On August 3, 2022 Horizon Therapeutics plc (Nasdaq: HZNP) reported second-quarter 2022 financial results and revised its full-year 2022 net sales and adjusted EBITDA guidance (Press release, Horizon Pharma, AUG 3, 2022, View Source [SID1234617335]).
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"Double-digit net sales growth in our orphan segment drove our second-quarter performance, with very strong growth of KRYSTEXXA and an increasing contribution from UPLIZNA," said Tim Walbert, chairman, president and chief executive officer, Horizon. "We were also pleased to receive FDA approval of our expanded KRYSTEXXA label in July, to include co-administration of KRYSTEXXA with methotrexate, which will enable many more patients to benefit from this important medicine."
"We are revising our full-year guidance to reflect our expectation for TEPEZZA full-year net sales percentage growth in the high-teens and reflect recent generic competition in our inflammation segment. Importantly, our long-term outlook for TEPEZZA has not changed and we continue to estimate that our three key growth drivers TEPEZZA, KRYSTEXXA and UPLIZNA can generate aggregate global peak annual net sales of greater than $5.5 billion. We understand the dynamics impacting the pace of growth of TEPEZZA, and we are executing on our strategy to address them, including a more significant expansion of our TEPEZZA field force and implementing initiatives to drive further penetration. We are excited about the future prospects for Horizon, with our growth drivers, our expanding pipeline and our global expansion initiatives."
Second Quarter and Recent Company Highlights
Revised Full-Year 2022 TEPEZZA Net Sales Expectations; Confirming Global Peak Annual Net Sales Expectations: Today, the Company announced that it expects TEPEZZA full-year 2022 net sales percentage growth in the high-teens compared to its previous guidance of mid-30s percentage growth. In its prior guidance, the Company expected TEPEZZA trends to continue to show positive progress in the post-Omicron recovery. Following further analysis, the Company determined it needed to increase its efforts to activate and support core thyroid eye disease (TED) treating physicians and to drive an urgency among ophthalmologists and endocrinologists to diagnose and refer TED patients. The Company is executing on several opportunities to accelerate growth, including evolving its commercial focus and increasing the size of its TEPEZZA field force to a greater extent than originally planned. The Company continues to invest significantly in direct-to-consumer advertising. A recent internal market analysis also confirmed the size of the market at more than 100,000 addressable TED patients in the U.S., supporting the Company’s expectation to generate global peak annual net sales of more than $3.5 billion.
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 improvement in response rate and sustained patient response of KRYSTEXXA with methotrexate compared to KRYSTEXXA with placebo (monotherapy). It also demonstrated significant reductions in infusion reactions in the KRYSTEXXA with methotrexate arm compared to monotherapy and no new safety signals were observed.
Advancing the Company’s Global Expansion for UPLIZNA in Europe and Brazil: In April, the European Commission approved UPLIZNA for the treatment of adult patients with neuromyelitis optica spectrum disorder (NMOSD) who are Anti-Aquaporin-4 Immunoglobulin G Seropositive (AQP4-IgG+). The commercial launch of UPLIZNA in Germany is underway. In June, the Company submitted a regulatory filing to the Brazil National Health Surveillance Agency (ANVISA) for inebilizumab.
Presented New KRYSTEXXA Data at EULAR 2022: In June, new data from the MIRROR RCT were presented at The EULAR 2022 European Congress of Rheumatology conference, showing KRYSTEXXA with methotrexate resulted in significant efficacy and safety improvements compared to KRYSTEXXA with placebo during Month 6. The MIRROR RCT demonstrated that 71% of patients receiving KRYSTEXXA with methotrexate achieved a complete response, a more than 30 percentage-point improvement compared to patients who were randomized to receive KRYSTEXXA with placebo (p<0.0001). Additionally, infusion reactions were seen in 4% of patients receiving KRYSTEXXA with methotrexate compared to 31% in patients randomized to receive KRYSTEXXA with placebo.
Presented New TEPEZZA Data at ENDO 2022: In June, an analysis of pooled data from TEPEZZA clinical trials was presented at the annual conference of the Endocrine Society, ENDO 2022, reinforcing the safety profile in people with TED. Hyperglycemic events were reported in 10% of patients who received TEPEZZA, compared to 1.2% of patients who received placebo. All hyperglycemic events reported in TEPEZZA patients were controlled with medicine, did not cause treatment disruption and were most often seen in patients with pre-existing diabetes.
Announced Positive Topline Proof-of-Concept Results from Dazodalibep Rheumatoid Arthritis Clinical Trial: In May, the Company announced positive topline results from the Phase 2 randomized placebo-controlled trial of dazodalibep in patients with rheumatoid arthritis (RA). The primary endpoint of the trial was met across all doses, a statistically significant change from baseline in DAS28-CRP, a standardized measure of disease activity in RA trials, at Day 113. In addition, dazodalibep was well tolerated across all doses. The impact observed after various doses will inform the dosing regimen for other studies with dazodalibep. Data from the trial will be presented at an upcoming medical meeting.
Presented New UPLIZNA Data at Key Medical Meetings: In June, data from the Phase 3 trial were presented at the Consortium of Multiple Sclerosis Centers (CMSC) Annual Meeting that showed no significant differences in disease attacks or disability outcomes in patients with a specific genetic variation, often linked to poor treatment response, compared to those without. Additionally in June, a new analysis of data from the Phase 3 trial was presented at the 8th Congress of the European Academy of Neurology (EAN) meeting, showing that European Union (EU) study participants receiving UPLIZNA had similar outcomes to non-EU patients. In April, multiple new data from the Phase 3 trial were presented at the American Academy of Neurology (AAN) 2022 Annual Meeting, including data showing no significant differences in attacks between NMOSD patients treated with UPLIZNA who previously experienced one pre-study attack and those who had experienced two or more pre-study attacks. At the same meeting, a separate analysis showed long-term treatment with UPLIZNA improved pain and quality of life outcomes for at least three years.
Initiated Enrollment in Alopecia Areata Clinical Trial: In May, the first patient was enrolled in a Phase 2 clinical trial to evaluate daxdilimab in patients with alopecia areata, an autoimmune disorder characterized by nonscarring hair loss.
Received Multiple Best Workplace Awards and Other ESG Recognitions: The Company has recently been recognized by Fortune in several best workplace awards – in April, the Company was named one of Fortune’s "100 Best Companies to Work For" for the second consecutive year, retaining the highest ranked position in the biotechnology/pharmaceutical category. In June, the Company was named one of Fortune’s "Best Workplaces in Chicago 2022" for the sixth consecutive year, ranking third overall on the list, and in July as one of Fortune’s "Best Workplaces for Millennials" for the third consecutive year. The Company also was recognized by Seramount as a "Top 75 Company for Executive Women" and more recently, as a "Best Company for Multicultural Women." In other environmental, social and governance (ESG) achievements, in May, the Company was recognized in the U.S. PatientView survey of patient groups, ranking second in overall corporate reputation among patients familiar with the Company. Also in May, the Company received an International Corporate Social Responsibility Excellence Award for its #RAREis Adoption Fund.
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. The trial completed enrollment in the second quarter of 2022.
Alopecia Areata Trial: Phase 2 open-label trial initiated in May 2022 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. The trial completed enrollment in the second quarter of 2022.
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 will inform the dosing regimen for other studies with dazodalibep.
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 Clinical Activity Score (CAS) TED Trial: Phase 4 randomized placebo-controlled trial underway to evaluate TEPEZZA in chronic/low-CAS TED.
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.
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.
Retreatment Trial: Phase 4 open-label trial underway to evaluate KRYSTEXXA with methotrexate in patients who were not complete responders to KRYSTEXXA monotherapy.
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.
Second-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: Second-quarter 2022 net sales were $876.4 million, an increase of 5% compared to the second quarter of 2021.
Gross Profit: Under U.S. GAAP, the second-quarter 2022 gross profit ratio was 73.7% compared to 75.9% in the second quarter of 2021. The non-GAAP gross profit ratio in the second quarter of 2022 was 86.3% compared to 87.7% in the second quarter of 2021.
Operating Expenses: R&D expenses were 11.8% of net sales and SG&A expenses were 45.4% of net sales in the second quarter of 2022. Second-quarter non-GAAP R&D expenses were 10.9% of net sales and non-GAAP SG&A expenses were 40.2% of net sales.
Income Tax Expense: On a GAAP basis in the second quarter of 2022, income tax expense was $3.8 million. Second-quarter non-GAAP income tax expense was $33.7 million.
Net Income: In the second quarter of 2022, net income on a GAAP and non-GAAP basis was $61.0 million and $253.8 million, respectively.
Adjusted EBITDA: Second-quarter 2022 adjusted EBITDA was $306.6 million.
Earnings per Share: On a GAAP basis, diluted earnings per share in the second quarter of 2022 and 2021 were $0.26 and $0.67, respectively. Non-GAAP diluted earnings per share in the second quarter of 2022 and 2021 were $1.07 and $1.45, respectively. Weighted average shares outstanding used for calculating GAAP and non-GAAP diluted earnings per share in the second quarter of 2022 were 236.2 million.
Second-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 upfront and milestone payments related to license and collaboration agreements, it is considered to be prepared in accordance with GAAP for purposes of presenting the Company’s segment operating results.
(1) Second-quarter and year-to-date 2022 UPLIZNA net sales included $8.6 million and $13.8 million, respectively, in revenue and milestone payments from the Company’s international partners.
Second-quarter 2022 net sales of the orphan segment, the Company’s strategic growth segment, were $841.3 million, driven by the growth of TEPEZZA, KRYSTEXXA, UPLIZNA, RAVICTI and ACTIMMUNE. Second-quarter 2022 orphan segment operating income was $315.1 million.
KRYSTEXXA second-quarter 2022 net sales increased 29% year-over-year driven by higher adoption of KRYSTEXXA with immunomodulation, which now exceeds 50% of new patient starts. In addition, the Company continues to see strong uptake of KRYSTEXXA from both rheumatologists and nephrologists.
(1) On May 6, 2022, Apotex Inc. initiated an at-risk launch of generic PENNSAID 2% in the United States.
(2) On Aug. 4, 2021, Alkem Laboratories, Inc. initiated an at-risk launch of generic DUEXIS in the United States.
Second-quarter 2022 net sales of the inflammation segment were $35.1 million and segment operating loss was $6.6 million. Net sales were impacted by an at-risk launch of generic PENNSAID 2% (diclofenac sodium) initiated on May 6, 2022, by Apotex Inc. in the United States.
Cash Flow Statement and Balance Sheet Highlights
Second-quarter 2022 operating cash flow on a GAAP and non-GAAP basis was $249.2 million and $251.4 million, respectively.
As of June 30, 2022, the Company had cash and cash equivalents of $1.89 billion.
As of June 30, 2022, the total principal amount of debt outstanding was $2.60 billion.
Revised 2022 Guidance
The Company now expects full-year 2022 net sales to range between $3.53 billion and $3.60 billion, updated from the previous guidance range of $3.9 billion to $4.0 billion. The Company now expects TEPEZZA full-year 2022 net sales percentage growth in the high-teens, compared to the previous guidance of mid-30s percentage growth. The Company continues to expect KRYSTEXXA full-year 2022 net sales growth of more than 20%. The Company expects inflammation segment second-half 2022 net sales of less than $30 million due to an at-risk launch of a generic PENNSAID 2% initiated on May 6, 2022. Full-year 2022 adjusted EBITDA is now expected to range between $1.30 billion and $1.35 billion, updated from the previous guidance range of $1.63 billion to $1.70 billion.
Webcast
At 8 a.m. EDT / 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.