On November 2, 2020 Horizon Therapeutics plc (Nasdaq: HZNP) reported record third-quarter 2020 financial results and increased both its full-year 2020 net sales and adjusted EBITDA guidance (Press release, Horizon Pharma, NOV 2, 2020, View Source [SID1234569667]).
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"We are proud of the fact that in just eight months TEPEZZA has made such a dramatic difference in the lives of so many patients, resulting in one of the most successful rare disease medicine launches ever," said Tim Walbert, chairman, president and chief executive officer, Horizon. "We are now pursuing our global strategy to provide TEPEZZA to patients with Thyroid Eye Disease in other parts of the world. Furthermore, we are significantly increasing our investment in TEPEZZA to drive additional awareness of Thyroid Eye Disease and support the continued strong demand for this important medicine."
Walbert continued, "During the third quarter we also saw a return to growth for KRYSTEXXA, our biologic for the treatment of uncontrolled gout and a key growth driver for the Company. With our substantial progress this year, including the improvements we have made to our capital structure and investments in our clinical programs, we are well positioned for continued growth."
Third-Quarter and Recent Company Highlights
Increasing TEPEZZA Investment to Support Continued Strong Growth: Today, the Company increased full-year 2020 net sales guidance for TEPEZZA to greater than $800 million from greater than $650 million. In addition, to support the Company’s outlook for continued strong TEPEZZA growth, as well as to increase awareness of Thyroid Eye Disease (TED), the Company is significantly expanding its commercial and field-based organization for TEPEZZA and increasing its investment in marketing initiatives, including its direct-to-consumer campaign. The Company is also increasing its investment in TEPEZZA long-term supply. These initiatives are intended to support TEPEZZA peak U.S. annual net sales guidance of greater than $3 billion.
Pursuing TEPEZZA Expansion Outside the United States: With the U.S. launch of TEPEZZA earlier this year and the demonstrated benefit it has provided U.S. patients with TED, the Company is pursuing its global expansion strategy to bring TEPEZZA to patients with TED in other parts of the world. Based on its preliminary analysis, the Company projects the initial opportunity to be greater than $500 million in annual net sales, which covers multiple geographies but does not yet incorporate any potential revenue in Europe. Japan is one of the countries the Company is pursuing, and the Company will be engaging with Japanese regulatory authorities and the Pharmaceutical and Medical Devices Agency, as well as with the Japanese medical community, to better understand the current dynamics of TED in Japan and the regulatory requirements for approval of TEPEZZA.
New Executive Vice President, Research & Development and Chief Scientific Officer: The Company announced today that Karin Rosén, M.D., Ph.D., has joined Horizon as executive vice president, research and development and chief scientific officer. Dr. Rosén is an accomplished life sciences executive and physician with nearly three decades of experience, which includes biologic clinical research and development, as well as building, leading and successfully launching multiple novel medicines in the United States and globally. Dr. Rosén will contribute to solidifying the Company’s position as a leading rare disease biopharmaceutical company.
Expanding HZN-825 Development Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in interstitial lung diseases. The most common interstitial lung disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating its first trial in an ILD, a Phase 2b pivotal trial in the IPF indication, in mid-2021.
KRYSTEXXA Immunomodulation RECIPE Trial Achieved 86 Percent Response Rate: Data from the investigator-initiated trial RECIPE will be presented at the 2020 American College of Rheumatology annual meeting on Nov. 7, 2020. This trial was the first randomized controlled trial (RCT) evaluating the effect of co-administration of KRYSTEXXA with an immunomodulator to increase the complete response rate of KRYSTEXXA. The primary endpoint was the proportion of patients with serum uric acid (sUA) less than or equal to 6 mg/dL at 12 weeks: 86 percent of patients receiving KRYSTEXXA co-administered with the immunomodulator mycophenolate mofetil (MMF) achieved this outcome, compared to 40 percent of placebo patients on KRYSTEXXA monotherapy (p-value 0.01). After 12 weeks off of MMF therapy but continuing on KRYSTEXXA therapy, 68 percent of patients achieved a sustained response, compared to 30 percent of placebo patients. The combination was well tolerated with no new safety signals. This trial adds to the growing body of evidence supporting the immunomodulation treatment approach where complete response rates have ranged between 70 and 100 percent.
Initiated Enrollment in KRYSTEXXA Shorter Infusion Duration Trial: On Oct. 29, 2020, the Company announced that the first patient was enrolled in an open-label clinical trial to evaluate a shorter infusion duration for KRYSTEXXA co-prescribed with methotrexate to treat patients with uncontrolled gout. Currently, KRYSTEXXA is infused over a two-hour or longer timeframe. A shorter infusion duration administration could meaningfully impact the experience for patients, physicians and sites of care.
Announced Interim Data in KRYSTEXXA PROTECT Trial: On Oct. 22, 2020, the Company announced interim data from its PROTECT open-label trial evaluating KRYSTEXXA to improve management of uncontrolled gout for adults with a kidney transplant. These data were presented as part of the 2020 American Society of Nephrology Kidney Week. Early data of this ongoing clinical trial are encouraging with respect to the ability of KRYSTEXXA to treat uncontrolled gout in this very sensitive transplant population without compromising kidney function.
Expanding HZN-825 Development Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in interstitial lung diseases. The most common interstitial lung disease (ILD) is idiopathic pulmonary fibrosis (IPF), a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating its first trial in an ILD, a Phase 2b pivotal trial in the IPF indication, in mid-2021.
Completed Enrollment for KRYSTEXXA MIRROR RCT: In August 2020, the Company completed enrollment of its MIRROR RCT, with a total of 145 patients, exceeding its target enrollment of 135 patients. MIRROR RCT is the first randomized trial to evaluate the efficacy and safety of the concomitant use of KRYSTEXXA with methotrexate to increase the complete response rate of KRYSTEXXA. Preliminary six-month results are expected in the first half of 2021 with the full 12-month dataset available after the trial is completed in the second half of 2021.
Announced Topline Data from TEPEZZA OPTIC-X Open-Label Extension Trial and OPTIC 48-Week Off-Treatment Follow-Up Period: In July 2020, the Company announced topline results from its OPTIC-X open-label clinical trial, an extension trial of OPTIC, the TEPEZZA Phase 3 pivotal confirmatory clinical trial, as well as data from the OPTIC 48-week off-treatment follow-up period. OPTIC-X results demonstrated that 89 percent of patients who received placebo during OPTIC and then entered OPTIC-X and received TEPEZZA achieved the primary endpoint of 2 mm or more reduction in proptosis at Week 24. These patients had a TED diagnosis for an average of one year prior to initiating treatment with TEPEZZA compared with an average of six months for patients in OPTIC. The results of the OPTIC 48-week off-treatment follow-up period demonstrated that the majority of TEPEZZA patients who were proptosis responders at Week 24 of OPTIC maintained their response at Week 72, nearly a year off treatment. For the small number of TEPEZZA patients who relapsed during the OPTIC follow-up period, the majority experienced improvements in proptosis with an additional course of TEPEZZA in OPTIC-X. The OPTIC-X and OPTIC 48-week follow-up data underscore the long-term durability of TEPEZZA, the potential for retreatment and the efficacy of TEPEZZA in patients with longer duration of TED.
Permanent J-Code Issued for TEPEZZA: On Oct. 1, 2020, the Company’s permanent, product-specific Healthcare Common Procedure Coding System (HCPCS) J-code (J3241) became effective for TEPEZZA. The permanent J-code enables reimbursement in all outpatient treatment settings.
Additional Clinical Trial Data on TEPEZZA at Upcoming Medical Meetings: Several TEPEZZA-related events will take place at the Nov. 13-15, 2020, virtual American Academy of Ophthalmology (AAO) 2020 annual meeting, including additional details on OPTIC 48-week off-treatment durability of response as well as OPTIC-X treatment results. The Nov. 20-22, 2020, virtual American Society of Ophthalmic Plastic and Reconstructive Surgery (ASOPRS) Fall Scientific Symposium will include a presentation on the recent case report published in the American Journal of Ophthalmology on the treatment of a patient with chronic TED. Additionally, case reports of improvement of dysthyroid optic neuropathy after treatment with TEPEZZA will be presented at both meetings.
Completed Equity Offering and Improved Company’s Capital Structure: On Aug. 11, 2020, the Company completed a public offering of ordinary shares and raised approximately $920 million in net proceeds. On Aug. 3, 2020, the Company completed the extinguishment of all $400 million of its 2.50 percent exchangeable senior notes due 2022.
Received Best Workplace Awards: During the third quarter, the Company received three workplace recognitions. In August 2020, Crain’s Chicago Business selected Horizon as one of the "Best Places to Work in Chicago" and Fortune and Great Place to Work named Horizon to the "Fortune Best Workplaces for Millennials" list. In September 2020, Horizon ranked 15th out of 50 U.S. companies on the "PEOPLE Companies That Care" list. More recently, in October 2020, Horizon was named to the "Fortune Best Small & Medium Workplaces" list, the Chicago Tribune Top Workplaces 2020 list, the "San Francisco Bay Area’s Best and Brightest Companies to Work For" list, the Dave Thomas Foundation for Adoption "Best Adoption-Friendly Workplaces" list and the Crain’s Chicago Business "Most Innovative Companies" List. To date in 2020, the Company has received 11 workplace-related recognitions, reflecting the high level of engagement of its employees.
Key Research and Development Programs
HZN-825 Diffuse Cutaneous Systemic Sclerosis (dcSSc) Program: HZN-825 is the Company’s LPAR1 antagonist in development for the treatment of dcSSc, a rare, chronic autoimmune disease marked by fibrosis, or skin thickening, with no FDA-approved treatment options. The Company expects to begin a Phase 2b pivotal trial in the first half of 2021.
HZN-825 ILD Program: As part of its strategy to further explore the potential fibrosis-mediating benefits of LPAR1 antagonism, the Company is planning a clinical development program for its pipeline candidate HZN-825 in ILD, starting with IPF, which is a rare progressive lung disease with a median survival of less than five years. The Company anticipates initiating a Phase 2b pivotal trial in the IPF indication in mid-2021.
TEPEZZA Trial in Chronic TED: The Company expects to initiate a randomized, placebo-controlled trial of TEPEZZA in patients with chronic TED by year-end 2020. In chronic TED, the disease is no longer progressive; however, significant disease manifestations such as proptosis (eye bulging) and diplopia (double vision) remain.
TEPEZZA Subcutaneous Administration Program: The Company has initiated a pharmacokinetic trial to explore subcutaneous dosing of TEPEZZA, which is currently administered by infusion. The objective of the trial is to inform the potential for additional administration options for TEPEZZA, which could provide greater flexibility for patients and physicians.
TEPEZZA dcSSc Exploratory Trial: As part of its evaluation of additional potential indications for TEPEZZA, the Company is planning to initiate an exploratory trial in dcSSc by year-end 2020.
KRYSTEXXA MIRROR RCT: The Company is currently evaluating the efficacy and safety of the concomitant use of KRYSTEXXA with methotrexate to increase the complete response rate of KRYSTEXXA in the MIRROR placebo-controlled RCT. The trial has completed enrollment, with 145 patients. The primary endpoint of the trial is the proportion of serum uric acid (sUA) responders (sUA of less than 6 mg/dL) at six months, with secondary endpoints out to 12 months. The registrational trial is designed to enable the potential submission of results to the FDA to update the prescribing information. The MIRROR RCT follows the MIRROR open-label trial completed in 2019 that demonstrated a 79 percent complete response rate for patients using KRYSTEXXA with methotrexate, nearly double the 42 percent response rate in the KRYSTEXXA Phase 3 clinical program, which evaluated KRYSTEXXA alone. Methotrexate is the immunomodulator most used by rheumatologists and has been shown to reduce anti-drug antibody formation to biologic therapies when used in conjunction with these therapies.
KRYSTEXXA PROTECT Trial in Kidney Transplant Patients with Uncontrolled Gout: The Company has achieved more than 75 percent enrollment in its PROTECT open-label clinical trial, and expects to complete enrollment by the end of 2020. The trial is evaluating the effect of KRYSTEXXA on serum uric acid levels in kidney transplant patients with uncontrolled gout. Kidney transplant patients have more than a tenfold increase in the prevalence of gout when compared to the general population, and literature suggests that persistently high serum uric acid levels can be associated with organ rejection. Managing uncontrolled gout is one of the most common and significant unmet needs of kidney transplant patients.
KRYSTEXXA Shorter Infusion Duration Trial: On Oct. 29, 2020, the Company enrolled the first patient in its shorter infusion duration trial to evaluate the impact of administering KRYSTEXXA over a significantly shorter infusion duration. Currently, KRYSTEXXA is infused over a two-hour or longer timeframe. A shorter infusion duration administration could meaningfully impact the experience for patients, physicians and sites of care.
Third-Quarter Financial Results
Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.
Net Sales: Third-quarter 2020 net sales were $636.4 million, an increase of 90 percent compared to the third quarter of 2019.
Gross Profit: Under U.S. GAAP, the third-quarter 2020 gross profit ratio was 76.2 percent compared to 73.2 percent in the third quarter of 2019. The non-GAAP gross profit ratio in the third quarter of 2020 was 86.7 percent compared to 90.7 percent in the third quarter of 2019.
Operating Expenses: Research and development (R&D) expenses were 4.7 percent of net sales and selling, general and administrative (SG&A) expenses were 35.5 percent of net sales. Non-GAAP R&D expenses were 4.4 percent of net sales, and non-GAAP SG&A expenses were 30.5 percent of net sales.
Income Tax Benefit: In the third quarter of 2020, income tax benefit on a GAAP and non-GAAP basis was $91.1 million and $73.3 million, respectively.
Net Income: On a GAAP basis in the third quarter of 2020, net income was $292.8 million. Third-quarter 2020 non-GAAP net income was $392.2 million.
Adjusted EBITDA: Third-quarter 2020 adjusted EBITDA was $329.8 million.
Earnings per Share: On a GAAP basis diluted earnings per share in the third quarter of 2020 and 2019 was $1.31 and $0.09, respectively. Non-GAAP diluted earnings per share in the third quarter of 2020 and 2019 was $1.74 and $0.64, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the third quarter of 2020 were 223.7 million and 225.3 million, respectively.
Third-Quarter Segment Results
Management uses net sales and segment operating income to evaluate the performance of the Company’s two segments, the orphan segment and the inflammation segment. While segment operating income contains certain adjustments to the directly comparable GAAP figures in the Company’s consolidated financial results, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.
Third-quarter 2020 net sales of the orphan segment, the Company’s strategic growth segment, were $534.8 million, an increase of 131 percent over the prior year’s quarter, driven by the strong performance of TEPEZZA, KRYSTEXXA, RAVICTI and PROCYSBI. The orphan segment represented 84 percent of total third-quarter net sales.
Third-quarter 2020 orphan segment operating income was $274.7 million, which includes significant investment spend associated with the commercial launch of TEPEZZA.
On Feb. 27, 2020, Dr. Reddy’s Laboratory initiated an at-risk launch of generic VIMOVO in the United States.
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In June 2019, the Company divested the rights to MIGERGOT.
Third-quarter 2020 net sales of the inflammation segment were $101.6 million and segment operating income was $55.1 million.
Cash Flow Statement and Balance Sheet Highlights
On a GAAP basis, operating cash flow in the third quarter of 2020 was $108.9 million. Non-GAAP operating cash flow was $109.0 million.
The Company had cash and cash equivalents of $1.725 billion as of Sept. 30, 2020.
As of Sept. 30, 2020, the total principal amount of debt outstanding was $1.018 billion, which reflects the extinguishment by holders in the third quarter of the remaining $193.0 million of the total $400.0 million of the Company’s 2.50 percent exchangeable senior notes due 2022 through $191.3 million of exchanges for ordinary shares and $1.7 million of cash redemptions. As of Sept. 30, 2020, the gross-debt-to-last-12-months adjusted EBITDA leverage ratio was 1.3 times, compared to 2.9 times as of Sept. 30, 2019.
Revised 2020 Guidance
The Company now expects full-year 2020 net sales to range between $2.12 billion and $2.14 billion, an increase from the previous guidance range of $1.85 billion to $1.90 billion. The Company now expects TEPEZZA full-year 2020 net sales of greater than $800 million, compared to the previous guidance of greater than $650 million, and low double-digit KRYSTEXXA full-year 2020 net sales growth. Full-year 2020 adjusted EBITDA is now expected to range between $920 million and $940 million, an increase from the previous guidance range of $725 million to $775 million.
Webcast
At 8 a.m. EST / 1 p.m. IST today, the Company will host a live webcast to review its financial and operating results and provide a general business update. The live webcast and a replay may be accessed at View Source Please connect to the Company’s website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. A replay of the webcast will be available approximately two hours after the live webcast.