My Thoughts On 14 Different Q2 Earnings Calls
Disclaimer: Not investment advice. Do your own research. For informational purposes only. I reserve the right to change positions after publishing as events change.
I’m trying some different and a little more informal this time. Here are some typed up notes of my high level thoughts on 14 earnings conference calls I listened to 2+ times. I follow more companies than this but sadly conference calls are optional and not all biotechs are required to do one - although they should! But what they choose to include in both the prepared comments and how they answer questions is always interesting to me so much so that I like to both listen (for tone of voice, enthusiasm, defensiveness, etc.) and read the transcript a couple times (for clarity and speed). Do I always get it right? No. Some companies are good at straight up lying or promoting their stock when things are going wrong behind the scenes. (Not saying any names for legal reasons.) Also some are overly conservative and probably should boast a little more! But hey I’m putting my thoughts out here and I think my track record is fairly decent and rapidly improving. Some of the commercial-stage biotechs below look appealing to me currently at the current valuation.
Companies mentioned: EOLS, EXAS, FULC, VNDA, VIR, DCTH, AVDL, CHRS, PODD, CMRX, ARQT, CELC, MDWD, SCPH.
I am currently long from that list: EOLS, FULC, DCTH, PODD, CMRX, ARQT, CELC, SCPH.
Notes are in chronological order by date of the earnings call.
Full Top 10 position list as of the end of the month will be posted on Labor Day provided I remember!
EOLS, call date 7/31/2024
Best Asset: Jeuveau, approved 2/1/2019
My Reaction To The Call: Evolus has appreciated post-call to my #1 position which is validation of my belief that the company was strongly undervalued at ~$10.50/sh it reached in late June. Thematically what I took away from the call was that the “neurotoxin market” (Botox and its competitors in aesthetics) is growing at a high single digit rate but Evolus is taking massive share by growing 34% YoY. The people who said you can not compete with Botox in aesthetics are looking increasingly foolish. Evolus has a great sales force, does innovative co-branded advertising with practices, and has a product with precision that providers (medspas specifically) seem to like. And, yes, they price cheaper than Botox. In a cash pay market: that matters. They will now be expanding into fillers with a differentiated potentially best in class product which will allow them to further play the rebate game and incentivize practices to use Jeuveau to get free/cheap fillers…with not $1 of incremental sales force spend. Yes the filler market is weaker currently than the neurotoxin market in terms of growth but it is still growing and who cares when you are starting from 0% share and have the first cold-linked HA filler in history? The LIFT filler will be the “workhorse” of the line and will launch globally by late 2025. All they have to do is get every major market for Jeuveau (named Nuceiva ex-U.S.) humming before then and then use the tailwinds of having a filler line and rebate flexibility to their advantage. And they are still only in 46% of possible U.S. practices right now (but growing new accounts rapidly) and they have room to go deeper in those accounts, especially because most practices stock and use at least two neurotoxin products. Consumer loyalty here looks very very strong and they have great youth-focused branding. I didn’t find much to be bearish here. Stock is up 27% since the call.
Pulled Quotes:
“The combination of the continued strength of our execution and the momentum we have built during the first half of the year give us the confidence to raise our full year 2024 net revenue guidance to between $260 million and $270 million. This updated guidance equates to 34% growth at the top end and is several degrees of magnitude above the estimated growth rates for our category.”
“Our differentiation is evident in the continued growth in new purchasing accounts increasing by 770 in the quarter. This brings our total number of customers purchasing since launch to approximately 14,000, which is approaching 50% penetration of the market.”
“Internally, we are preparing for a transformative year in 2025. This preparation starts with the commercialization of our novel dermal filler line. In June, we submitted our premarket approval application for the -- to the FDA for Evolysse Lift and Evolysse Smooth. In Europe, regulatory approvals for the Estyme dermal filler products are anticipated later this year, and we remain on track for U.S. and international launch in 2025. Our commercialization plans are well underway, and we will share more details at our Investor Day in September.“
“So we do see sort of a low to mid-single-digit growth rate on the filler market in the U.S. this year. And we do anticipate that filler market wrapping around on this depressed growth rate and benefiting from the boom of the patients coming in for GLPs achieving their optimal weight and looking to add on a filler. We have multiple data points that confirm that the market should benefit from the GLP trends, and we should start to see that in the coming quarters. So we feel very good about the market we're entering. Keep in mind, the filler market is a $1.8 billion category.”
“Internationally, we continue to make significant progress with Nuceiva. We continue to expand our international business with a focus on deeper penetration in the U.K., Germany and Italy while broadening our global footprint by commercially launching in Spain and Australia. With these recent launches, we are now operating in all the major markets needed to deliver our 2028 guidance.”
“These efforts collectively keep us on pace to our long-term revenue target of at least $700 million by 2028.”
EXAS, call date 7/31/2024
Best Asset: Cologuard, approved 8/11/2014
My Reaction To The Call: I am really mad that I did not strike on Exact Sciences in the low 40s. Now it’s almost $60, I’m still not long, and fear I might have missed the boat. Although I usuaully favor much smaller companies, the size of the company back then ($7b+) is no excuse because I have been saying Insulet is undervalued in its niche and it’s a larger company. Exact wowed analysts with a very bullish reversal of narrative and although I still think they spend way too much money on OpEx the core business (Cologuard and soon Cologuard Plus) is humming. More people are becoming eligible especially as rescreening is becoming a sizable market and brand loyalty looks very high for people with the opportunity to use Cologuard for the second and third time. Not much to say here that the quotes below don’t convey. Blood testing from competitors as of now is not a threat and they spent a lot of the call defending why. It doesn’t catch enough polyps and early stage cancers and is simply not sensitive enough in its current state. Meanwhile the transition from Cologuard to Cologuard Plus will mean better results for patients and providers with less false positives. For now the moat looks strong but the stock is up almost 50% since the late June nadir. Unfortunately I might have called Evolus but I missed the boat here and I currently have opportunities that I think are a little better with EXAS above $10b valuation now. But it’s permanently on my watchlist for future dips. Preicison Oncology department continues to look meh at the current growth rates but who cares when Cologuard is growing from such a large base.
Pulled Quotes:
“Screening revenue increased 15% to $532 million. We continue to see Cologuard orders consistently grow as health systems, health care professionals and payers increasingly embed the test into their practices. We're proud of our sales and marketing teams and the work they are doing to drive adoption, especially within rescreens and care gap programs. Care gap programs generated more revenue in the first half of 2024 than all of 2023. Precision Oncology revenue grew 7% to $168 million or 6% on a core basis.”
“Cologuard Plus could save the health care system billions of dollars for 2 reasons: one, Cologuard Plus presents an opportunity to further reduce colon cancer incidence and mortality, moving us 1 step closer towards helping eradicate this disease. Two, fewer patients will be sent to unnecessary follow-up colonoscopies.”
“Bottom line is Cologuard Plus delivers real value to people getting screened because of a lower false positive rate, because of a higher rate of detection of cancer and precancerous polyps, it's a better test.”
“One of the -- we've said this in the past, one of the challenges with Cologuard was a 10% false positive rate. That false positive rate is now 7% with Cologuard Plus.”
“The number of patients eligible for rescreen grows this year from 1.2 million to 1.6 million for the full year. And we saw strong growth from rescreens coming in the second quarter. And as we said, the back half of the year is actually up sequentially versus the first half of the year by roughly 10%. And we're getting better and better at engaging with these patients via my chart, our advanced ordering portal, bringing them into the Exact Nexus platform. And once the patient orders the test, the second time it's at 80% adherence rate and the third time is now north of 90%. So again, we're finding new and creative ways to engage with our patients.“
FULC, call date 7/31/2024
Best Asset: losmapimod, Phase 3
My Reaction To The Call: There was not a lot of news in the call aside from people trying to interpret the recent Avidity early Phase 2 data and compare to FULC’s Phase 2 dataset. And of course lots of probing management to read the tea leaves when they are blinded to the data anyway! The two quotes I thought were most interesting was management defending doing in vitro experiments but no biomarker analysis in the Phase 2 on the downstream transcripts of blocking DUX4. And reiteration that the Phase 3 is very overpowered due to the rapid overenrollment of the Phase 3. At this point the Phase 2 and (impressive) OLE data has been sliced and diced a million ways. If you think it’s real the Phase 3 is structually set up to repeat and you should be long. If you don’t think it’s real, you should be short. If you aren’t sure, stay away. I think the Phase 2 is reasonably likely (~50%) to be real and the upside of the first approved therapy is very high where the downside is worth risking. Also to be clear my cost basis here is from a much lower level and I have sold some on large pops before so it’s very possible I am biased by that to be long to a degree on a “house money” philosophy. Full disclosure on that point.
Also what’s the case to be long Avidity (ticker RNA) here? If FULC works it’s oral and it’s very hard for Avidity to show superiority or enroll a Phase 3 against placebo with an approved drug in the marketplace? I think longs there are very overconfident. I also would be very worried about a fail if FULC fails unless you are positive Avidity is completely blocking everything DUX4 downstream and FULC isn’t.
Pulled Quotes:
“The evidence that we have both in the original discovery of losmapimod as well as in the characterization of it was done in muscle cells derived from patients with FSHD, and you can perform the characterizations of the effect on DUX4 and all the downstream transcripts pretty convincingly in that in-vitro system where you don't have competition from other cell types and issues related to the biopsy and so on. And I think those data are very robust and show the mechanism of action on -- of losmapimod on the reductions of DUX4 and the downstream transcripts.”
“And so the powering -- initially, the powering was based on 210 FSHD type 1 patients, and that was the powering at 93%. And the expectation was that we would, in addition, have 20 FSHD type 2 patients who pushed the total up to 230. The over-enrollment pushed the total enrollment from 230 to 260, and the type 1s went from 210 to 242. And so that's really the comparison for the powering was the 210 to 242 type 1s moving it from 93% to 96%.”
VNDA, call date 7/31/2024
Best Asset: Tradipitant, PDUFA 9/18/2024
My Reaction To The Call: I am only interested in Vanda because they are a breakeven company currently with a hodge podge of assets and potentially have a drug that could be approved in gastroparesis or motion sickness down the line. I am not interested in them at all if neither indication is approved and would never be long before approval. The quotes from the call were, uh, not encouraging. This sounds like a management team bracing for a CRL and carefully choosing their language. Maybe motion sickness in a year or two has a better chance, maybe not. Again: I would not be long until tradipitant is approved and based on these quotes I’m not optimistic at all but including in this post because, hey, I already did the work to listen to the call. I will probably forget about this one on a rejection but would do further work if they get a surprise approval.
Pulled Quotes:
“The new drug application for tradipitant for the treatment of syndromes of gastroparesis remains under review by the FDA with a PDUFA target action date of September 18, 2024. We continue to believe that the evidence provided in the NDA, including from qualified experts constitutes both substantial evidence of efficacy and sufficient safety information to support the approval of tradipitant to treat the symptoms of gastroparesis.”
“However, despite our repeated requests for an advisory committee meeting to consider the NDA, the FDA has yet to grant one. In the late cycle meeting held in June, the FDA stated that it would take into consideration our request for an advisory committee meeting.”
“We requested clarification from the FDA as to whether we should expect labeling communication prior to the PDUFA date that the FDA has yet to respond. Nonetheless, we remain confident in the body of evidence we have presented and we await clarity on next steps by the FDA. On tradipitant again, in the second quarter, we reported on positive results for our second Phase III study in motion sickness completing therefore, our clinical efficacy packages with 2 positive Phase III studies and a supporting positive Phase II study.”
VIR, call date 8/1/2024
Best Asset: Tobevibart +/- Elebsiran, Phase 2
My Reaction To The Call: I had no interest in VIR prior to the call but they pulled a surprising in-licensing of T-cell engager assets similar to JANX’s but they have a larger cash pile and much smaller valuation (although with no PoC validation yet)…plus you have the Hepatitis Delta and Hepatitis B programs with data upcoming. The questions I’m asking: Does anyone care or believe in functional cures in Hepatitis Delta or Hepatitis B anymore? Is it worth being a long a second-to-market JANX competitor that is two years behind? In pursuing all these programs with their huge OpEx will they burn their massive cash pile chasing an approval? I am interested here, just not as interested as I am in other near-term stuff. Maybe in 2025 with regulatory guidance and a Phase 3 started in HDV and upcoming oncology data I will see where it sits and consider a position. VIR is in a bit of a holding pattern for now. I suspect the upcoming virology data will be nothing to convince people one way or another and the bias is probably to the negative as a Phase 3 start is likely over a year away. I applaud that they finally axed a bunch of stuff that was wasting money and focus but it feels liks they will still spend a lot on their pipeline.
Pulled Quotes:
“First, the agreement has 3 potentially best-in-class clinical-stage assets. SAR446309 or AMX818, a dual-masked HER2-targeted T-cell engager in Phase I development. SAR446329 or AMX-500, a dual-masked PSMA- targeted T-cell engager in Phase I clinical development and SAR446368 or AMX-525, the dual-masked EGFR-targeted T-cell engager with a cleared IND scheduled to begin Phase I in early 2025.”
“Second, we obtained the exclusive license to Sanofi's PRO-XTEN protease-cleavable masking platform for oncology and infectious diseases. T-cell engagers are in essence engineered by specific monoclonal antibody. And given our deep antibody protein engineering and T-cell biology expertise, we believe that we can unlock meaningful synergies and create new best-in-class therapies.”
“As we anticipate integrating the licensed assets into our pipeline, we are taking decisive steps to focus on the highest-value near-term opportunities. First, we are focusing our resources on our core programs in hepatitis delta, hepatitis B and upon closing the newly licensed masked T-cell engager clinical portfolio. Second, we are phasing out programs in influenza and COVID-19 as well as our T cell-based viral vector platform and programs. Where appropriate, these programs will be made available for partnering. Third, we are implementing a workforce restructuring that will result in a reduction of approximately 25% of our employees. These actions are expected to yield significant cost savings while allowing us to effectively utilize our strong balance sheet to advance our strategic priorities.“
“…absolutely no impact on our time lines for the hepatitis delta and hepatitis B studies. I mean, our focus will be on clinical execution that is really a strategic priority for hepatitis programs and then after closing of this transaction also the newly licensed T-cell engagers.”
DCTH, call date 8/5/2024
Best Asset: Hepzato, approved 8/14/2023
My Reaction To The Call: The post call dip was a blessing that I have used to finally get off the fence in a big way. Yes, things have taken a little longer than we all would have liked. But by late 2024/early 2025 there will be 22 centers up and running with Hepzato Kit. They are making sure the economics work for the hospitals (facility fee, physician payment, drug ASP+6% payment), patients are satisfied and living longer, the safety profile is holding up well in the real world, and offering an advanced procedure is good for the prestige of the leading oncology centers. It’s a win-win-win which are the easiest launches. The therapy can be used in multiple different lines and it's easy to explain to patients (safe, very high dose chemotherapy right to the liver, the organ which most determines lifespan in mOM - and other cancers) and it’s not priced unreasonably compared to Kimmtrak but priced in a way that revenue could ramp very meaningfully. There may be substantial benefit to combining with immunotherapy which will be sussed out in further clinical trial data coming in 2025 and beyond. There is low financing risk because the warrants, which have weighed the stock down like a lead balloon, now will become an advantage when they reach $10m/quarter in domestic revenue (forced warrant exercises) and when the stock is sustainably above $10/sh (more warrant exercises)…the company also spends cash exceedingly reasonably because they have been poor so long. The stock is now rebounding and starting to run but to use an overly done cliche from earnings calls this feels incredibly “early innings”…I’m maybe more bullish than I have ever been. There are people on Twitter who know every detail about Delcath and God bless ‘em but I feel the story is very simple to understand at this point and will be inflecting by the February 2025 earnings call at the latest. It might be slightly early to see the stock run hard but then again maybe not. I don’t want to be late. (Editing note: The stock ran pretty hard in the days after I wrote this - up 32+% in the last five trading days. I guess you’ll have to take my word I wrote this before.)
Pulled Quotes:
“Two additional centers having completed all the required preceptorships and have each scheduled their first treatment this month. Assuming no cancellations, we should end the August with 10 treatment centers. An additional four centers have completed the necessary steps to conduct their first commercial treatment under the guidance of a proctor and are currently in the process of identifying and scheduling a patient for proctor treatment with HEPZATO KIT. As I've mentioned in the past, that can be a complex scheduling algorithm given all the proctors that need to arrive as well as that fit with the patients' needs as well. A further eight centers are currently completing a portion of the preceptorship requirements.”
“We are confident that the 12 centers that are currently in the process of activating will successfully activate within the next 6 months. Now I'd like to dig a little into a second metric, average treatments per center, which has been higher than we projected during our last call. Adjusting for the date of center activation, the average treatment by center was just under 2 per month in the second quarter. Not surprisingly, some centers have notably greater volumes than others. But given the commitment required to become a REMS-certified active treating center, we believe that the vast majority of treatment centers either currently active or undergoing the activation process will become meaningful revenue contributors.”
“This is based in part on a pattern we are seeing where some centers treat an initial group of patients and then pause for a month or more before treating additional patients. Besides assessing patient outcomes, the pause provides an opportunity for our centers to evaluate the explanation of benefits from payers before approving a steady flow of patients. As many of you know, this is a common dynamic for the rollout of premium innovative new procedures and therapies within hospitals, even in situations such as ours, where the product has the benefit of a product-specific J code, which greatly reduces risk of underpayment. Some of you may have seen this morning's press release in which we shared that on August 1 we were informed by CMS that we were granted New Technology Add-on Payment status for HEPZATO, effective for starting October 1, 2024. This additional payment under NTAP designation will help cover the costs associated with the treatment for the small percentage of Medicare patients that might require inpatient stay. As a reminder, most patients do not end up being billed as inpatient. And thus, for those Medicare billed patients in an outpatient basis, the product is reimbursed to the hospital under J-code at ASP plus 6%. Given the pace of revenue ramp, we expect -- we continue to expect that we will achieve $10 million in quarterly U.S. revenue by the fourth quarter of this year, which is expected to trigger approximately $25 million in cash proceeds from the exercise of the remaining tranche of warrants that were issued as part of our financing in March 2023.”
AVDL, call date 8/8/2024
Best Asset: Lumryz, approved 5/1/2023
My Reaction To The Call: Avadel’s stock price is being held down by pending legal cases, including Jazz Pharma getting a recent temporary injunction against AVDL to launch into a future new indication. And it’s really a shame because the company should be rewarded for innovating: Their sales ramp looks amazing, all the leading indications like new starts in their patient portal look fantastic, average net price per patient should continue to increase, patients seem hugely satisfied based on case reports in patient communities, and they are launching a Phase 3 trial in Idiopathic Hypersomnia (the indication Jazz is attempting to block until 2036, which will now be appealed) that will enroll very fast. Based on narcolepsy sales alone it should be a good long idea but Jazz is going to pull every legal lever remaining to try to block sales there too. I love Avadel’s product and the idea of a once nightly therapy for narcolepsy is such an easy sell to patients it’s a no brainer but the continued legal drama is draining and really flattening out the stock . It’s very hard to be long here until there is complete clarity which could take a year or more still.
Pulled Quotes:
“…demand is growing from both naive patients and patients who have previously tried and discontinued twice-nightly oxybates, a patient segment many had discounted; and the launch of LUMRYZ has resulted in the expansion of new oxybate prescribers who have previously never written an oxybate script and, additionally, physicians who are now treating more patients with oxybates, specifically with LUMRYZ, than prior to our launch, resulting in new patients coming into the oxybate market…”
“These important data points only confirm what our research informed us, that the oxybate market opportunity for LUMRYZ is both significantly larger than that of the first-generation oxybate and is unique primarily to LUMRYZ alone.”
“Let me start with our new key piece of metric. As of the end of Q2, there were more than 1,900 patients on therapy. Additionally, for our leading indicators that we have provided quarterly since launch through June 30, approximately 3,800 patients were enrolled in our RYZUP patient support program, and more than 2,400 total patients had initiated therapy.”
“…based upon how we exited Q2, we currently expect that we will generate operating income in Q3, an important financial milestone we will have achieved during the first full calendar year of launch…”
“In addition, we are expecting a potential approval decision by the FDA for our supplemental New Drug Application for LUMRYZ's use in the pediatric narcolepsy population. The target action date is set for September 7. If approved, we believe LUMRYZ has the potential to address the needs of both pediatric narcolepsy patients, who could benefit from a full therapeutic dose of an oxybate given in a once-at-bedtime formulation; and the caregivers who currently have to awaken in the middle of the night, night after night, to administer a second dose of a first-generation oxybate to their children.”
CHRS, call date 8/8/2024
Best Asset: Udenyca On-Body, approved 12/26/23
My Reaction To The Call: I am not sure I am ready to talk about them. I swore off this company (mostly this CEO) in the past. I said I wouldn’t be back and I have adhered to that as the stock fell to levels previously unimaginable. But…BUT…
It is so cheap now that you could make a case to be long. Perhaps a good one. It’s all about Udenyca. Loqtorzi in NPC may be a disappointment in its current form or with a launch that takes 3-4 years to just reach $100 million/year. The convertible debt of $230 million due April 2026 looms large.
BUT—
If you think Udenyca On Body (and autoinjector) could make serious inroads and also bolster the pre-filled syringe there is a case the company could generate enough free cash flow to pay off the convertible debt or have the strength to refinance it to a low-interest term loan. If they did that you are looking at an essentially debt free company (or good debt company) with a product (Udenyca) selling $300m+ per year and another product selling $100m+ per year and a huge SCLC readout looming that could actually give Loqtorzi a 3x larger market to expand into and make it a $300m/year product too.
TO BE CLEAR THIS IS A VERY CHARITABLE FUTURE SCENARIO. I do not have any faith in their oncology “pipeline” beyond what I wrote above - the other stuff looks like turds as of now. But if you value the pipeline at NEGATIVE value and assume there is an exceedingly real risk of bankruptcy or a takeunder at a pitiful valuation based on the CEO’s past competence…I could still maybe make the case to possibly be long. It all comes down to Udenyca’s launch tracetory in auto-injector and on-body in the next four quarters. They either get the debt reworked and rise like a Phoenix or they go under.
Pulled Quotes:
“Q2 UDENYCA net revenue was $50.9 million, a 19% increase quarter-over-quarter and a 60% increase over Q2 2023.”
“LOQTORZI net revenue nearly doubled to $3.8 million in Q2 compared to $2 million in Q1.”
“Pleased to report that many operational milestones have been achieved, setting LOQTORZI up for future growth. And examples of these include: first, LOQTORZI was included in NCCN, ASCO and ClinPath guidelines. In NCCN, LOQTORZI is the only PD-1 with a Category 1 designation for first-line use and the only preferred regimen in second-line plus. Second, payer coverage has now been confirmed on nearly 100% targeted medical benefit lives and health plans, including Medicare Fee-For-Service, Medicare Advantage, and national and regional commercial plans. Third, product-specific permitting J-Code has been granted by CMS and took effect July 1, which will enable electronic billing and faster or predictable reimbursement for providers. Fourth, among the top academic research hospitals, LOQTORZI is now accessible in all 33 NCCN institutions. With the foundation now set to enable broad access to LOQTORZI, our efforts are solely focused on driving new patient starts in the LOQTORZI-eligible patient segments, we believe, constitute approximately 2,000 patients annually.”
“These real-world data combined with the current off-label PD-1 use confirms our view that LOQTORZI would follow a steady revenue ramp in the near term fueled by new patient acquisition, with sustained growth over time driven by duration, as 80% of long-term value is from early line continuing patients, which we estimate will take 3 to 4 years to fully materialize.”
“As for key performance indicators for the quarter, UDENYCA franchise demand grew 25% quarter-over-quarter. All 3 product presentations grew in the quarter, with on-body representing 60% of the total unit growth. On-body and auto-injector ended the quarter at 13.5% and 10% of the total SKU mix, respectively. Franchise market share was 29%, an increase of 4 market share points quarter-over-quarter. Regarding the launch of UDENYCA On-Body, we're very pleased with the launch performance to date and customer receptivity continues to be very positive. Fueling customer adoption are innovative and differentiated features, such as UDENYCA On-Body's 5-minute injection time compared to the 45-minute delivery time for Neulasta Onpro. In summary, our long-term strategy for UDENYCA is delivering as planned and we expect continued revenue growth in the second half of 2024.”
PODD, call date 8/8/2024
Best Asset: Omnipod 5, approved 1/28/2022
My Reaction To The Call: I am pretty much the only person I know who is interested in Insulet and it’s outside of my traditional wheelhouse of therapeutics companies but since the product has worked so well for my son I continue to stay engaged. And I continue to think even at a $13b valuation there is upside if they drive meaningful growth. Many new ex-U.S. geographies to grow, still much upside in the U.S. T1D market, on-label promotion of the U.S. T2D market as soon as the end of this year. (Editing note: After I wrote this the company received early approval on August 26, 2024 far ahead of my expectations by the end of 2024.) I’m kind of a broken record at this point so I’ll just let the quotes from the call speak for themselves. I feel a double over the next 2 years is possible.
(One more thing - there are 5 million T1D and 6 million T2D insulin-intensive patients in the markets they serve. Annual list price in the U.S. is ~$7,200, obviously less OUS. But even assuming a blended net price of $6,000 that’s a $66 billion TAM. Just sayin’.)
Pulled Quotes:
“Starting with financial performance. In Q2, we achieved total Omnipod revenue growth of 26%, including U.S. growth of 27% and international growth of 24%. Omnipod 5 continues to disrupt the diabetes technology landscape. In the U.S., we maintained a strong momentum in new customer starts, achieving sequential growth in Q2, in line with our expectations.”
“We are excited about the huge opportunity for us in type 2, subject to FDA clearance for Omnipod 5 label expansion, which we hope to receive this year.”
“The accelerated revenue we are achieving returns us to growth rates above 20% at the high end of our international outlook. We've been able to achieve these results with only 2 full country launches and 2 more just getting started, which signals to us significant runway for continued international growth as we expand access to Omnipod 5 in all of the markets we serve.”
“Following our successful U.S. limited market release, we entered full release of Omnipod 5 with Dexcom's G7 in the last 2 weeks of the quarter. Full integration with both G6 and G7 allows us to offer even more choice for our customers and capture the growth and adoption of Dexcom's latest sensor.”
“Demand for our G7 offering is strong. Early results are promising and in line with our expectations. We have been pleased with the performance of this channel. It is operating at scale, and we can flex to meet ongoing increases in demand.”
“Further expanding global reach, we recently launched Omnipod 5 in France, which is one of our largest markets. We are in the early days and feedback from patients and HCPs has been fantastic. HCPs have noted the very positive clinical outcomes with particular emphasis on Omnipod 5's simplicity. Demand for Omnipod has always been high in France. And with Omnipod 5, we expect to continue to build on this strength and successfully drive robust adoption as we have seen in our other international launch markets. Omnipod 5 is now available to the majority of our European customers. And of course, we are not stopping there. We are in the final planning stages for additional launches in Italy, the Nordics, Canada, Australia, Switzerland and Belgium, with others soon to follow.”
“Turning to type 2 diabetes, which represents another significant opportunity for growth in our business. We are already the market leader in our space. In the second quarter, people with type 2 represented roughly 25% of our U.S. new customer starts, continuing a strong ongoing trend. The type 2 insulin delivery market is large and significantly underpenetrated. The combined patient population using either intensive insulin therapy or basal insulin, is roughly 3x the size of the type 1 population.”
“More importantly, we are confident we have a clear right to win in the type 2 space. We expect to be the first to market in type 2 with an AID offering, and not just any AID offering, but with Omnipod 5, which is the product platform that quickly leapfrogged into market leadership once we launched it in type 1. Omnipod 5 will bring all the benefits to type 2 patients that it already delivers, ease of access to the pharmacy channel, low to no upfront cost, market-leading ease of use and the unique discretion and convenience of a wearable, disposable patch pump with the day-to-day simplicity of full phone control with both Android and iOS.”
“I do want to mention something as we think of 2025, which we are not providing guidance during this call. We'll wait until we wrap up the fourth quarter. We have a lot of things transpiring here, as Jim mentioned in the second half of the year, G7, we have iOS. We have Libre 2 Plus. We have the international that is really ramping incredibly nicely and more countries ahead and we have the type 2 label extension. Once we have more clarity into the later part of the year, we'll come back and provide that additional guidance.”
CMRX, call date 8/13/2024
Best Asset: dordaviprone, Phase 3
My Reaction To The Call: Not much has changed except for now there is some hard guidance that 2025 will have two catalysts. They are low probability for either of those catalysts to inflect value but then again the stock was recently trading at $0.80/sh. In late 2025 they will have…$0.80/sh in cash and book value. In the small chance that the Phase 3 ACTION study is stopped due to overwhelming efficacy or that ONC206 shows some responses in hard-to-treat brain cancers you might want to own it. (You would definitely want to own it.) Also an outside chance that Australia will approve their drug based on Phase 2 data but the revenue opportunity is pretty small and if the Phase 3 failed then I imagine they would reverse that decision so maybe not material aside from stretching out the cash runway a bit.
Pulled Quotes:
“Starting with our lead program, dordaviprone, our team continues to be laser focused on the execution and enrollment of the Phase III ACTION study, which is on track for the first interim overall survival readout in the third quarter of next year.”
“Should the regulators in Australia approve this application, the final step is to apply for provisional registration. If we proceed to this final step, it's expected that an NDA filing could occur as early as year-end 2024 with possible commercial availability in early 2026.”
“Given the need to confirm responses and the importance of characterizing their durability, initial readout of objective response is expected to occur in the first half of 2025. We are very excited about the current stage of the study where ONC206 is now safely achieving sustained biologically active concentrations in patients, some of which have forms of CNS cancers that are expected to be responsive to ONC206 based on preclinical models and some of which have never been tested before in the clinic with either ONC206 or even ONC201.”
ARQT, call date 8/14/2024
Best Asset: Zoryve Foam, approved 12/15/2023
My Reaction To The Call: Arcutis posted another strong revenue number in the 2nd full quarter post-approval of the foam yet the stock continued to drift down before and after earnings. When the stock went below $1 billion, I took a small position hoping to add more. And then that Friday the stock went up almost 20%. What does the stock movement mean? Probably nothing. Arcutis has always been volatile and they still are a few quarters away at least from profitability. But after an initial launch of their cream in Plaque Psoriasis which wasn’t that differentiated or compelling they seem to have found real enthusiasm with their launch of the foam in Seborrheic Dermatitis. Now with a recently commenced launch in Atopic Dermatitis, impending launch into Scalp & Body Psoriasis in 2025, and a primary care partnership that will bring in revenue with not one extra dollar of expenses you could easily chart a path to profitability by the end of 2025. The problem is the ~120 million shares outstanding kind of blunt the upside but then again…these are conditions that in total affect 13+ million people. Even at a net price of, say, $1,000/year (based off GtN discount and average cream/foam usage per year), there is multi-billion $ potential here. Plus patent life on the foam and possibly the cream until 2041? A Big Pharma really should have tried to acquire this. Maybe they will.
Pulled Quotes:
“The portfolio had quarter-over-quarter volume growth of 42% over Q1. We expect continued build as we include Atopic Dermatitis beginning this quarter and will add a fourth indication in 2025, if approved by the FDA.”
“When we examined the percent of prescriptions being covered by insurers, we see an encouraging trend in ZORYVE 0.3% cream with roughly 4 out of 5 prescriptions covered. For ZORYVE foam, 3 out of 4 prescriptions are covered. This is very positive for the portfolio lending to the gross-to-net improvements we have shown.”
“We have been working on identifying a primary care partner for some time, and we are thrilled that Kowa checks all our boxes with respect to covering a broad PCP target universe, having a proven track record of successful co-promotions and possessing the bandwidth to prioritize ZORYVE promotion.”
“We've already started looking to expand the indications also for ZORYVE foam, having recently filed another sNDA with the FDA in scalp and body psoriasis in July. If approved, this will represent our fourth indication for ZORVYE and I'm going to give just a brief peak at why we're so excited to bring this indication to patients.”
“But as I mentioned in my comments, we don't expect to see an inflection in ZORYVE growth from the primary care and pediatric piece probably this year. I would expect that to be more of a contributor in '25, very much like when we first launched with plaque psoriasis in dermatology, the primary carrier and the pediatric doctors don't know ZORYVE yet and so there's going to be some education that has to go into that.”
“Yes, absolutely. First, in reference to Medicaid. As mentioned earlier, we've been able to secured coverage in Texas, Florida and New York. We are in negotiations with other states for Medicaid and those negotiations are moving forward, and we're having very positive conversations. So I expect to pick up additional coverage with Medicaid states as we roll through 2024.”
“We expect, as you mentioned, we roll over 2025 and into the Kowa partnership relative to Medicare. We do expect to be able to have some Medicare access as we initiate and go into 2025. Those conversations with those partner plans are going well and the coverage would very likely be initiated on 2025, although we are having conversations about the potential to pull some of that forward into 2024.”
“Maybe the only amplifying comment I would add to that is primary care starts to kick in and drive top-line revenue, we aren't spending our money or shareholder money to drive that business, right? That's really coming from the partner side. So that's something that will give us more leverage in terms of profitability. It's revenues without expenses really.”
CELC, call date 8/14/2024
Best Asset: gedatolisib, Phase 3
My Reaction To The Call: Celcuity’s stock price over the next six months will be entirely tied to two readouts in 2nd Line HR+/HER2- advanced breast cancer. The call was slightly bearish overall as the timeline for the “WT” readout is slipping a tiny bit to late Q4/Q1 2025 from Q4. This is notable because I think the WT readout has the highest probability of success. The “MT” readout was moved up slightly. These changes were both due to a minor shift in the population’s mutation status from what was expected during planning. Overall, though, this is mostly nothing unless you were a catalyst trader trying to play the WT readout before the results of the presidental election and its effect on biotech. Elsewhere in the call they gave details on the 1L Phase 3 in planning including a small safety run-in and their total enrollment target. Also they affirmed timelines for early data in the prostate cancer program. I’m still intrigued by the WT readout especially and own the stock but it hasn’t done much and with all the attractive opportunities in commercial biotech it’s kind of hard to justify such a risky binary event. I do think commercially it will be a success if the trial works but I know others are more skeptical based on heavy clinical competition in the space.
Pulled Quotes:
“We now project that 60% of the patients enrolled in the study will be enrolled in the PIK3CA wild-type cohort rather than the 65% originally estimated. And this proportion, while lower than our original estimate is within the reins reported in other studies. And thus, we don't believe this shift is study related but simply a result of normal sample variation within a population. Despite lower proportion of PIK3CA wild-type patients completed, enrollment for the PIK3CA wild-type cohort is over 80% complete. We expect to reach the enrollment target for the PIK3CA wild-type cohort during the fourth quarter rather than the end of the third quarter as we originally forecast.”
“…the investigational combination of gedatolisib with ribociclib has not yet been clinically tested. And therefore, a safety run-in of approximately 12 to 36 patients will evaluate the safety profile of gedatolisib combined with ribociclib and fulvestrant. Safety run-in will be completed and gedatolisib Phase III dose with ribociclib confirmed before enrolling patients in the Phase III portion of the study. For this study, approximately 638 subjects will be assigned to a cohort based on the PIK3CA mutation status.”
MDWD, call date 8/14/2024
Best Asset: EscharEx, Phase 3
My Reaction To The Call: Mediwound is kind of an interesting story with an approved product and another (related) product about to go into Phase 3 in a much much larger TAM. The problem here is they have been supply limited due to manufacturing constraints for some time so, while their operating loss is not that large, relief (and profitability) won’t come on the manufacturing capacity front until the end of 2025 when new facilities are finished. And the Phase 3 in the much larger indications probably won’t read out until 2026/2027. When you consider the time value of money, you have to wonder how patient the market will be to see roughly the same revenue number from them for the next five quarters. Not to mention other factors working against them: some outstanding warrants, poor investor awareness and perception due to the company’s headquarters being in Isreal not the U.S., and the fact they don’t operate in a “sexy” area of biotech but instead thermal burn treatment, venous leg ulcers, and diabetic foot ulcers. Still the low market cap, large TAM for EscharEx, and the fact they have a relative moat with a unique/hard-to-make product probably means the story deserves attention late next year as long as they execute on what they say they can do.
Pulled Quotes:
“At the beginning of the year, we set 3 key goals: First, to complete the construction of our new manufacturing facility; second, to accelerate the revenue growth of NexoBrid; and third, to initiate the Phase III clinical trial of EscharEx. I am pleased to report that we have successfully completed the first goal, and we are well on track to achieving the remaining two.”
“Moreover, we awarded EUR 16.25 million in funding for the expansion of EscharEx indication to include diabetic foot ulcers, significantly increasing the product's total addressable market. We also raised $25 million in financing led by industry leader, Mölnlycke, reflecting strong confidence in our technology and significantly enhancing our financial position.”
“We are starting the commissioning very soon. It can be -- it is a 1-year process. It includes 6 months of stability, so you can't expect it to be earlier. Having said that, as I stated in previous calls, we expect the European approval to be earlier in 2025. And in the United States, we expect it to be at the end of 2025, and our forecast is -- reflects this execution.”
“The upcoming Phase III study will replicate the successful design of our Phase II trial and will be structured as a multicenter, prospective, randomized and placebo-controlled global trial. We aim to enroll 216 patients across over 40 sites. An interim assessment will be conducted after 67% of the participants have completed the trial and providing early insights into the efficacy of EscharEx. This study is scheduled to start in the second half of 2024 as planned.”
SCPH, call date 8/14/2024
Best Asset: Furoscix, approved 10/10/2022, launched February 2023
My Reaction To The Call: scPharmaceuticals probably had one of the most bullish calls of the season based on their commentary but I think there are rightful questions about their ability to execute. When you have an investor presentation touting a $9.4 billion total addressable market but you are doing $8.1 million in quarterly sales in your fifth full quarter of launch I don’t blame anyone for being skeptical. I’m somewhat late to the story myself but at this valuation, and on the heels of a recent offering which strengthened the balance sheet, I think there are reasons to be bullish. In fact, I counted seven reasons why the launch should meaningfully improve. (You can match these up to the seven quotes below, by the way.) Combined with OpEx that is mostly leveling out, I think SCPH could be profitable in 2025. Reason #1: Recently approved Class IV Heart Failure indication. Previously only Class II and Class III were on-label creating a weird situation where you had to be sick enough to qualify for the risk reduction but not too sick. Now it’s much more clear and the sickest patients obviously have the strongest incentive to want to avoid a hospitalization solely to get IV furosemide. Reason #2: Auto-injector approval in 2025. The auto-injector is way easier to use (the current system is kind of a brick that sits on your skin, not ideal), better cost of goods, and the IP will be extended way beyond the current 2034 LoE. Reason #3: New indication approval in Fluid Overload in Chronic Kidney Disease. This will lead to an increase in the total addressable market and also an increase in the size of the sales team. In theory, every dollar spend on the sales team should flow back to more than a dollar in revenue. Right now, they just need to be laser focused in ramping revenue and achieving economies of scale. Reason #4: Average doses/patient is going up. Adding the Class IV indication will help this but it turns out patients and providers do have a high satisfaction with the therapy so once they finally get off the fence maybe they use more than was previously anticipated. So the focus needs to be on patient starts. Reason #5: Expanded sales force. Even before the CKD indication, SCPH recently increased from ~75 reps to 90 reps and that effect should start to flow through on the next earnings call in the HF indication alone. Reason #6: Patient/provider support hub was brought in-house and is way better. The old one frankly sounds horrible. It was all pen and paper and robocalls. The new system is online based and also FedEx’s patients time sensitive information. This is getting patients attention and leading to a higher fill rate from a pretty paltry fill rate before. Reason #7: Starting in 2025, copays will be capped for government insurance patients leading to a much easier sale to the patient as opposed to now where the upfront cost is onerous.
Pulled Quotes:
“By expanding the label to include the New York Heart Association Class IV, which accounts for approximately 10% of heart failure patients and 30% of heart failure hospitalizations, we estimate that as many as 40% of these patients may potentially benefit from Furoscix.”
“We announced earlier this week positive top line study results from a PK study, which demonstrated that Furoscix [auto-injector] achieved primary pharmacokinetic and secondary pharmacodynamic endpoints. Some of the highlights from the study results include: at SCP-111 demonstrated bioavailability of 107.3%, achieving the 90% confidence interval limit of 80% to 125%.”
“Finally, we announced that FDA has accepted our filing of a supplemental new drug application speaking to expand the Furoscix label to treatment of edema due to fluid overload in patients with chronic kidney disease or CKD. The FDA previously indicated that no additional clinical studies were required to expand the Furoscix syndication to include CKD, if we can demonstrate an adequate PK and pharmacodynamic bridge to the listed drug, which is the furosemide injection. […] The FDA assigned a PDUFA date of March 6, 2025.”
“But we do think the Class IV patients will need 9 doses or even up to 12 doses based on the severity of their symptoms. We do think they'll get prescriptions more often than the average heart failure patient as often as every month or every other month. So that could impact the average doses per prescription over a quarter.”
“Yes. So we're going to move to 90 reps. We're in the process of it right now based on the increase in demand we've seen, especially into this quarter and with the label expansion into Class IV. So that will have us at 90 reps.”
“But we'd be able now to have a hub in place that is really seeing a dramatic increase in our fill rate. So again, in the mid- to high 40% for Q2 starting not really low. And then for this quarter, right now, we're closer to 60% and even a little over for this month, 60% fill rate. So we do have a meaningful impact on our net sales this quarter.”
“We think next year sets up well like spectacular for us because with the redesign, patient co-pays a half, they're going to smooth it, so about $166. So where we've lost scripts is when a patient has a high co-pay. So we really think next year with the capping at $166 that our fill rate continues to go up now. We mentioned it was for August, it's in the 60%, low 60%. No brand is going to get above 80%, 85%.”
Hopefully you like this format, I’m going to try to make it a mainstay going forward!
Matt