On November 2, 2022 Horizon Therapeutics plc (Nasdaq: HZNP) reported third-quarter 2022 financial results and increased its full-year 2022 net sales and adjusted EBITDA guidance (Press release, Horizon Pharma, NOV 2, 2022, View Source [SID1234622809]).
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"Our third-quarter focus on clinical, commercial and operational execution drove continued progress across our portfolio," said Tim Walbert, chairman, president and chief executive officer, Horizon. "We advanced our pipeline, achieving several important R&D milestones, including completing enrollment in our TEPEZZA trial for chronic/low CAS thyroid eye disease and announcing positive Phase 2 topline results from our dazodalibep trial in Sjögren’s syndrome. These achievements reflect our commitment to bring innovative medicines to more patients in need."
"Our successful launch of the KRYSTEXXA expanded label has driven increased use of KRYSTEXXA with immunomodulation. Encouraged by the momentum we are seeing, we increased our KRYSTEXXA U.S. peak annual net sales expectations to greater than $1.5 billion. We also see a significantly greater opportunity for TEPEZZA in various international markets and are increasing our ex-U.S. peak annual net sales expectations for TEPEZZA to greater than $1 billion."
Third-quarter 2022 and 2021 adjusted EBITDA includes $19.0 million and $4.0 million, respectively, in acquired IPR&D and milestones expenses. Year-to-date 2022 and 2021 adjusted EBITDA includes $19.0 million and $47.0 million, respectively, in acquired IPR&D and milestones expenses.
Third Quarter and Recent Company Highlights
Increasing TEPEZZA Ex-U.S. Peak Annual Net Sales Expectations to Greater than $1 Billion: Today, the Company announced it is increasing its ex-U.S. peak annual net sales expectations for TEPEZZA to greater than $1 billion from the previous estimate of greater than $500 million, following further assessment of the ex-U.S. TED market opportunity and now also incorporating plans to launch TEPEZZA in Europe. The Company continues to expect U.S. peak annual net sales of greater than $3 billion, bringing global peak annual net sales expectations to greater than $4 billion.
Increasing KRYSTEXXA U.S. Peak Annual Net Sales Expectations to Greater than $1.5 Billion: Today, the Company announced it is increasing its U.S. peak annual net sales expectations for KRYSTEXXA to greater than $1.5 billion from the previous estimate of greater than $1 billion. This increase follows strong momentum across rheumatology and nephrology, with the use of KRYSTEXXA with immunomodulation now exceeding 60% of new patient starts and increased clinical conviction among physicians. Given the strong performance of KRYSTEXXA through the third quarter, the Company is also increasing its guidance for full-year 2022 net sales growth to approximately 25% from more than 20%.
Completed Enrollment in TEPEZZA Chronic/Low CAS TED Clinical Trial: In September, the Company completed enrollment in the Phase 4 clinical trial evaluating TEPEZZA for the treatment of TED in patients with a low CAS. Topline results are expected in the second quarter of 2023.
Announced Positive Topline Data from Dazodalibep Sjögren’s Syndrome Trial: In September, the Company announced positive topline data from the Phase 2 trial evaluating dazodalibep in Sjögren’s syndrome patients with moderate-to-severe systemic disease activity as defined by the European Alliance of Associations for Rheumatology (EULAR) Sjögren’s Syndrome Disease Activity Index (ESSDAI) score of ≥ 5. The results met the primary endpoint, showing a 6.3-point reduction in the ESSDAI score at Week 24 in patients treated with dazodalibep, and achieving a statistically significant least squares mean difference of 2.2 points compared to placebo (p=0.017). Other numerical improvements observed in key secondary, exploratory and post-hoc analyses suggest that dazodalibep may also impact other important symptoms for patients living with Sjögren’s syndrome, such as the number of tender and swollen joints, fatigue and dryness. The Company plans to work with global regulatory bodies to design a Phase 3 program which is expected to initiate in 2023. The Phase 2 trial in a second population of Sjögren’s syndrome patients with moderate-to-severe localized symptoms as defined by the EULAR Sjögren’s Syndrome Patient Reported Index (ESSPRI) score of ≥ 5, is fully enrolled and continues to progress.
Entered into Agreement with Q32 Bio for Pipeline Candidate in Development for the Treatment of Autoimmune Diseases: In August, the Company entered into a collaboration and option agreement with Q32 Bio to develop its pipeline candidate ADX-914 for the treatment of autoimmune diseases. ADX-914, a fully human anti-IL-7Rα antibody targeting the IL-7 and TSLP pathways, demonstrated pharmacological effect on T-cells in a Phase 1 study in healthy volunteers. A Phase 2 trial in atopic dermatitis initiated in October and a Phase 2 trial in a second autoimmune disease is planned to initiate next year.
Announced Planned Expansion of Manufacturing Facility in Waterford, Ireland: In August, the Company announced plans to expand its facility in Waterford, Ireland to add new drug substance biologics development and manufacturing capabilities. The project would expand the footprint of the Company’s current drug product (fill-finish) biologics facility, which it purchased in July 2021. The Company continues to invest in its development and manufacturing capabilities to supplement its current network of contract manufacturing organizations and provide flexibility over production and supply.
FDA Approved Expanded Label for KRYSTEXXA to Include Co-Administration with Methotrexate: In July, the U.S. Food and Drug Administration (FDA) approved the supplemental Biologics License Application (sBLA) expanding the KRYSTEXXA label to include co-administration with methotrexate. The approval was based on 6-month and 12-month results from the MIRROR randomized controlled trial (RCT), which demonstrated significant improvements in response rate and sustained patient response of KRYSTEXXA with methotrexate compared to KRYSTEXXA with placebo, as well as a significant reduction in infusion reactions.
Presenting Results from the KRYSTEXXA MIRROR RCT and Dazodalibep Rheumatoid Arthritis (RA) Trial at Key Upcoming Medical Meeting: Multiple data will be presented at the American College of Rheumatology (ACR) Convergence 2022 which will take place on Nov. 10-14, 2022, including 12-month results from the MIRROR RCT. In addition, data from the Phase 2 trial of dazodalibep in patients with RA will be presented. The study met the primary endpoint across all doses, achieving a statistically significant change from baseline in DAS28-CRP, a standardized measure of disease activity in RA trials, at Day 113.
Presented New TEPEZZA Data at Key Medical Meetings: In October, new data were presented at the American Academy of Ophthalmology (AAO) Annual Meeting 2022 showing that insulin-like growth factor-1 (IGF-1) and its related pathways are extensively upregulated throughout all stages of TED, including in both high and low CAS patients. Additionally, in October, new data from a real-world analysis of TEPEZZA were presented at the American Thyroid Association (ATA) Annual Meeting 2022 showing only 4.9% of patients analyzed were prescribed an additional course of TEPEZZA, with 1.9% of analyzed patients going on to initiate treatment.
Presented New UPLIZNA (inebilizumab-cdon) Data at Key Medical Meeting: In October, multiple new data from the UPLIZNA Phase 3 trial were presented at the 38th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS), including data showing that UPLIZNA effectively depletes CD19+ B-cells, including plasmablasts and plasma cells, which have been found to play a crucial role during a neuromyelitis optica spectrum disorder (NMOSD) attack. A separate analysis highlighted the efficacy of UPLIZNA among patients with genetic variations typically associated with reduced response to other types of monoclonal antibody therapies.
Advancing the Company’s Global Expansion for UPLIZNA and TEPEZZA: In August, the Company launched UPLIZNA in Germany, and in France under an early access program, followed by the launch in Austria in September. In October, the Company announced that it submitted a regulatory filing to the Brazil National Health Surveillance Agency (ANVISA) for teprotumumab, in addition to inebilizumab, which was filed earlier this year.
Announced Share Repurchase Program: In September, the Company’s Board of Directors authorized a share repurchase program of up to $500 million of the Company’s ordinary shares. To date, the Company has repurchased $250.0 million of its ordinary shares under the program. The Company’s strong balance sheet and cash generation provides the flexibility to opportunistically repurchase shares while preserving capital to continue prioritizing business development.
Environmental, Social and Governance (ESG) Highlights: In August, the Company published its inaugural Sustainability Accounting Standards Board (SASB) Index as part of its updated 2021 ESG Overview. In addition, the Company continues to receive recognition for its high employee engagement, receiving multiple workplace awards, including Fortune’s "Best Workplaces in Biopharma 2022 List" for the sixth consecutive year and ranked first overall for the third time, Seramount’s "Inclusion Index", Seramount’s "100 Best Companies", Seramount’s "Best Companies for Dad", Newsweek’s "2022 Top 100 Most Loved Workplaces", PEOPLE’s "100 Companies That Care and was recognized in the PatientView global survey of patient groups, ranking third overall in corporate reputation.
Key Clinical Development Programs
Daxdilimab, an anti-ILT7 human monoclonal antibody that depletes certain dendritic cells. Depleting these cells may interrupt the cycle of inflammation that causes tissue damage in diseases such as lupus, and a variety of other autoimmune conditions.
Systemic Lupus Erythematosus (SLE) Trial: Phase 2 randomized placebo-controlled trial underway to evaluate daxdilimab in patients with SLE, a disease in which the body’s immune system attacks its own tissues and organs. Trial enrollment was completed in the second quarter of 2022.
Alopecia Areata Trial: Phase 2 open-label trial underway to evaluate daxdilimab in patients with alopecia areata, an autoimmune disorder characterized by nonscarring hair loss.
Discoid Lupus Erythematosus (DLE) Trial: Planned Phase 2 randomized placebo-controlled trial to evaluate daxdilimab in patients with DLE, a rare, chronic, inflammatory skin condition characterized by lesions that result in scarring.
Lupus Nephritis Trial: Planned Phase 2 trial to evaluate daxdilimab in patients with lupus nephritis, a rare, autoimmune and inflammatory condition of the kidney.
Dermatomyositis Trial: Planned Phase 2 trial to evaluate daxdilimab in patients with dermatomyositis, a rare autoimmune disorder characterized by rashes, debilitating muscle weakness and interstitial lung disease.
Dazodalibep, a CD40 ligand antagonist that blocks T-cell interaction with CD40-expressing B-cells, disrupting the overactivation of the CD40 ligand co-stimulatory pathway. Several autoimmune diseases are associated with the overactivation of this pathway.
Sjögren’s Syndrome Trial: Phase 2 randomized placebo-controlled trial underway to evaluate dazodalibep in patients with Sjögren’s syndrome, a chronic, systemic autoimmune condition that impacts exocrine glands, including the salivary and tear glands. Topline data in Sjögren’s syndrome patients with moderate-to-severe systemic disease activity, as defined by an ESSDAI score of ≥ 5, were announced in September. The trial met the primary endpoint and showed numerical improvements in key secondary and exploratory endpoints. The Phase 2 trial in a second population of Sjögren’s syndrome patients with moderate-to-severe localized symptoms, as defined by an ESSPRI score of ≥ 5, is fully enrolled and continues to progress.
Rheumatoid Arthritis Trial: Phase 2 randomized placebo-controlled trial to evaluate dazodalibep in patients with RA. Topline results were announced in May 2022. The trial met the primary endpoint and dazodalibep was well tolerated. The trial results may inform the dosing regimen for other studies with dazodalibep. Data from the trial will be presented at an upcoming medical meeting.
Kidney Transplant Rejection Trial: Phase 2 open-label trial underway to evaluate dazodalibep in kidney transplant rejection patients.
Focal Segmental Glomerulosclerosis (FSGS) Trial: Planned Phase 2 trial to evaluate dazodalibep in patients with FSGS, a rare kidney disorder characterized by scarring of glomeruli.
HZN-825, an oral lysophosphatidic acid receptor 1 (LPAR1) antagonist designed to prevent gene activation.
Diffuse Cutaneous Systemic Sclerosis Trial: Pivotal Phase 2b trial underway to evaluate HZN-825 in diffuse cutaneous systemic sclerosis.
Idiopathic Pulmonary Fibrosis Trial: Pivotal Phase 2b trial underway to evaluate HZN-825 in idiopathic pulmonary fibrosis, the most common form of interstitial lung disease.
UPLIZNA, an anti-CD19 humanized monoclonal antibody that depletes B-cells, including the pathogenic cells that produce autoantibodies.
Myasthenia Gravis Trial: Phase 3 randomized placebo-controlled trial underway to evaluate UPLIZNA in patients with myasthenia gravis, a chronic, rare, autoimmune neuromuscular disease that affects voluntary muscles, especially those that control the eyes, mouth, throat and limbs.
IgG4-Related Disease Trial: Phase 3 randomized placebo-controlled trial underway to evaluate UPLIZNA in patients with IgG4-related disease, which is a group of disorders marked by tumor-like swelling and fibrosis of affected organs, such as the pancreas, salivary glands and kidneys.
TEPEZZA, an insulin-like growth factor type 1 receptor (IGF-1R) antagonist monoclonal antibody.
Chronic/Low CAS TED Trial: Phase 4 randomized placebo-controlled trial underway to evaluate TEPEZZA in chronic/low CAS TED. The trial completed enrollment in September 2022.
TED in Japan (OPTIC-J) Trial: Phase 3 randomized placebo-controlled trial in Japan underway to evaluate TEPEZZA in patients with moderate-to-severe active TED.
Subcutaneous (SC) Administration Trial: Phase 1b trial initiated in July 2022 to explore the pharmacokinetics, safety, tolerability, efficacy and immunogenicity of subcutaneous administration of TEPEZZA in patients with TED.
Diffuse Cutaneous Systemic Sclerosis Exploratory Trial: Phase 1 exploratory trial underway to evaluate TEPEZZA in diffuse cutaneous systemic sclerosis.
ADX-914 (collaboration with Q32 Bio), a fully human anti-IL-7Rα antibody that re-regulates adaptive immune function by blocking signaling mediated by both IL-7 and TSLP. The Company has an option to acquire ADX-914 on pre-negotiated terms with Q32 Bio.
Atopic Dermatitis Trial: Phase 2 trial initiated in October 2022 to evaluate ADX-914 in atopic dermatitis, a chronic, autoimmune disorder that causes inflammation, redness and irritation of the skin.
Autoimmune Disease Trial: Planned Phase 2 trial to evaluate ADX-914 in a second autoimmune disease.
KRYSTEXXA, a recombinant uricase enzyme that converts urate into a water-soluble liquid, allantoin, that can be easily excreted from the body.
Shorter Infusion Duration Trial: Phase 4 open-label trial underway to evaluate the impact of administering KRYSTEXXA with methotrexate over a shorter infusion duration in patients with uncontrolled gout.
Monthly Dosing Trial: Phase 4 open-label trial underway to evaluate monthly dosing of KRYSTEXXA with methotrexate in patients with uncontrolled gout.
HZN-1116, a fully human monoclonal antibody designed to bind and neutralize the function of the FLT3-ligand, thereby reducing both conventional and plasmacytoid dendritic cells.
Autoimmune Disease Trial: Phase 1 trial underway to evaluate HZN-1116 in patients with autoimmune diseases.
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. Beginning with the third quarter of 2022, the Company is separately presenting upfront, milestone, and similar payments pursuant to collaborations, licenses of third-party technologies, and asset acquisitions as "Acquired in-process research and development and milestones" expenses in the condensed consolidated statement of comprehensive income. Amounts recorded in this line item for the three and nine months ended September 30, 2022, would have historically been recorded to research and development ("R&D") expenses. The Company believes the new classification assists users of the financial statements in better understanding the payments incurred to acquire in-process research and development ("IPR&D"). Prior period condensed consolidated statements of comprehensive income have been reclassified to conform with the new classification.
Net Sales: Third-quarter 2022 net sales were $925.4 million. Third-quarter 2021 net sales were $1.037 billion.
Gross Profit: Under U.S. GAAP, the third-quarter 2022 gross profit ratio was 74.7% compared to 75.7% in the third quarter of 2021. The non-GAAP gross profit ratio in the third quarter of 2022 was 87.2% compared to 85.4% in the third quarter of 2021.
Operating Expenses: Under U.S. GAAP, third-quarter 2022 R&D expenses were 12.3% of net sales and non-GAAP R&D expenses were 11.7% of net sales. Third-quarter 2022 acquired IPR&D and milestones expenses were 2.1% of net sales. Under U.S. GAAP, third-quarter 2022 SG&A expenses were 43.0% of net sales and non-GAAP SG&A expenses were 37.0% of net sales.
Income Tax (Benefit) Expense: On a GAAP basis in the third quarter of 2022, income tax benefit was $0.8 million. Third-quarter non-GAAP income tax expense was $21.8 million.
Net Income: In the third quarter of 2022, net income on a GAAP and non-GAAP basis was $135.8 million and $293.3 million, respectively.
Adjusted EBITDA: Third-quarter 2022 adjusted EBITDA was $335.3 million and includes $19.0 million of acquired IPR&D and milestones expenses.
Earnings per Share: On a GAAP basis, diluted earnings per share in the third quarter of 2022 and 2021 were $0.58 and $1.38, respectively. Non-GAAP diluted earnings per share in the third quarter of 2022 and 2021 were $1.25 and $1.74, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the third quarter of 2022 were 235.4 million. These reported results for the third quarter of 2022 and 2021 include an unfavorable impact of $0.08 and $0.02, respectively, to both GAAP diluted earnings per share and non-GAAP diluted earnings per share, related to acquired IPR&D and milestones expenses.
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, such as the exclusion of acquired IPR&D and milestones expenses, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.
TEPEZZA net sales in the third quarter of 2021 accounted for a larger share of full-year 2021 net sales due to a supply disruption caused by the U.S. government-mandated COVID-19 vaccine orders.
PROCYSBI net sales in the third quarter of 2022 benefitted from a $7.5 million partial release in the pricing review liability recorded during the three months ended September 30, 2022, as a result of a decision made by the Patented Medicines Prices Review Board (PMPRB) in September relating to PROCYSBI pricing in Canada.
Third-quarter and year-to-date 2022 UPLIZNA net sales included $3.2 million and $17.0 million, respectively, in international net sales, related primarily to revenue and milestone payments from the Company’s international partners.
Third-quarter 2022 net sales of the orphan segment, the Company’s strategic growth segment, were $904.7 million, with strong contributions from TEPEZZA, KRYSTEXXA, UPLIZNA, RAVICTI, PROCYSBI and ACTIMMUNE. Third-quarter 2022 orphan segment operating income was $366.9 million.
TEPEZZA third-quarter 2022 net sales were $490.9 million. TEPEZZA third-quarter 2021 net sales were $616.4 million and accounted for a larger share of full-year 2021 net sales due to a supply disruption caused by the U.S. government-mandated COVID-19 vaccine orders.
KRYSTEXXA third-quarter 2022 net sales increased 21% year-over-year driven by higher adoption of KRYSTEXXA with immunomodulation, which now exceeds 60% of new patient starts. In addition, the Company continues to see strong uptake of KRYSTEXXA from both rheumatologists and nephrologists.
On May 6, 2022, Apotex Inc. initiated an at-risk launch of generic PENNSAID 2% in the United States.
On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States.
Third-quarter 2022 net sales of the inflammation segment were $20.7 million and segment operating loss was $10.8 million. The Company expects the wind down of the inflammation segment to be substantially complete in the fourth quarter of 2022.
Cash Flow Statement and Balance Sheet Highlights
Third-quarter 2022 operating cash flow on a GAAP and non-GAAP basis was $366.5 million and $368.4 million, respectively.
As of Sept. 30, 2022, the Company had cash and cash equivalents of $2.13 billion.
As of Sept. 30, 2022, the total principal amount of debt outstanding was $2.59 billion.
Revised 2022 Guidance
The Company increased its full-year 2022 net sales guidance to range between $3.59 billion and
$3.61 billion, compared to the previous guidance range of $3.53 billion to $3.60 billion. The Company continues to expect TEPEZZA full-year 2022 net sales percentage growth in the high teens and is increasing KRYSTEXXA full-year 2022 net sales growth to approximately 25% compared to the previous guidance of more than 20%. The Company increased its full-year 2022 adjusted EBITDA guidance to range between $1.32 billion to $1.34 billion, compared to the previous guidance range of $1.268 billion to $1.318 billion, which includes $52.5 million of expected full-year 2022 acquired IPR&D and milestones expenses.
Webcast
At 8 a.m. EDT / 12 p.m. GMT 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.