TPI Composites Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 13 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Rhythm Pharmaceuticals Q2 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Connolly, Executive Director of Investor Relations and Corporate Communications.

Operator

Please go ahead.

Speaker 1

Thank you, Bella. I'm Dave Connolly here at Rhythm Pharmaceuticals. For those of you participating on the conference call, our slides It can be accessed and controlled by going to the Investors section on the Investors page of our website at ir.rhythmtx.com. This morning, we issued a press release that provides our Q2 2023 financial results and a business update, which is available on our website. As listed here on Slide 2 is our agenda.

Speaker 1

Here with me today in Boston are David Meeker, Chair, Chief Executive Officer and President of Rhythm Pharmaceuticals Jennifer Chen, Executive Vice President, Head of North America Hunter Schmidt, our Chief Financial Officer and Jan Mazibro, Executive Vice President, Remarks concerning future expectations, plans and prospects, which constitute forward looking statements. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed on our most recent annual or quarterly reports on file with the SEC. In addition, any forward looking statements represent our views only as of today It should not be relied upon as presenting our views as of any subsequent date. We specifically disclaim any obligation to update such statements. With that, I'll turn the call over to David Meeker, who will begin on Slide 5.

Speaker 2

Thank you, Dave, and good morning. Thank you all for joining today. Q2 was a very good quarter. So we're going to dive into the details behind the quarter in our presentation. But before we do that, let me try to put these results in a larger context.

Speaker 2

We recognize and all of you recognize that Rhythm has 2 main drivers of value creation: BBS commercial execution and HO clinical development. On top of that, we have a number of additional efforts, which offer potential upside that may be significant. The fundamentals, which we have discussed multiple times, are strong. The biology is well understood. Impairment in signaling through the MC4 pathway leads to hyperphagia, that uncontrolled hunger that stems from not getting a The community is increasingly recognizing that not all Obesity is the same and that patients with impaired signaling through the pathway have a distinct disease, which requires a specific approach.

Speaker 2

2, the unmet medical need is clear. Treatments for patients with general obesity may have some effect in individual patients. For example, my craving for Ice cream may go down on a GLP-one, but I have not addressed the fundamental problem. Impairment in MC4 pathway signaling leads to a decrease in the endogenous hormone Alpha melanocyte stimulating hormone. Semmelanotide is an analog of alpha MSH.

Speaker 2

We are a precision medicine that happens to be a hormonal replacement. Why wouldn't you replace the hormone if there were a deficit? 3, our drug works. Approved for multiple genetic diseases and with Strong proof of concept data in hypothalamic obesity. We are now increasingly seeing the real world effect.

Speaker 2

Patients are choosing to go on treatment and are largely staying on treatment. So now to the quarter. We are 1 year post approval for BBS in the U. S. We have discussed each quarter whether we can trend the quarter on quarter And I'm sure we will again today.

Speaker 2

The answer will be the same. No, don't trend the quarter on quarter numbers, but you can Look at a full year now of data and conclude BBS is evolving into a very meaningful rare disease opportunity. The patient community is engaged, The number of doctors writing scripts continues to grow. The payer community is listening and recognizing this is a unique rare disease and not simply The teams are executing and our confidence is growing. We hope yours is as well.

Speaker 2

We're making good progress on our Phase 3 study for hypothalamic obesity. We have moved up our timeline for completing enrollment to the end of the year Based on good progress getting sites up and going. I wish no one took so many vacations, but the patients are there and waiting. Our 6 month long term extension data show continued reductions in BMI at 6 months and we look forward to updating you on the 12 month data in the fall. I will speak briefly about our Phase 2 long term extension data in a couple of slides.

Speaker 2

Finally, we have a number of trials reading out in the second half of this year with a DAYBREAK pediatric and weekly We will highlight these results at an upcoming R and D session in Q4 of this year. And we are excited to introduce you to our next generation program RM718, which I will discuss in the next slide. So Slide 6. RM718 is a more And potentially more potent molecule. It is MC4R specific in its targeting.

Speaker 2

It does not hit MC1R and therefore eliminate Hybrid pigmentation effect we see with MC1R agonism and it is a weekly formulation with patent protection out to 2,041. We are preserving the option of continuing with our current weekly program, but we will push out initiation of the weekly study into 2024 When we will make a final decision on our weekly strategy pending further development of 718. Our goal quite simply is to develop a better drug, which happens to come with a Significantly longer patent protection. We look forward to providing more details at the upcoming R and D Day. So on Slide 7, Slide 7 is to remind you of the overall opportunity.

Speaker 2

We started small with POMC and LEPAR. DBS and HO represent meaningful rare disease populations with the major advantage being they can be diagnosed more easily And the HO population, as you know, is largely diagnosed today. On top, a significantly larger world potentially opens up with the M and A trial populations. Moving to Slide 8. We remain laser focused on getting our global Phase 3 trial up and running.

Speaker 2

As previously discussed, the challenge was not patient Interest but clinical trial site bureaucracy. We are breaking through all of that with 1 third of the sites open and about a quarter of the patients screened. Screening is a good indicator because very few patients screen fail. The physicians have their list of patients, they know the entry criteria and may invite patients to participate accordingly. Based on our progress to date, we are moving up our targeted enrollment completion date from Q1 2024 to the end of this year.

Speaker 2

On Slide 9, we remind you of the 6 month data we presented at ENDO, which shows continued BMI reductions Over time in the majority of patients, the blue bars represent the 16 week data and the red bars represent the 6 month data. On Slide 10, we have the summary of this data and you can see the mean change for the 11 pediatric patients moving from minus 18% at 16 weeks to -22% at 6 months. The 2 adults we broke out separately with 1 patient moving from -14% to -21% And the other patient who has been up and down on her drug dose, regaining as the dose was decreased and losing again as the dose was increased, She has now again lost approximately 10% at 6 months. So on Slide 11, I'll finish my section on this slide, which shows an increasingly robust I'll now turn the call over to Jenna.

Speaker 3

Thank you, David. We are now 1 year into our BBS commercial launch for which was approved by FDA in June 2022. We are very pleased with how the launch has progressed And I am proud of the team for all we have accomplished. And most importantly, Incyvery is now making a positive impact on the lives of hundreds of patients and families the United States. Now beginning here on Slide 13.

Speaker 3

Throughout the year since launch, we have heard from many patients with BBS to have benefited from INCEVRI therapy. Just last week, we hosted in our office a patient summit to formally launch our Patient Ambassador Program. We welcome 8 patients and or their caregivers, all who are active participants in our live or virtual speaker programs designed to continue building the BBS community and offer peer to peer support. Hearing and learning from other patients with BBS or their caregivers can be tremendously powerful as each She was diagnosed with BBS when she was 6 years old and struggled throughout her teens and early 20s with hyperphagia, that pathological hunger that leads to abnormal food seeking behaviors and severe obesity. She tells us how she was hungry all day long and snuck food every night.

Speaker 3

Now at age 28, having been on ensifery since last September That hunger no longer through her words consumes her energy and she is able to enjoy life more. She learned about ensivory through our digital non personal promotion efforts, attended one of our programs to learn about in our Intune patient support service program. Almost 1 year in, she tells us how she is sleeping better, able to focus more and participate in a number of activities and is currently writing a book about her experiences. She is a remarkable young woman, a truly inspiring and powerful advocate and we are very grateful to her and others to continue to share their stories and voices. Next slide.

Speaker 3

Our experienced teams continue to execute at a high level and we couldn't be more pleased by all the progress we have made throughout this 1st year of launch. We are seeing strong continued demand for IMCIVRI, the first and only approved precision medicine for BBS patients with hyperphagia and severe obesity. Throughout the launch from June Since 2022, through the end of the Q2 of 2023, we now have received more than four 25 new BVS prescriptions, which includes robust growth through the 2nd quarter where we received more than 125 In addition, more than 250 physicians have written prescriptions and we have received approval for reimbursement for more than 250 prescriptions. We continue to identify more BBS patients and work to speed diagnosis. Physicians continue to recognize the benefits of ensivory and prescribe it for their patients.

Speaker 3

Additional patients Continue to initiate and maintain on ensivary and payers see the value and differentiation of ensivary as they approve reimbursement. Moving to the next slide with some details on physicians who are writing a Sivri prescription. The specialty breakdown remains consistent with what we have reported at the end of the Q1 of this year. Launch to date, Endocrinology, both pediatric and adult remained a top specialty at a combined 45% since launch. Pediatricians and general or primary care combined come in at just under 40%.

Speaker 3

Also the portion of new to Rhythm prescribers For physicians, our territory managers had not previously called on directly prior to prescription accounts for about 26% of our prescriber base. This continues to give us confidence in our non personal promotion efforts as an effective supplement to our field team by educating a broader physician and patient population. Lastly, on prescribers, Since launch, more than 25% of them have written 2 or more prescriptions, which is a growing percentage of repeat prescribers. This is our goal to have greater breadth in prescribers over time as well as more and more ACPs who identify additional patients and prescribe because they see the value of ENCEVRI for their patients through their own experiences. Next slide.

Speaker 3

On access and reimbursement, last quarter we shared a similar slide During the breakdown of states where we've had success on ensifery Medicaid coverage as well as those we have not had successful based on covered lives. I'm pleased to report that we have seen incremental improvement in gating access over the last quarter. According to Medicaid, there are approximately 85,000,000 individuals enrolled in Medicaid in all 50 states, plus Puerto Rico and the District of Columbia. Launch to date, approximately 80% of Medicaid covered lives are in states With a positive ANSIVRI policy in place or in a state where we have been able to get at least one positive coverage decision in the absence of an ANSIVRI policy. The remaining 20% of Medicaid lives represents a mix of states in which we either have not yet had a prescription from Sivri that would trigger a coverage decision or we are still working to secure access for prescription or finally where we have not been where we reported a 75%, 25% breakdown.

Speaker 3

Additionally, the payer mix for BBS does remain consistent as almost 90% of prescriptions since launch fall under commercial or Medicaid plans. The average time frame for approval is 1 to 3 months with some tails extending out several months consistent with our previous report. Overall, we are pleased with achievements to date and securing approvals. Next slide.

Operator

Here are

Speaker 3

some details on patients with BBS with prescriptions and on drugs. Adults now account for approximately 54% of This speaks to an opportunity identified upfront. In the CRIS Registry, We knew approximately 80% of participants were 18 years of age or younger, which is not representative We believe many older patients may have been lost to follow-up or lost in the system. So we put plans in place to find them through non personal promotions, educational webinars, engagement with the BBS Foundation and more. Catherine, the woman on my opening slide today is a prime example of this.

Speaker 3

She found us with a little digital help after MCIFRIA was approved. Lastly, on access, and this becomes more important as we look ahead to coming quarters, is our reauthorization rate. While the majority of the reauthorization decisions are made at 12 months on therapy, Some plans do have 3 or 6 months reauthorization requirements. We are very pleased to report that launch to date, we have seen 50 reauthorization approvals with only one patient who did not meet criteria. This was a patient who was not compliant on medication.

Speaker 3

Next slide is my final slide on patient identification. With our bolstered confidence in the need for a targeted therapy like Zifrie and the benefit it can provide, we remain focused on educating the community to find already diagnosed patients while expediting the identification of individuals with BBS who do not yet have a diagnosis. Our efforts over the last several quarters have shown to be and we continue our engagement with all key stakeholders along with our overall community building efforts. We are excited about our progress over the last year and the opportunities we have ahead of us. With that, I'll hand it over to Jan.

Speaker 4

Thank you, Jennifer, and good morning. Slide 20, I will start with a reminder. Europe is a key market for Rare Diseases and Forearm. As we have spoken of before, European countries typically are better organized for rare diseases and more centralized in their approach The United States with single payer healthcare systems, government funded genetic testing, more established networks of experts and referral patterns, Multiple Centers of Excellence and Patient Advocacy Group. Even though these diseases are quite rare, the opportunity is meaningful for us In both POMC LIPAR deficiencies and Bardebede syndrome.

Speaker 4

In the EU4 plus UK, we estimate the prevalence for bialylic For the C and L part, we are between 621,500 patients and we have identified approximately For Bardebel syndrome, our estimated prevalence in the EU4 plus UK is 4 1,000 to 5000 patients, which is a prevalence similar to the U. S. And we have already more than 1500 patients identified in this country. With our growing international team, we remain focused on identifying more patients and continuing to collaborate with country level authorities and centers of excellence to gain reimbursement and access for these patients. Next slide.

Speaker 4

Overall, on a global level, Incyra is now available in more than 10 countries outside the United States. We are now approved and available for both Ponsilipar and BBS in Germany. In France, we are available for the same indications under a paid early access program. We also have full coverage for Insivri For Pompa and Lipa in England, Italy and the Netherlands and we are advancing with pricing negotiations for BBS in the UK, Italy, Spain and the Netherlands with BBS launches planned in Italy and Spain for this year and in 2024 in the U. K.

Speaker 4

And in the Netherlands. We also have achieved name patient sales in Spain, Austria, Turkey, United Arab Emirates and Early Access in Argentina And we have initiated reimbursement processes in Belgium and the Nordic country. Next slide. Lastly, an update on our launch for BBS in Germany, where the GBA, which is the German Federal Joint Committee, did recognize the fact That Incyvary is a precision medicine, did exclude Incyvary with an anonymous vote from its lifestyle exemption list and made it eligible for full reimbursement by the statutory health insurances for the patients with DBS and POMC PCSK1 and LITA deficiency. Our launch in Germany which kicked off in late April 2023 is off to a strong start and our focus remains on collaborating with leading experts Patient identification also is a key focus.

Speaker 4

We estimate that the prevalence for BBS in Germany is approximately 1200 patients. We believe that there are about 800 patients diagnosed and of those 800, we have identified physicians caring for more than 250 of them And we are focused on I don't think more. Our physician engagement and MC4 pathway education efforts are focused Initially, on major university hospitals across the country, and we have already received many prescriptions from several of them. Lastly, similar to the Rhythm Intune patient support program in the United States, we have a new patient support program in Germany called Rhythm at Home. This program is tailored to each patient, designed to educate patients and caregivers to set expectations for ancillary and to maintain adherence.

Speaker 4

With that, I will turn the call over to Hunter.

Speaker 5

Thank you, Jan. With robust demand for Emsivri in the United States our growing international business, our focus remains on building long term value for our shareholders through excellence and execution alongside a strong commitment to financial discipline. Here on Slide 24 are the highlights of the Q2 P and L. Rhythm recorded $19,200,000 in net product revenue in the 2nd quarter versus $2,300,000 during the same quarter last An increase of $16,900,000 We received FDA approval for BBS on June 16 last year at the tail end of Q2, so that quarter preceded the BBS On a sequential quarterly basis, product revenue increased by approximately $77,800,000 or 68% over the Q1. The primary driver of this growth was the increase in reimbursed BBS patients on IMCIVI therapy in the United States.

Speaker 5

In addition, Inventory at our specialty pharma partner increased both due to the larger number of patients on therapy and an increase in days on hand, Days on hand under Q1 at a lower than normal level of 5 days and added Q2 at a more normalized level of 12 days. This impact contributed $1,600,000 to Q2 revenue. Gross to net for U. S. Sales improved slightly quarter over quarter to 85% versus 83% in the Q1.

Speaker 5

Growth in international sales contributed approximately $800,000 to quarter over quarter entries. While the German launch began late in the quarter, we began to have more of an impact in future quarters. Cost of goods sold during the Q1 was $2,200,000 or approximately 12% of net product revenue, representing a slight decrease versus Q222 as well as versus the Q1 of this year. Cost of sales consisted primarily of product costs, our 5% royalty due to Ipsen under our Original licensing agreement for cetmelanotide as well as amortization of previously capitalized sales based milestone payments. R and D expenses were $33,500,000 for the Q2 of 2023.

Speaker 5

This compares to $31,500,000 during Q2 2022. Compared to $37,900,000 in the Q1 of this year, there was a decrease of $4,400,000 Most of this decrease was driven by the $5,700,000 in one time costs and fees associated with the Simvento acquisition recognized in the Q1. There also was a decrease of $2,800,000 associated with the reduction in CMC expenses given the shift to commercial product. These decreases were partially offset by increased clinical trial expenses of $1,800,000 and expenses of $1,300,000 related to our RM718 program. SG and A expenses were $30,000,000 for the Q2 this year versus $22,300,000 for the Q2 of 'twenty 2.

Speaker 5

On a sequential basis, SG and A increased by $5,400,000 versus Q1 2023. This increase was primarily due to an increase $2,400,000 in U. S. Marketing spend as well as $1,900,000 increase in stock compensation. For the Q2, common shares outstanding were $56,700,000 and quarterly net loss per share was $0.82 Turning to Slide 25.

Speaker 5

We closed the Q2 of 2023 well capitalized with $278,000,000 pro form a cash on hand. This amount includes the anticipated net proceeds of $24,400,000 from the 3rd and final tranche of our healthcare of our royalty financing agreement with Healthcare Royalty Partners. This cash on hand is sufficient to fund all planned activities into 2025. On the $19,200,000 in reported revenue, 86% of revenues were generated from sales of VIMCIBRI in the United States, slight increase from the 83% of net revenues in Q1. International sales growth continues to be robust, albeit from a stronger Smaller base than the growth rate of IMCIBRI sales in the U.

Speaker 5

S. Of note, none of our international markets had full reimbursement for BBS throughout Q2. Germany's 1st full quarter of launch is Q3. Q2 operating expenses included total stock based compensation $8,900,000 as compared to $6,400,000 in the Q1 of 2023. The quarter over quarter increase primarily due to recognition of stock based compensation associated with company performance awards.

Speaker 5

Finally, our non GAAP operating expense guidance for 2023, which we initiated last quarter remains unchanged at $220,000,000 This guidance excludes the non cash impact of stock based compensation. With that, I'll turn the call back over to David.

Speaker 2

Thank you, Hunter. And as you hopefully have heard, we're Really excited about the progress we're making. Slide 27 highlights that we have a lot coming up and we look forward to updating you on those events in subsequent calls. And our last slide, 28, is simply a reminder of our strategic priorities, which remain unchanged, and we will continue to focus on execution. With that, we'll open the call up for Q and

Operator

Please limit your questions to 1 and one follow-up only. Thank you. Please standby while we'll compile the Q and A roster. And our first question comes from the line of Divya Rau with TD Cowen. Your line is now open.

Speaker 6

Good morning, guys. Thanks for taking our question. I'm Divya on for Phil. Just 2 from us. 1 on Daybreak, Could you provide any color on the scope of the presentation that's coming in the second half, maybe like how many cohorts that You expect to present and also patients per cohort?

Speaker 2

Yes, I think to be so The Daybreak, I'm going to repeat what I said earlier. This will only be the open label results. The blinded randomized The draw portion is ongoing. What I anticipate is we'll report out on a probably on the order of 4 to 5 different genes. And again, not all of those genes necessarily will be ones where we've seen a positive result.

Speaker 2

We'll report out on those where we think And we've got enough data to conclude either it's working or not working at some level. The number of patients per gene cohort, again, it's Highly variable as you might expect in this kind of basket trial. Again, I would like to think we'll be in the range of 10 plus or minus patients for the genes that We report out.

Speaker 6

That's helpful. And then just one more question from us. In terms of the number in terms of the patients who have yet to be reimbursed, how many of those are on the free drug program in BBS.

Speaker 2

Jennifer?

Speaker 3

So we do have a free drug program available for patients. To be eligible for the free drug, they have To go through several steps in terms of the reimbursement process, to date, the number of Patients who are on Afraid drug still remains at approximately 20% of scripts.

Speaker 6

And how do you expect that to Change in the long term, do you expect that to be relatively consistent?

Speaker 3

So we have made incremental progress just in terms of securing access for MFCFRI, as outlined In terms of the Medicaid portion, and that is a work that is ongoing in terms of going payer by terms of those efforts overall, approximately 10% of the scripts Our Medicare patients, where we do not have access and while we are still investigating potential options in terms of opening up access for those patients that would be a longer term type of Ongoing dialogue with CMS and InTouch. And I would say that in terms of commercial patients, The ones that are on our free drug program similar to other rare disease therapies, there are coverage from large commercial And it's quite good in terms of reimbursement. It's the smaller, really small self insured plans that I think in general rare diseases may have difficulty gaining reimbursement for the cost of therapy.

Speaker 6

Got it. Thank you so much.

Speaker 7

Thank you, David.

Speaker 2

Next question.

Operator

Your next question comes from the line of Derek Archila with Wells Fargo. Your line is now open.

Speaker 8

Hey, good morning and thanks for taking the questions. Congrats on Just first question from us. Just any updates on the overall discontinuation rates you're seeing within Sivri, I guess across all indications, but maybe Bart Beetle specifically. And then secondly, I know the The amount of sales currently OUS is small and growing, but I guess how should we think about the sales ramp in Germany now that you're there? And just Curious like is that going to mimic the U.

Speaker 8

S. Or should it be or should we think about it differently? Thanks.

Speaker 2

Yes. Jennifer, discounts?

Speaker 3

Overall, we're very pleased with the discount rate, which is now approximately 10% of patients who have started therapy. There was an through the initial nausea vomiting and we have had very, very low discounts from that perspective. And I think that there are A variety of different reasons that patients do DISCON, some due to AEs, others for other personal And we continue to monitor those patients, and some of these patients may be interested in getting back on therapy, as their Situations may evolve over time as well.

Speaker 2

Great. And Jan, you want to comment on the expected German ramp or how you think about that?

Speaker 4

Sure, sure. Thank you. We had a strong start in Germany with a very experienced team in the field. A bit difficult to project the next quarters. What I can tell you is that first, we did add maybe prescriptions from several major centers and it will continue.

Speaker 4

The second thing is that back to your questions, we don't expect a fast ramp up as we had in the U. S. Because of the German conservative Mindset, but for sure, we have all the signals that will that are telling us that we will build a solid growth on the long run.

Speaker 8

Perfect. Thank you.

Speaker 2

Eric, next question.

Operator

One moment. And your next question comes from the line of Corrine Jenkins with Goldman Sachs. Your line is now open.

Speaker 9

Good morning, everyone. Maybe a couple from me. First, just how quickly post an IND can you move forward with that weekly formulation you announced today. And should we look for you guys to move directly into Phase 3 studies with that asset?

Speaker 2

So again, the timing on how quickly you move after filing an IND is dependent on regulatory input, of course. So All we're communicating today is we're filing the IND and we will obviously meet with the regulators and get further input. The strategy for developing the drug, again, all we'll say today is that we will start with A Phase onetwo type of effort, which will be initially in healthy volunteers. I think we have a big advantage Here in that having developed setmelanotide and understanding populations we're studying and what needs To be done to successfully get a drug through for these indications. So we'll leverage that learning as we go forward.

Speaker 2

But step 1 is pretty conventional with Phase 1, operator.

Speaker 9

Okay. And then in terms of the epidemiology, just Overall, what portion of patients would be expected to be adults with BBS versus children or pediatric population?

Speaker 2

Maybe I'll take that. I think these are the things we know. One is if you look at the CRBS registry in the U. S. On the order of 80% plus of those individuals were pediatric, that doesn't mean that 80 Some of the patients are pediatric.

Speaker 2

It just means that of those patients who stay engaged with the registry often probably with the help of their families, They're disproportionate peds. That's number 1. Number 2, we have been focused disproportionately on the pediatric call point, if you will. So that also would SKU us to perhaps finding more peds. What's been really encouraging, maybe then, sorry, the last thing before I get to the encouraging part is that These patients, they don't die.

Speaker 2

They may die early, the mortality. We don't have good data on overall life expectancy here, They certainly don't die necessarily at a young age. And therefore, there's no reason not to expect a significant number of patients who are now adults. And if you look at the population distribution overall, a quarter peds, 3 quarter adults, what's really encouraging about the information that Jennifer presented is that We are penetrating to a significant degree that adult population. They're finding us.

Speaker 2

They want to go on therapy and they're staying on therapy.

Speaker 9

Great. Thank you.

Speaker 2

Next question.

Operator

Your next question comes from the line of Tygoon with Stifel. Your line is now open.

Speaker 10

Great. Thanks very much for taking our questions and congrats from us as well on a strong quarter. Just looking at the overall As you continue to roll out BBS in the U. S, I guess how much more confidence do you now have towards the estimated prevalence on BBS that you initially project A couple of months ago, that was realized up. And I guess, given the strong ramp up this Quarter, I guess, how are you kind of projecting the rest of the year?

Speaker 10

You mentioned no quarter over quarter trend line drawing, but There seems to be a little bit of an inflection this quarter. So does that portend anything in your view or any color on that would be great. And then in terms of the HO trial timeline, recognizing there is approximately a third that you've activated right now, Is the 1 third still out of the 35? Do you still anticipate 35 to be activated? Or do you think you can kind of muster with maybe 2 thirds of that 35 to satisfy your overall 120?

Speaker 10

Thanks so much.

Speaker 2

Yes. Maybe I'll take the last question So on the number of sites, I think the number of sites will probably end up opening given the strong patient interest and the like, it is full $35,000,000 so we expect it will be somewhat less than $30,000,000 so that's the answer to that. And Jennifer?

Speaker 3

Just relating to the projections for the rest of the year, what I'll just say right now is that we are Extremely excited about the opportunity and feel that there is still a lot of room just in terms of growth for this product and Just the feedback we're receiving in terms of patients benefiting on therapy just gives us so much more energy in terms of really moving forward with Finding these patients, we have been pleased overall in terms of the targeted ways that we have identified patients and feel like there's still A lot more that we can do there, in addition to the breadth as well as what I outlined in terms of the depth of physicians writing more than one script because of the conviction they have around the drug itself. I will say though that things take time in It takes time for patients to go and see their physicians. It takes time for some of these physicians and patients To have that conviction to initiate therapy, I mean some of these scripts that we saw come in, it was many, many months of interaction And Even like physicians who are now educated, it will take time for the patients to come in so that they can actually suspect and then test and get patients to an accurate diagnosis.

Speaker 3

So overall, like I said, there it's Rare disease, it really is dependent in terms of what happens within that quarter, but we are very, very happy in terms of What we've achieved and we have a lot more to do.

Speaker 2

Great.

Speaker 4

Yes.

Speaker 11

And Dae Gon,

Speaker 2

I think maybe just to amplify one short thing on Jennifer's answer there is The overall prevalence numbers, all those things that Jennifer highlighted and the progress we've made to date, it does, not surprisingly, we increase our confidence in the overall epidemiology, this 4000 to 5000, again, we're learning more and more much, much more than we did, of course, first launch, so confidence there is extremely high. And that's a over beat this 0.04 percent too much. It's The quarter on quarter piece, again, the nature of rare diseases, which is why we keep reiterating this, it is going to be variable. It'll be up, it'll be down. I mean, but That's not what we hope you're looking at.

Speaker 2

We hope what you're looking at is a slightly longer view. Again, we've got a 1 year view here. And our confidence This is going to continue to grow meaningfully over the next subsequent quarters is very high.

Speaker 10

Sounds good. Congrats.

Speaker 2

Thanks.

Operator

And your next question comes from the line of Michael Higgins with Ladenburg Thalmann. Your line is now

Speaker 7

Thanks, operator. Good morning, guys. Thanks for taking the questions and I'll share my congrats on the continued success with the launch of BBS A little more progress in HO. Daybreak is one of the bigger drivers here this back half. You've got a lot of things going on, of course, but just wanted to poke in a bit Somewhat of a follow-up from a previous question, understand what we are to be looking for.

Speaker 7

I assume it's some efficacy readings, whether that's BMI, BMI Z scores, hyperphagia scores. We're curious if we're going to see this as an overall means, any patient specific data And also, your decision to advance specific genetic patient types, does it matter by the prevalence Of that specific patient type? Thanks.

Speaker 2

Yes, Michael. So more to come. I think what We will put out so the data cuts we're looking at now are still rough and not final one, so caveat. 2, We'll determine how best to present the data. Again, instead individuals, I mean, if there's a small number of patients in a specific cohort, we'll probably Zento specific and for those where we have a slightly larger number, maybe we'll need those.

Speaker 2

But that's again to be determined. I think the decision making around what we might do next depends on the strength of the data, number 1. What we would consider for sure, as you indicated is, A, how robust is your response and 2, how prevalent is that gene. If we have one We have a gene where we've only been able to find a small handful of patients even though the gene itself looks potentially interesting. We may not We have the ability to recruit and actually run a trial just given that small prevalence.

Speaker 2

So we'll take all that into consideration. I do want To remind everybody that the bar for taking things forward is high. So I anticipate taking Or just because we see a signal, we want to have some confidence that it's robust and that we can execute on the trial and relative to all the other things that we have to do. And you heard about the 718 program today, we're going to be incredibly focused on pushing that forward as well. Next question?

Operator

Yes, you are still on.

Speaker 2

Sorry, did we is there another question or Operator?

Speaker 1

Yes. We

Operator

can hear Michael. I can hear Michael.

Speaker 2

Oh, we can't hear. We can't hear Michael. Michael, you still there? Okay. There you go.

Speaker 2

We got you.

Speaker 7

Oh, there we go.

Speaker 2

I'm sorry about that. We got you.

Speaker 7

We'll keep going back on. Just one follow-up here and really one for you David is given the state of the markets here Slightly improving, but still assets are relatively cheap. Wanted to get your sense for and your appetite for expanding the pipeline. Obviously, you've got 7.18 going forward, you've got some bento activity, but curious to hear your appetite for expanding the pipeline. Thanks.

Speaker 2

Yes. Again, I answer it, I will be the same at this point. Very, very high bar to do anything. We are not actively looking, but we will be opportunistic in the sense that if in our engagement with the world If things are of particular interest and we see a real opportunity to add value, then of course we would look. But basically we're just very focused And executing on these near term value drivers, and we'll continue to assess other opportunities as they might arise, but no specific focus on additional Acquisitions.

Speaker 7

I appreciate that. Thanks again.

Speaker 2

Thank you. Next question?

Operator

Your next question comes from the line of Joseph Strainer with Didym and Co. Your line is now open.

Speaker 12

Hi, good morning. Thanks for taking our question. Just curious, what percent of patients on ensivre have titrated back down to the lower daily dose, so down either to the 1 mg or the

Speaker 2

DBS in the U. S. Is probably our best shot at that, Jennifer?

Speaker 3

So overall, in terms of The doses the majority of these patients are getting to the target 3 mg dose. I will say that just in terms of the percentages that you break down the different segments, whether adults versus Pediatric patients, there is a slightly higher percentage of adults that get to the 3 mg. It may be also because There is basically 1 titration staff from 2 to 3 to get to the max dose of adult. But Overall, even within each of the segments, the majority of the patients are getting to the 3 mg dose. And we want them to also be able to work with their physicians

Speaker 12

Great. Thanks for the additional color and thanks for taking our question.

Speaker 2

Thanks, Troy. Next question?

Operator

Your next question comes from the line of Jeffrey Hung With Morgan Stanley, your line is now open.

Speaker 11

Hi. This is Michael Riad on for Jeff Hung. Thank you for taking our questions and congrats on the quarter. Can I just ask for a little bit more color on the previous comment for the 1 to 3 months period for translating scripts to sales? You had said that there was a tail end for some patients that it could extend out several months.

Speaker 11

What factors come into play there? And what makes those patients more likely to have A longer process. Thanks.

Speaker 3

So the reasons just in terms of the length of Time to gain reimbursement is not always relating to the payer itself. Sometimes it's just Also delays in terms of HCP side, from a process standpoint, whether they're working through multiple Patience and doing things a bit sequentially or for other reasons. With that said, I mean, we have definitely gotten Even within those groups of tail end patients and the patient Support group as well as our access group and our teams on ground really continue to be persistent in terms of working that process through.

Speaker 11

Okay. Thank you. That's very helpful. And then maybe just a follow-up, maybe more of a housekeeping question. You reiterated guidance on OpEx and It seems like for SG and A, it would have to somewhat lower in second half to stay within guidance.

Speaker 11

How should we be thinking about expenses in second half, particularly SG and A given The launch is happening in EU.

Speaker 5

Sure. Good question. And we certainly have factored that in. I think there are a variety of factors that are It can be a bit lumpy within SG and A, particularly in the compensation area. So we're quite comfortable that we would still be And on track to meet our guidance.

Speaker 11

Thank you very much and congrats again on the quarter.

Speaker 2

Great. Thanks, Michael.

Operator

And we have a follow-up question here

Speaker 3

from

Operator

Michael Higgins from Ladenburg Thalmann.

Speaker 7

Thanks, operator. Can you hear me guys?

Speaker 2

Yes.

Speaker 7

Fantastic. Just a follow-up here on 718. Obviously, it's early. IND is not cleared yet. But just looking further down the road as to How this would be developed, given your experience with sevulantide, of course, it's fair to assume the control arm is different, but how do you expect to run 718?

Speaker 7

Would that be up against sevalenotide considering it's approved now? And then after the healthy volunteers are tested, assuming positive, of course, Would you is

Speaker 2

it fair to assume you'd open up

Speaker 7

a broad basket study with all the patient types you've tested and possibly additional patients?

Speaker 2

Mike, all good questions. We don't have the answers today. I mean, those are things we'll think about. A number of choices, you've highlighted some of them about how you develop an That's just good. But first step again is there's not much to negotiate there.

Speaker 2

We'll just get through that. And while we're doing that, we'll evaluate As I said, those are good questions in terms of strategy.

Speaker 7

Appreciate it. Thanks, guys.

Speaker 2

Thank you, Michael.

Operator

And I see no further questions At this time, I will now turn the call back over to David Meacher.

Speaker 2

Great. Thank you. Thank you all for joining in the Early day of August here and we as you hopefully heard today, a really good quarter, a lot of momentum here in Rhythm and Very much look forward to the next earnings call and updating you further on the progress we can make. Thank you.

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Earnings Conference Call
TPI Composites Q2 2023
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