GW Pharmaceuticals PLC (NASDAQ:GWPH) 40th Annual Goldman Sachs Global Healthcare Conference Call June 11, 2019 2:20 PM ET
Stephen Schultz - Vice President of Investor Relations
Conference Call Participants
Salveen Richter - Goldman Sachs & Co.
Good morning, everyone. Thanks for joining us. I'm Salveen Richter, one of the Biotechnology Analyst at Goldman Sachs, and we're pleased to have the GW Pharma team with us here today. And we have Steve Schultz, VP of IR. With that, Steve, it's been an exciting time for GW with the recent launch of Epidiolex to treat seizures. How do you view the launch to-date versus your internal expectations heading into it?
That’s a great question. But before I'd start, let me just thank Goldman Sachs, and Salveen, thank you and your team for having us at the conference. Very exciting. It's always a terrific conference. And also to just reminding listeners that I will be making forward-looking statements, and so you should definitely refer to our SEC filings for risk factors associated with investing in GW Pharmaceuticals.
So with that said, I think we in early May gave our Q1 results and I think it's fair to say that, by all measures, this launch is going very well. When you look at some of the components of the launch, so the payer coverage, which we think is going very, very well and ahead of plan and also the number of physicians – and the physician – the physicians that have prescribed the drug, the interactions with our commercial organization, and of course, the number of patients that are taking drug now.
I think again, by all measures, we're very pleased with the performance to-date. But it's early and we have a ways to go and we're focused on continuing to improve those areas as we go through the rest of what we think will be a very exciting 2019.
Great. I know it's early days and you're off to a nice start with I think $33.5 million in sales in the first quarter. How should we be thinking about the sales trajectory for 2Q and the remainder of the year?
Well, this drug is being very well received by patients and there is significant demand for a pharmaceutical CBD product and there is pent-up demand for this drug. I mean we heard many examples of where patients had been calling physicians, asking for access to this drug.
And I think we saw a bolus at launch of those patients getting prescriptions fulfilled, written and then fulfilled. So I don't think that that dynamic is waning. I think that the demand is there. And so that's a key fundamental element of a successful launch.
But with that said, I think that there is a learning curve associated with this drug. It's a drug that's dosed based on weight. It's a drug that's – that has a dosing window and it's an environment where patients are on numerous other drugs. And so – and this is individualized medicine. Physicians are treating each patient uniquely in the combination of medicines that they're taking.
So introducing a new drug into that patient’s treatment regime is one that takes thoughtfulness, it takes care and in some cases caution. And I think one should expect that physicians will likely dose closer to the 10 mg/kg/day, which is the lower end of the dose range. They'll probably select patients that are most likely to respond to this drug, LGS and Dravet patients. It will dose them low and slow and watch them very, very carefully.
And only when they begin to build confidence and I think learn how to use the drug proficiently will they then begin to really expand the prescribing within their own clinics and also to increase potentially the dose, which over time is a natural thing for these epilepsy specialists. So I think as we look out through the year, it's a very – in our eyes, a very exciting 2019.
But with that said, we did have a bolus. We talked about that on our May first quarter call. That bolus was quantified. I think it's largely in their rearview mirror and I think we now are going to settle into a organic prescription number that is one that's probably a little bit more normal than what we saw probably in Q1 due to the carry-forward of those scripts that were written in November and December, but weren't fulfilled until Q1.
And then, can you just talk about the distribution channels that are currently supplying Epidiolex and which of them are generating the most demand here for the drug? And do you have plans here to expand points of distribution?
Yes. So distribution, we use a specialty pharmacy distribution model. We do so for a number of reasons, but one in particular is that because this is a scheduled drug, patients receive exactly the amount of drug that are prescribed. So the specialty pharmacy needs to be able to essentially break up a bottle, if you will, if the bottles are a 100 milliliter bottles. If a patient is prescribed to 125, they're going to take a quarter of a bottle and pour it into a new bottle and send the bottle and a quarter to the patient. So that has to take place at the specialty pharmacy level.
We selected five specialty pharmacies as our original network. This bolus that we spoke of occurred to some extent because they were overwhelmed by demand, which is a good problem. But it was a problem that we addressed rapidly and quite effectively, and we did so by expanding the number of SPs beyond that original five to include specialty pharmacies that exist within the larger academic clinics. Most of them have their own SPs in house and also to community pharmacies through some of the other larger pharmaceutical companies that are distributing this product.
And so we now – we went from that original five to now over 140 specialty pharmacies that are distributing the product, which I think seems to be a pretty good place to be for us right now.
Perfect. And where do you stand with regard to prescription time to fill right now? Is that – are you in your window, your goal window?
We are. We started off in November and December, less than ideal at over four weeks from script to fulfillment. That was unacceptable. I think there were some valid reasons why that was occurring, but we addressed the problem rapidly and we're now around two weeks for the initial script, refills are much quicker than that. So I think we're in a good place right now.
And where do you stand with patient mix in terms of children versus adults?
Well, we know that children and adults are both on label and what we've said is, we felt like in 2019, there would be more children than adults. And I think that's exactly what we're seeing.
In May on our call, we did note that there were more adults that were being prescribed Epidiolex than we had originally anticipated at this point, but adults are still the minority. And I think that's going to probably stay that way through most of the year. And so as you model Epidiolex prescribing, I think for 2019 it's reasonable to model that the majority of the patients will still be children.
And when you think about the higher dose [and you said] expect more doctors stop for 10 versus 20. Why are they doing that? Why aren't you seeing them go to higher doses here with patients?
Well, what's inherent in the way these physicians prescribed their medicines is a level of caution. They are very, very careful about how they introduce new medicines. They start at the lowest dose and they observed their patients carefully.
Especially with a new drug like Epidiolex, where we know we have data that suggests that there is a drug-drug interaction with clobazam, and I think clobazam is a very commonly used drugs, so physicians will want to watch that.
They'll want to watch for other side effects. They'll want to watch for seizure reductions and other benefits that are occurring from the drug as well, and assess the patient's condition at that 10 mg/kg/day dose before considering going up from there.
I think over time, it's consistent with the practice of epilepsy specialist to increase the dose in search of seizure freedom because that really is the goal. And I think as long as they – as long as the drug is well tolerated, they will probably do so. But I think what you should expect is that most of the physicians and I think on our call in May, we noted that 1,900 physicians had prescribed Epidiolex in the first five months up to the end of March.
You should assume that the majority of those 1,900 physicians are new to the drug. Only several 100 of them had participated in our pivotal studies and were fluent in the use of the drug, so they have to learn how to use it. And that's a process I think we're in right now. And it's a process that will take time. They will stay at 10 for awhile and get comfortable with the drug and then determine how to move forward from there.
And I think that will probably be the case for most of the patients. Some patients will probably not be able to tolerate the drug early on. But beyond that, I think patients will be on the drug for awhile as they're observed in that initial period of observation.
And you brought up a good point. I mean, I think when you think about all the other drugs that have been used in these diseases and it's a polypharmacy market, there's the question of efficacy, right? And as you said, the search for seizure reduction, but at the same time, there are side effects associated with many of those drugs, and so parent that plays a role into discontinuation rates.
So with you guys, you don't have the side effect profile that many of your – many of the other drugs do. So how long do you think these families can choose to look for a seizure free before they may choose to discontinue?
Well, I'll say that our drug does have side effects and those are all spelled out in the label and in the clinical studies that have been published in The New England Journal of Medicine and Lancet. But the drug is well tolerated.
And so I think – yes, I think adult patients and parents of younger patients are likely to be more patient as they introduce Epidiolex into their treatment regime. I think Epidiolex is a very exciting drug and a very unique drug in that it is different from many of the other anticonvulsants that cause problems with cognition and cause problems in behavior and things like that.
So Epidiolex seems to have a slightly different profile and anecdotally we do hear cases where children are more responsive, they brighten up if you will. These are again anecdotal, but there is something unique going on here with this drug and it's very exciting I think for the physicians and for the patients, and certainly for GW.
Great. And you also recently announced positive data in TSC. How do you anticipate that will be added to the label and can you frame the opportunity there versus Dravet and Lennox-Gastaut?
Yes. TSC data we released in early May as well. TSC is Tuberous Sclerosis Complex. It's a condition where tubers grow in the body, and when they grow in the brain, they do cause highly treatment resistant epilepsy in a large percentage of the patients. The data was positive. We will be submitting an sNDA, supplemental NDA in the fourth quarter of this year to expand the label for Epidiolex to include the seizures associated with TSC.
The interesting facet to that is this seizures associated with TSC include partial seizures and generalized seizures. These are seizure types that are not currently on the label and are fairly common seizures. They were the most common seizures in the TSC study I believe.
And so that's very exciting because that expands in a drug that's indicated for the seizures associated with to increase the seizure types. It can make a very big difference in the application of the drug.
So we will be submitting that sNDA, I think it's a probably a six-month review period, although we have yet to confirm that. So that will be a mid 2020 approval and launch event for us, which is really good timing because will come at a point where the sales organization and the medical affairs team will be very excited about bringing this new indication out to the marketplace, I think even more exciting for the TSC community as well to have a FDA approved cannabidiol product that they can use for the treatment of these difficult seizures.
And there is also an element of a dosing switch that plays out with TSC, so where do you expect them to also now start at a higher dose though 25 before they progress to 50?
Yes. So in the TSC study, the dose levels were different and they were 25 and 50 milligrams per kilogram per day target doses. In the Lennox-Gastaut and the Dravet studies, they were 10 milligrams per kilogram per day and 20, so a higher dose level. I think what we found is that the 25 and the 50 performed very similarly. And there were increased number of side effects with the 50 mg/kg/day.
So I think when you look at the potential label expansion for TSC, I think number one, it's most likely that physicians are going to titrate the same way that they do now for LGS and Dravet patient's with their TSC patients. They'll go to 10, they'll stop, they'll observe the patients, and then make a informed decision as to how to proceed from there.
And I think it probably makes sense for us to consider that 25 mg/kg/day dose as the maximum dose for the labels. So there shouldn't really be any pricing implications or anything like that.
Got it. And as we think about – so I know the question of off-label use comes up a lot because there's a huge opportunity with epilepsy, but at the same time you're approved for seizures associated with these diseases, so one can argue it's not off-label if those patients have those seizures. How do you think about the true demand for Epidiolex?
That’s a good question. It's a bit of a tricky question. First of all, we'll promote the drug only for the epilepsy conditions that the drug is approved for. And physicians prescribing decisions are between the physicians and the patients. And so I think ultimately the label is for the seizures associated with LGS and Dravet and hopefully in the future TSC. And so I think what we're seeing is that patients that have those types of seizures are getting prescribed drug.
And the trick of course here is to get the insurance companies to reimburse for it. I think that our insurance team has done an incredible job of really developing terrific coverage, broad coverage both for the commercial and for the CMS Medicare, Medicaid sides of the business. And I think they've created a very favorable landscape for this drugs reimbursement.
Are you thinking about the Epidiolex opportunity ex-U.S? How should we expect that those launches will occur and what's the pricing differential versus the U.S.?
Yes. So we're under review right now with the European Medicines Agency, the EMA. We're expecting a CHMP opinion soon. I think our current guidance is mid year. If that opinion is positive, which we expect it will be, the EMA approval should come 67 days after that. And our expectation is that we will launch initially in the largest five European countries starting with France and Germany. And then in the UK, we're in negotiations with all of those countries right now. France and Germany, you can launch at risk and so we will do so right away. I think we're in later stage negotiations with NICE in the UK and then we'll launch in Italy and Spain after that.
I think in terms of pricing, we will be pleased if we get – if we settle on our goal of 70% of the U.S. price somewhere in that neighborhood, it will be added discount to the U.S. price though. And I think that the uptake in Europe will be slower than that of the United States, which is quite typical.
But there is – treatment-resistant epilepsy is a challenge in Europe to the same extent that it is in the United States that the patient numbers I think in those five initial countries are probably very similar to those in the United States for LGS, Dravet, TSC patients. So I think that that dynamic is very similar, but again added discounted price with a little bit slower uptake.
Great. Moving to the pipeline here, can you just talk about the development status of the pipeline outside of Epidiolex, which program is most advanced right now and when should we expect next data?
Sure. So before we leave Epidiolex, I think it's important to note that developing the pipeline for Epidiolex beyond the seizure management environment is a really important one for us. We are commencing a study in a condition called Rett syndrome, which is a very difficult condition that mainly affects young girls. They include seizures, but it also includes a number of non-seizure comorbidities.
And I think it's our goal now to sort of look at those non-seizure benefits that Epidiolex maybe able to affect and measure them scientifically and clinically with the objective of being able to expand the label in the future into those non-seizure benefits. And I think that that's a very exciting pipeline opportunity for that Epidiolex product. So that's a key thing.
Beyond Epidiolex, I think an underappreciated program is that of the Sativex product. Sativex is a – is the first product that our Company developed and it is approved in over 30 countries outside of the United States right now. It's being used effectively by many patients for the management of their spasticity due to multiple sclerosis. That's what it's indicated for.
And it's our intention to bring Sativex into the United States, put it in front of the FDA. We met with the FDA in December and the result of that is that we expect now to run a single Phase III pivotal study for Sativex for the treatment of spasticity due to MS here in the United States, and then if successful, presented an NDA to the FDA for that drug.
What's really exciting about Sativex is that we believe that there are indications beyond MS spasticity that could be a very interesting for a drug like Sativex, which is a combination of CBD and THC.
And we have run a number of placebo-controlled Phase II studies in various indications outside of spasticity that we have the data for and can utilize in making decisions about how to expand Sativex once approved for use in the United States for spasticity and what other indications maybe logical next steps for that drug. So what seems to be an interesting drug, it first could be a really exciting drug for this Company long-term.
Right. Can you touch based on autism because I think you're looking at that indication as well as glioblastoma and what next steps are there?
Yes. So autism is one of those areas where I think anecdotally we've seen improvements in some of the comorbidities that you see typically in the autism spectrum disorders. But as is the case with the regulators, we have to prove this scientifically.
So we're studying both CBD and CBDV and autism spectrum disorders at various levels in clinical studies and in an open label studies. And just to really get a sense for how the – both CBD and CBDV may affect those comorbidities.
Again, we're approaching this with Epidiolex CBD through Rett syndrome because Rett syndrome has some of those comorbidities associated with it and it has a validated measurement for the FDA.
And so again, we hope our objective is that we can have a successful clinical evaluation of CBD and Rett syndrome and characterize the benefits in those comorbidities and then take that to the FDA.
Simultaneously, we're running CBDV studies in autism spectrum disorders with seizures and also in Rett syndrome, so that we can compare and contrast and see what if any similarities or any differences in profile might be for sort of future thoughts on product development.
Great. With that, I'll open questions up to the audience.
Q - Salveen Richter
So there was a recent FDA hearing with regard to CBD products. Can you just talk about implications if any for GW Pharma?
Sure. It was a very interesting first meeting. I think first of probably many that the FDA will hold. It was at the end of May where they entertained presentations, a day long of presentations. Most of them were a couple of minutes long and some – handful were five minutes long. GW had one of those five minute long presentations.
I think what overall you heard in that day of presentations was that there's just very little evidence at all right now as to CBD effectiveness and scientific evidence and that really Epidiolex and GW were consistently referred to as about really the only clinical evidence out there, and that's of course for the treatment of these different seizure types.
The FDA is clearly being pressured to figure out driving lanes for different applications of cannabidiol. Right now it's sort of Wild Westlake and you get variability. You have products that are being sold that are not very well characterized in terms of what's in them. And that's a challenge and I think that FDA is going to try to tackle that challenge.
And I think we believe that the driving lanes should include a FDA approved pharmaceutical option that can make medical claims based on the scientific evidence. And the driving lanes may include also a nutraceutical category that may or may not have restrictions in dose or in concentration.
But what I think many of the concerns heard that they were about just the unfettered use of cannabidiol and the unknown implications of that from a safety standpoint. We know through our scientific studies that there are side effects. There are drug-drug interactions that to the patients and the physicians especially should be aware of as they're utilizing this medicine.
And so I think the FDA is keenly aware of a need to develop those driving lanes. And I think that there also it seems to me quite aligned with our philosophy that cannabidiol drugs that make medical claims do so based on clinical scientific evidence.
Great. Maybe one final question just around lifecycle management of Epidiolex as well as your IP status, because I know that's been evolving. Where do you stand today?
So from an IP standpoint, we have right now nine Orange Book listed patents for Epidiolex. Their method of use patents, this is a naturally occurring molecule, which doesn't allow us to get a composition of matter. But the method of use patents that we have, we believe are defensible and strong.
They speak to the types of seizures that the drug has been tested on the epilepsy conditions themselves and to the novel findings of drug-drug interaction mainly with clobazam, which is interesting because that is – that interaction is listed in the safety portion of the label and may make it very difficult to carve out the label in the future.
Beyond that, we continue to evolve the product formulations. We have intention to develop a capsule formulation, which would be helpful for I think, larger patients, adult patients. We also have plans to improve the current formulation of Epidiolex and we'll continue to do so.
And then I think thirdly, we will continue to expand from a lifecycle standpoint on the different indications that we are testing and on the expansion of the label for Epidiolex over time. Of course, TSC data we talked about and our intention to develop the drug in Rett syndrome, and there will likely be other areas of exploration for Epidiolex beyond that as well, which should give us an extension of the lifecycle of the product.
Perfect. Well, thank you, Steve. Appreciate it.
Well, thank you again for having me.