 13. This patent is expected to be a principal U.S. patent covering inclisiran set among a series of platform and other patents for RNA interference and delivery of RNA to the liver, which we licensed from Alnylam.

When issued, the new patent will run through December 2033, with potential patent term extension and pediatric exclusivity likely to further extend market exclusivity into early 2035.

Based on our expected timing of NDAs submission and the FDA approval for inclisiran. We are confident the intellectual property estate for inclisiran could not be better positioned, or better timed, to allow for creation of value for the asset.

Fourth, as shown in our results this morning, we have driven expenses down significantly and focused our capital now almost entirely on inclisiran within the timeframe we said we would. This follows the successful completion of our company-wide restructuring, which included the sale or wind down of our legacy businesses and assets. These included the recent disposition of our remaining interest in the Angiomax brand to Sandoz, and the sale of our early-stage infectious disease research assets to a syndicate of venture capital firms. Chris Visioli will review these transactions later in the call.

Our operations and infrastructure are now streamlined and focused entirely on delivering inclisiran's enormous value potential for healthcare and for shareholders. In the meantime, we'll continue to carefully and diligently manage expenses.

In addition to these achievements, two other noteworthy events will, we believe, have an important positive impact on inclisiran and its commercial potential. First, Amgen's recent announcement regarding Repatha pricing, and second, anticipated events at the American Heart Association Scientific Sessions which will take place in Chicago this coming weekend.

Amgen recently announced the launch of a new Repatha SKU with a separate NDC number carrying the list price of $5,850 per year. This effectively reduces Repatha's list price by almost 60%. Now, below, the specialty tier of $6,000. We understand this unprecedented step, and why and how Amgen will implement it over the next two years. We share analyst views that Amgen's move will increase volume without substantial net price reduction.

As we pointed out in our January 2018 Investor Meeting, the U.S. list price above $14,000 per year, Repatha was associated with high abandonment rates, consequence of the drug's high out-of-pocket costs, particularly for Medicare Part D patients. Amgen has stated that it believes out-of-pocket payments will now come down from $280 to $370 per month to $25 to $150 per month for these patients. We agree with Amgen's assertions as well as those of the (00:12:28) that this action will unlock a large Medicare patient population. In the meantime, Amgen will keep available a high-priced product with a high rebate structure to support existing rebate contracts as the market adjusts.

At the American Heart Association Scientific Sessions in Chicago planned for Saturday morning, the 2018 AHA/ACC Cholesterol Clinical Practice Guidelines will be reviewed in a series of presentations covering secondary prevention, primary prevention, familial hypercholesterolemia and special patient routes.

Among other things, we anticipate lowering of LDL-C targets below those of today, perhaps down to 50 milligrams per deciliter for some. In the United States, such a change will expand those requiring treatments for LDL-C levels not a goal on statins or even with ezetimibe.

We also anticipate that the new guidance will encourage appropriate use of PCSK9 monoclonal antibodies especially in view of Amgen's price changes and the AHA Value Initiative.

To be clear we believe inclisiran is in a class of its own separate from the monoclonal antibodies. I believe it's based on our rapidly emerging pre-commercialization work and development work which shows, at launch, we can expect that first inclisiran will be indicated for use in a very large population of secondary ASCVD patients, and some risk equivalent patients. Certainly, those who are not at goal with statins and ezetimibe for LDL-C. Our best estimate now is that first this population is approximately 12.7 million patients in the U.S., and we believe that will expand significantly with the new guidelines.

To be clear, at launch, we expect strong labeling, differentiation and potential product positioning prior to the data from the cardiovascular outcomes or ORION-4 trial. Second, we believe that provider and patient preference will be high for an infrequent low-volume injection given by healthcare professionals part of routine, twice annual appointments in ASCVD patients, and this is something that only inclisiran will be able to offer.

Third, inclisiran has the unique potential to avoid the intractable problem of poor patient adherence, related mostly to health literacy. A substantial and consistent constraint for statins, other oral agents and also evidenced in the PCSK9 monoclonal antibody launch data, independent and in addition to the copay problems mentioned earlier.

And fourth, we believe that payer preference will be strong, where cost effectiveness, reliable administration and results and appropriate budget impact are each demonstrated. We believe that only inclisiran has the potential to provide payers with what they need for large patient populations.

And finally, shortly after the initial launch of inclisiran, we will of course expect to deliver very persuasive evidence of health outcomes impact which we believe will surpass the affects demonstrated for PCSK9 monoclonal antibodies.

In summary, then, we believe inclisiran is a ground-breaking first-in-class investigational therapy emanating from a proven platform based on Nobel Prize winning science; inclisiran directly targets the root cause of millions of heart attacks and strokes with simple and easy dosing which has the potential to avoid the intractable problem of poor patient adherence with other medications.

We believe inclisiran has therapeutic domain many winning attributes and benefits which provide a strong competitive advantage as a new class of medicine for lowering LDL-C dramatically, predictably lowering the consequent risk of heart attacks, strokes and death worldwide.

Thanks to efficient manufacturing and inclisiran's mode of action, we anticipate unprecedented price flexibility in a dynamic market, positioning us to make inclisiran available for patients who need it, at a price they can afford, and which payors will find attractive to use in large at-risk populations. Our extensive recent market research programs paint a picture of inclisiran as a provider favored product of potential blockbuster proportions.

I will now turn the call over to our Chief Financial Officer, Chris Visioli who will cover our financial results for the third quarter. Chris, over to you.

Christopher Visioli - The Medicines Co.

Thank you, Clive, and good morning, everyone. During the third quarter of 2018, the company completed, as planned, the restructuring and streamlining of our operations, substantially reducing costs while advancing inclisiran through the ongoing Phase III program. Before I turn to our financial results, I want to highlight two items in our GAAP financial statements for the third quarter, and one event subsequent to the end of the third quarter, all of which arise out of our completed company-wide restructuring.

First, we divested the Angiomax brand and full authorize generic rights to Sandoz, our partner for the last three years for total cash consideration of $9.9 million. We recognized the sale of Angiomax in Q3, and as a result, we booked a gain on the sale of $7 million in SG&A expense, net of inventory adjustments, and we adjusted our estimates for the charge backs and returns reserve for branded Angiomax in the third quarter, which is reflected in the negative $3.3 million of net revenue.

Second, we entered into a sub-lease for the remaining portion of our former antibiotics research facility in San Diego. In conjunction with the sub-lease, we recognized a non-cash asset impairment charge of $5.1 million reflecting accelerated depreciation for the fixed assets associated with that facility.

And third, subsequent to the end of the third quarter, we divested our early-stage infectious disease research assets, those assets that were not acquired by Melinta, to Qpex Biopharma, a newly formed company formed by a syndicate of venture capital firms led by New Enterprise Associates. The CEO of Qpex is Mike Dudley, formerly our Head of Antibiotic Research and Development. In connection with the sale, we received approximately $2.7 million in upfront consideration, and we'll be entitled to receive up to an additional $29 million upon the achievement of certain milestones.

In addition, Qpex assumed responsibility for potential development milestone payments due under our Rempex agreement. The sale will be recognized in our fourth quarter financial statements.

Now, I'll summarize other main points from our financial results for the third quarter. At the beginning of 2018, we indicated our focus on implementing a company-wide restructuring to focus on inclisiran development, disposing of or winding down legacy businesses and assets, and substantially reducing costs and maintaining a disciplined approach to expense management. As you can see from our third quarter results, we have successfully executed on all three of those objectives. Our restructuring is essentially complete.

With the sale of the Angiomax brand and full authorized generic rates to Sandoz and the divestiture of our San Diego-based early-stage infectious disease research assets, we've successfully executed on the disposition and wind-down of our legacy businesses and assets. And we have achieved substantial and broad reduction in expenses. As a result, our operations and infrastructure are now streamlined and optimized and focused on delivering on inclisiran value potential for shareholders.

At the beginning of 2018, we projected approximately $22 million in direct cash compensation for our dedicated inclisiran team for the year. We remain on track to meet or potentially come in below that projection. Cash compensation costs for the inclisiran team were approximately $4.7 million for the third quarter of 2018, and approximately $14.6 million for the first three quarters of 2018.

At the beginning of 2018, we projected spend of approximately $150 million over 2018 and 2019 to bring inclisiran forward through NDA and MAA submission. Through the first nine months of 2018, we remain on track to meet that objective.

In the third quarter of 2018, our non-head count inclisiran R&D costs were approximately $23 million for preclinical, manufacturing and clinical projects building towards NDA and MAA submission for an LDL-C lowering indication in patients with ASCVD, and potentially risk equivalent patients with diabetes. Through the first three quarters of 2018, we've spent approximately $70 million towards these programs, and we remain on target to spend approximately $150 million on these programs through the end of 2019. The remainder of the inclisiran R&D expense in the third quarter 2018, around $4.7 million, was spent on planning and start-up activities for the cardiovascular outcomes trial, ORION-4.

At the beginning of 2018, we projected significant reduction in SG&A expenses. As our third quarter results will show, we successfully executed on that objective. SG&A expense for the third quarter of 2018 was approximately $6.8 million on a GAAP basis, and approximately $11 million on an adjusted basis, which is down 27% from second quarter 2018 adjusted SG&A and down 58% from adjusted SG&A in the third quarter of 2017 on a comparable continuing operations basis. We ended the third quarter 2018 with $118.7 million in cash and marketable securities.

With that, I'll turn the call back over to Clive. Clive?

Clive A. Meanwell - The Medicines Co.

Thanks a lot, Chris. So the market for biopharmaceutical products that reduce the risk and cause of cardiovascular disease is vibrant, fluid, and growing, and will, we believe, continue to be one of the largest and most attractive in the world for years to come; inclisiran is moving quickly through Phase III trials, generating high-quality data, including safety data at the rate of five patient years every day and results which mirror or improve on the safety profile published from the ORION-1 Phase II data.

We are rapidly moving towards data readout for Phase III, and as we enter 2019, results will be only two quarters away. Pre-commercialization work shows the enormous market opportunity and affirms the highly competitive profile of inclisiran.

Other critical aspects of building a product for NDA and MAA submission, including preclinical and manufacturing development programs are well in hand, and we have commenced ORION-4, a high-quality, cost-efficient cardiovascular outcomes trial.

We'll continue to focus all of our efforts and resources on the development of inclisiran as a potentially game changing therapeutic building on the groundbreaking science and technology, and following innovative approaches to product and market development, while maintaining our unwavering commitment to maximizing inclisiran's value for our shareholders.

With that, thank you for listening to our presentation, and we'll turn it back over to our operator, Melissa, so that we can take some questions.

Question-and-Answer Session

Operator

Thank you. Our first question comes from the line of Jessica Fye with JPMorgan. Please proceed with your question.

Jessica M. Fye - JPMorgan Securities LLC

Great. Good morning, guys. Thanks for taking my questions. I have several here, so let me know if you want me to say them all at once, or just one or two at a time. But, the first one is, I thought your comment was interesting that the safety thus far in Phase III is at least as favorable as ORION-1. Can you just elaborate a little bit on that, and whether it relates to things like injection site reaction versus LFTs, versus across-the-board? And then just at a literal level, can we take that to mean when we look at the safety chart from the ORION-1 paper, the percentages of adverse events would be lower in Phase III?

Clive A. Meanwell - The Medicines Co.

I think we meant exactly what we said. Obviously, the easy thing for people to do, as you say, Jess, is look up the profile we created by publishing in peer-reviewed journals the ORION-1 trial, and we are seeing results in Phase III that are at least as favorable as that. And I think the rest of it is a good interpretation.

Jessica M. Fye - JPMorgan Securities LLC

Okay. And then with respect to the outcomes trial ORION-4. Can you elaborate on the four-year interim, and how you get comfortable that that won't lead the study to stop sooner than would be maybe ideal? And can you also just remind me of the thinking behind the decision to leave revascularization in the primary endpoint?

Clive A. Meanwell - The Medicines Co.

Yeah, sure. The interim analysis plan for ORION-4 is to look at the data at a median of approximately four years follow-up. You know, it's likely with such significant power for the primary MACE endpoint, which is 99%, that you would pass statistical significance at 2 to 3 years, as happened with the monoclonal antibody trials.

What we don't allow though is to stop the trial before 4-1/2 years, because we want to see the real impact on MACE, and also we want to have a chance for the accumulation of deaths to occur, so that potentially we can also show the trial has 90% power for that, a reduction in cardiovascular-related death, that is sort of pre-specified, and if you like, authentic. So I think that's the real reason.

As for revascularization, we think we will only be accepting acute revascularization and adjudicated. We don't like the idea of measuring, should we say, logistically-driven revascularization. It has to be driven by the presence of ischemia and ischemic episodes. So in that regard, it closely mirrors acute myocardial infarction, or at least an episode of ACS. So we are comfortable with that for that reason.

Jessica M. Fye - JPMorgan Securities LLC

Okay. Great. And maybe just switching to a couple of sort of financial or commercial topics. Are you reiterating that your current cash can get you to either Phase III data or the NDA filing?

Clive A. Meanwell - The Medicines Co.

I don't think we've ever been that specific, but I'm going to hand over to Chris Cox, who might want to handle that or may Chris Visioli, you want to handle it first and maybe Chris Cox want to add a comment?

Christopher Visioli - The Medicines Co.

Yeah, thanks, Clive. Hi, Jess. I mean, we continue to have a lot of confidence in VABOMERE, ORBACTIV, and MINOCIN and we have a lot of confidence in Melinta's execution. As you know, VABOMERE is early in its launch cycles, so consistent with all the recent ID product launches, it's sales trajectory has been pretty slow, but there are some pretty promising signs that VABOMERE sales will accelerate as we get into 2019.

In the meantime, we've been enthusiastic about Melinta's announced commercial agreement with Menarini Group to develop and commercialize all three of our products in 68 countries outside the U.S. I think, as we previously disclosed, we're entitled to 15% of all the proceeds that Melinta receives for the ex-U.S. rights to those products. And what that means is that, in the near-term, we're going to receive 15% of the €70 million upfront licensing payment that Melinta received from Menarini when the deal was announced on October 1, and then an additional 15% of the €15 million payment that Melinta will receive upon EMA approval of VABOMERE which we expect by November 30.

So we remain confident that the value of those Melinta assets will materialize as we move forward and will prove to provide a strong source of capital for us as we move forward. And we'll remain vigilant for opportunities to monetize those assets in whole or in part.

Jessica M. Fye - JPMorgan Securities LLC

Okay. Interesting. And then just two more. I know you highlighted your price flexibility, but does Amgen's announcement to reduce their price, reduce the potential attractiveness of your expected price on a relative basis? And I'll tack on a last one here which is, what's your current thinking on how many years patent term extension might add to that composition of matter inclisiran patent?

Clive A. Meanwell - The Medicines Co.

Yeah, so it's a little early to talk about the price of inclisiran at this stage. I think that our view on Amgen's move is that at the end of the day their net price really isn't changing, because of rebates and so on in any material way. So, we're quite comfortable with the level they've gone to. By the way we applaud it, because we think it's within the cost effectiveness value range that these drugs should be in. So no, we're not in any way put off by the sort of greater transparency of pricing around monoclonal antibody.

In fact, we think it's highly appropriate, because it opens up greater market potential for more patients to benefit from the products, and we'll benefit from that too, of course. So we're quite pleased with it, actually. Regarding the – and you're right, we do have unprecedented pricing flexibility and certainly comfortable with that.

As far as the intellectual property developments are concerned, we believe that now, based upon the imminent issuance of this composition of matter patent plus pediatric exclusivity, and possibly leading a little bit on Hatch-Waxman extension, we'll get the maximum 14 years of initial market exclusivity that we earned. And that will provide a great opportunity to build a huge brand for the future.

Operator

Thank you. Ladies and gentlemen, in the interest of time, we ask that you please keep to one question and one follow-up question. And we invite you to rejoin the queue. Our next question comes from the line of Umer Raffat with Evercore ISI. Please proceed with your question.

Umer Raffat - Evercore Group LLC

Hi. Thanks so much for taking my questions. I really want to focus on one thing, but there are a couple of parts to it. And it's really around – so Clive, as an organization, you guys have so much experience with CV trials and CV pivotal programs, obviously across Angiomax and then also with Cangrelor, and now with inclisiran. So my question is, we saw Esperion run into some imbalances on deaths and long events, because of some patients making it into the trial that really shouldn't have.

So what I'm really trying to get at is, have you guys done a review of site overlaps in inclisiran Phase III versus Esperion trial sites, especially the ones that have those issues, I think, they have given patient level disclosures? And do you have any visibility into the baseline characteristics on a patient level for people that made it into your trial? And I'm assuming you've been tracking blinded event rates on mortality or liver enzymes or even cancer for that matter, any observations today? Thank you.

Clive A. Meanwell - The Medicines Co.

Yeah, thanks, I mean, good questions as always. We don't have overlap with Esperion's program in any way that we are aware of, at least. And certainly, we feel that all of our sites, many of whom are getting audited as we go along, are performing perfectly well. So we are not concerned about any of that stuff.

As far as our understanding of the event rates, yes, we have regular analysis of blinded event rates and yes, they are absolutely in line with what you would expect for this patient population or as I say, better. And we are very comfortable with it. So, now small numbers can sometimes provide imbalances which need explanation, but our interest is in statistically robust differences. And again, for that, we are very comfortable too, because we have a DSMC that's monitoring that. So, I think right now we are in very good shape, indeed, and looking forward to very soon being able to unlock these data from Phase III in any case.

Umer Raffat - Evercore Group LLC

Got it. And just to be clear, Clive, when you said you have been regular announcing the blinded effect rates, were you talking about events across all types of safety measures? Or a specific type event?

Clive A. Meanwell - The Medicines Co.

No, across all types. In a blinded view of what is going on, that's necessary for appropriate diligence and very tight safety management. So no, we are talking about everything from death to adverse events. We monitor that.

Umer Raffat - Evercore Group LLC

Thank you very much.

Clive A. Meanwell - The Medicines Co.

Thank you.

Operator

Thank you. Our next question comes from the line of Adnan Butt with Guggenheim Securities. Please proceed with your question.

Adnan Butt - Guggenheim Securities LLC

Hey. Thanks. I just have one. I wanted to ask if ORION-3 is subject to the same sort of a data blinding or DSMB? Or is that something you can or will provide a safety update form in the future? Basically, before the Phase III readout?

Clive A. Meanwell - The Medicines Co.

Yeah, ORION-3 is the long-term extension study of ORION-1, of course. While it was ORION-1, it was subject to a DSMB review on a regular basis, as our current Phase III trials are. The extension trial is not managed the same way, it's more visible to us, and again, we are closely monitoring the adverse events, which is one of the major reasons we did ORION-3 is to look at long-term treatment. Some of those patients have had five injections of inclisiran now, many of them have been on trial for a long, long time. And we are very, very satisfied with the way that's panned out as well. And again, I'll reiterate that the adverse event profile, safety profile, is at least as favorable as we saw in the formal part of ORION-1. So my comments refer to both the Phase III trials and the ORION-3 extension study.

Operator

Thank you. Our next question comes from the line of Joseph Schwartz with Leerink Partners. Please proceed with your question.

Joseph P. Schwartz - Leerink Partners LLC

Great. Thanks very much. So beyond pricing, I was wondering if you could talk about your ability to differentiate on the basis of better adherence and compliance, and what that is reasonably worth to payers? I know in your ADA presentation recently, you quoted some statistics from the European Heart Journal that approximately 9% of event risk is attributable to poor adherence. So, just wondering if you can put that into context for us clinically and historically, you haven't been shy about trying to value that economically. So, could you give us your thoughts on that as you advance inclisiran now?

Clive A. Meanwell - The Medicines Co.

Yeah, I'm not going to make any comments about our discussions with payers, we've had good interactions so far, but that will get more intense and accelerate as we move through the next 12 to 18 months. However, I think that – and for payers, I think the first question is your drug priced appropriately?

And then secondly, is it going to deliver what they're trying to pay for? So that's where adherence comes in. And I think our viewpoint on adherence is that it's a substantially intractable problem. When I mentioned in the script that health literacy is the core issue for adherence, I'm distilling down0 25 years of research that shows that efforts to help physicians and other practitioners explain to patients why and how to be adherent has made some ground, but not as much as we would have all liked.

And secondly, efforts to improve patient literacy, in addition their provider literacy, so that they understand the importance of adherence and are motivated to do so has also proven to be quite slow progress, and certainly we remain at the point where at least 50% of people failed to take their oral agents and rapidly emerging that seems to be the case for injectables too. So, if that's so difficult, Joe, I'm not sure that further massive investments in adherence are going to necessarily improve performance.

Rather, if you move to an infrequent injection that can be viewed more like a flu shot, more like a vaccine, although because it's not technically a vaccine, there may be ways of working around the problem of adherence and moving to the more attractable problem of coverage and persistence, which is sort of vaccine language.

In order to get people to be covered, you have to have three things: a drug, a patient and a provider, all in the same place at the same time, which is really a logistical problem, and carries much fewer emotional overtones than adherence does. So generally, as we speak to experts, there's a belief that the problem of coverage is easier to solve than the problem of adherence. And the problem of adherence has flummoxed us as care providers for 30, 40, 50 years in spite of outstanding work, even by the FDA and others to try and improve it.

So that's why we're excited. We think that's incredibly different and differentiated, and that's what we're hoping on to build on. And I'll come all the way back to your question in a discussions with payers going forward we hope to help them understand the enormous value that that can bring for them.

Joseph P. Schwartz - Leerink Partners LLC

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Joel Beatty with Citi. Please proceed with your question.

Joel L. Beatty - Citigroup Global Markets, Inc.

Great. Thank you. So I appreciate the update earlier on the call that the data from the ongoing trials of inclisiran are at least as favorable as ORION-1. Have you looked to see how they're compared with trials from the PCSK9 antibodies in their Phase III programs? And could you characterize how the data is looking with that comparison?

Clive A. Meanwell - The Medicines Co.

I think (00:41:09) across trials is a tricky subject, so I won't try and comment on that. I think it's a little early to be interpreting non-randomized data. We do, of course, have comparative direct data with Repatha in the ORION-3 extension study. And I have to say we're very satisfied indeed by what we're seeing on the safety side. So that's probably the clearest statement I can make to you all, I hope that's helpful.

Joel L. Beatty - Citigroup Global Markets, Inc.

Yes, it is. And then just one follow-up. Could you describe how the opportunities for inclisiran compares between primary prevention patients and secondary prevention patients? And do you see any opportunities to grow the use in primary prevention patients beyond what the current PCSK9 antibodies have done?

Clive A. Meanwell - The Medicines Co.

Again, more work to be done on this. So, I won't try and be comprehensive in the answer. It's an ongoing effort by us. We are including some primary prevention trials in the European Phase III pivotal study. That study allows for patients to be entered with diabetes without a prior ASCVD events. So technically speaking, they would be high-risk or so called risk-equivalent patients. The European label is likely, assuming the results come out as we expect, to include that patient group. The FDA have indicated to us that they are willing to look at those data. They are not by any means certain that they would include primary prevention in the label wording, but they are willing to consider it, they say, and we'll see how that turns out once we put the NDA together. So bottom line, we will probably have, we believe, data from primary prevention in the European label, we may have it in the U.S. label, and for the time being that's kind of where we are.

Joel L. Beatty - Citigroup Global Markets, Inc.

Great. Thank you.

Clive A. Meanwell - The Medicines Co.

You're welcome, Joel. Thank you.

Operator

Thank you. Our next question comes from the line of Jay Olson with Oppenheimer and Company. Please proceed with your question.

Jay Olson - Oppenheimer & Co., Inc.

Oh, hey, guys. Thanks for taking my questions, and thank you for your comments earlier on the expectations that you have regarding potential changes to AHA guidelines over the weekend. I was curious, if all of your clinical development programs work out favorably for inclisiran and you achieve your target product profile, do you eventually expect inclisiran to be lumped in along with PCSK9 antibodies in AHA treatment guidelines? Or would you expect, based on the differentiating features that you've described for inclisiran to be treated differently?

Clive A. Meanwell - The Medicines Co.

I think that in general terms, the pathway is the same, but I think as we've seen in other therapeutic classes in other disease states, when you have a product that's this differentiated, they tend to get a paragraph of their own, if you know what I mean, in the guidelines. We certainly would shoot for that. We'd hope for that. We certainly feel that PCSK9 as a pathway is the right pathway to be targeting, after all it has genetic Mendelian randomization and clinical outcomes trials proof-of-concept. So why wouldn't we emphasize that? But I think from a product point of view, we feel that the differentiation is very real, not only through mode of action, but also some of the more pragmatic issues of dosing, and the way that patient care can be managed as a consequence of the product.

So, probably a bit mixed picture, Jay, and we'll certainly look forward to getting in the guidelines, but it will be a while yet, and we'll sort of cross that bridge as we come to once we have the Phase III data for the NDA.

Jay Olson - Oppenheimer & Co., Inc.

Okay. Thank you. And then if I could just a follow-up on, I think you said that your clinical studies had begun dosing with prefilled syringes. Can you just talk about what sort of work you envision to implement an auto-injector and what sort of regulatory studies might be required for that?

Clive A. Meanwell - The Medicines Co.

Yeah, the choice of an auto-injector or not, is the first question. And in an infrequently administered drug, which is perhaps given no more than once or twice a year, it's debatable at least, whether it's necessary or even advisable to ask patients to self-inject infrequently when their skills wouldn't necessarily be honed by regular use.

On the other hand, there is no reason why someone shouldn't have an auto-injector. Our strategy is that our prefilled syringes, which are the simplest form of delivery, and very practical for healthcare providers, could be used for self-administration, provided we do the necessary patient studies. Although we wouldn't necessarily emphasize that to begin with. But also the prefilled syringes we've chosen can be put inside an auto-injected modular system which would mean that we wouldn't require any formal manufacturing or stability studies to add an auto-injector. We would though need patient behavior studies.

So I think it's all optionally before us. These are relatively small incremental investments, and wherever we believe that having all options available, we'll consider going forward and investing in those programs. But at the moment, we are very comfortable with the idea of prefilled syringes used by healthcare professionals.

Jay Olson - Oppenheimer & Co., Inc.

Great. Thanks for taking the questions.

Clive A. Meanwell - The Medicines Co.

Thanks, Jay.

Operator

Thank you. Our next question comes from the line of Madhu Kumar with B. Riley FBR. Please proceed with your questions.

Madhu Kumar - B. Riley FBR, Inc.

Yeah, thanks for taking my question. I apologize for background noise. So is there any plans to put out data from the ORION-1 open-label extension between now and the ORION-9 to ORION-11 readouts?

Clive A. Meanwell - The Medicines Co.

The full completion of ORION-3 as it is, Madhu, is really not going to be ready until roughly the same time as the completion of the Phase III trials. So it's unlikely that we would pre-announce that, because the trial will still be ongoing, you can think anticipate that data roughly at the same time as the NDA data revealed.

Madhu Kumar - B. Riley FBR, Inc.

Okay. And – never mind. That's it. Thanks, guys.

Clive A. Meanwell - The Medicines Co.

Yeah, okay.

Operator

Thank you. Mr. Meanwell, there are no further questions at this time. I'll turn the floor back to you for any final comments.

Clive A. Meanwell - The Medicines Co.

Thank you very much. Indeed, we'd like to thank everybody for joining us today. We continue to be extremely focused, putting all of our resources into inclisiran on behalf of the patients we hope to serve in the future and, of course, the shareholders we serve today. We look forward to continuing to provide you with updates on our progress and we also look forward to an exciting weekend at AHA and we hope to talk to everybody soon. Thanks very much indeed for joining us today. Bye-bye.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.