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Good day, and thank you for standing by. Welcome to the Horizon Therapeutics First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] Please be advised, today's conference is being recorded. [Operator Instructions]
I would now like to hand the conference over to Tina Ventura, Senior Vice President, Chief Investor Relations Officer. Please go ahead.
Thank you, Noma. Good morning, everyone, and thank you for joining us. On the call with me today are Tim Walbert, Chairman, President and Chief Executive Officer; Liz Thompson, Executive Vice President, Research and Development; Paul Hoelscher, Executive Vice President, Chief Financial Officer; Andy Pasternak, Executive Vice President, Chief Strategy Officer; and Aaron Cox, Executive Vice President, Finance. As a reminder, Aaron will be transitioning to the role of CFO on May 16.
Tim will provide a review of the business, including our first quarter performance, Liz will then review our R&D programs, followed by Paul, who will discuss our financial performance and guidance in more detail. After closing remarks from Tim, we'll take your questions.
During today's call, we'll be making certain forward-looking statements, including statements about financial projections, development activities, our business strategy and the expected timing and impact of future events. Our actual results could differ materially due to a number of factors, including the risk factors and other information outlined in our latest Forms 10-K, 10-Q and any 8-Ks filed with the Securities and Exchange Commission, and our earnings press release, which we issued this morning.
You're cautioned not to place undue reliance on these forward-looking statements, and Horizon disclaims any obligation to update such statements. In addition, on today's conference call, non-GAAP financial measures will be used. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings press release and other filings from today that are available on our investor website at www.horizontherapeutics.com.
I will now turn the call over to Tim.
Thank you, Tina, and good morning, everyone. We had a strong start to the year with first quarter net sales of $885 million and first quarter adjusted EBITDA of $371 million. We also reiterated our full year 2022 guidance this morning, and are well positioned for another year of top-tier growth.
In addition to strong financial and operational performance, we made meaningful progress on our strategic priorities. We continue to advance our pipeline, initiating two of the seven clinical trials expected to start this year. We also advanced our dazodalibep clinical programs, announcing positive top line results from our Phase 2 trial in rheumatoid arthritis and completing enrollment in our Phase 2 trial in Sjogren syndrome. The positive readout from our RA study serves as an important proof-o-concept validating the dazodalibep mechanism of action as well as providing further validation of our acquisition of Viela last year.
We look forward to the readout of the Phase 2 trial and Sjogren syndrome next year. With KRYSTEXXA, we are pleased to be granted FDA priority review of our supplemental biologics license application for KRYSTEXXA plus methotrexate. This marks an important milestone in establishing KRYSTEXXA plus immunomodulation as the standard of care. We're also making progress on our global expansion strategy. We recently received approval for UPLIZNA Europe for NMOSD, and we're initiating its European launch starting with Germany.
We also initiated the build-out of our infrastructure in Brazil to support the potential launches of UPLIZNA and TEPEZZA. As we continue to advance our strategy to drive rapid growth over the coming years, we announced today that we have hired Jacopo Leonardi as President, Global Commercial Operations reporting to me. Jaco is an accomplished life science executive with more than two decades of commercial experience, including driving growth of high-performing businesses in rare diseases and immunology. Jaco will oversee the US and international commercial organizations, commercial development, and global medical affairs.
Finally, we continue to receive recognition as the best workplace including ranking in Fortune's 100 Best Companies to Work for, for the second consecutive year and retaining the highest ranked position in the biotechnology pharmaceutical category. This recognition underscores the strong engagement of our employees which is very important in our highly competitive industry.
Before I move on to our results in the quarter, I want to thank Paul Hoelscher for his contributions that he's made to Horizon during his time here. As many of you know, Paul is retiring this month. He has been a tremendous partner who was nearly eight years with us, and I'm grateful for his leadership and dedication to Horizon as well as his financial stewardship that has contributed significantly to our success and transformation during that time. We're pleased that Paul will be staying on an advisory role through May of next year to ensure a smooth transition. As announced previously, Aaron Cox will assume the CFO role on May 16th.
Moving on to our growth drivers. TEPEZZA first quarter net sales of $501 million were in line with our expectations. As we mentioned last quarter, the Omicron variant had an impact on our business beginning at the end of last year as did typically seasonality. Despite that, we generated strong performance in the quarter.
As we discussed last quarter, we continue to drive the next stage of our commercial strategy. This includes more deeply penetrating our high-priority TED physician targets.
Additionally, we are broadening our reach through general ophthalmologists and endocrinologists in order to further educate them on thyroid eye disease, and accelerate the referral of their patients to TED treaters.
As part of our plan, we are increasing our field force to accelerate referrals to existing treaters and expand the number of physicians prescribing TEPEZZA as well as continuing our significant investment in direct-to-consumer and other key digital activities. We expect these activities to accelerate growth as we move further throughout the year, reaffirming our confidence in achieving our strong growth expectations for TEPEZZA this year despite Omicron-related impacts persisting into the second quarter.
The TED market has evolved considerably in the last two years since the approval of TEPEZZA, which has proved to be a paradigm-shifting medicine. As the TED market leader, we have continued to do a significant amount of work to further inform our understanding of the market. This includes additional market analysis, payer claims analysis, physician and patient market segmentation, and commercial strategy work, which all support the growth of TEPEZZA over the long-term.
Additional readouts from this have been very insightful and positive. First, we have continued to validate the size of the US TED market, and believe it is at least as large as what we have communicated in the past, if not larger. This gives us even greater confidence in the long-term potential for TEPEZZA and our global peak annual net sales expectation of more than $3.5 billion globally.
Second, it is providing us with important information about the patient journey, and therefore, how we can further drive execution over the short and long term. We are finding that patient symptoms such as diplopia and pain, regardless of the time from diagnosis, are what drives them to seek treatment and drive physicians to prescribe TEPEZZA.
And contrary to earlier views, suggesting the majority of TED patients experienced less severe symptoms over time, we now know that there's a significant cohort of patients who experience high inflammation and high proptosis more than two years after diagnosis. In fact, most of the chronic patients being treated with TEPEZZA today have high levels of inflammation along with their proptosis.
When you launch a transformative medicine into a market that has never had an adequate treatment, the treatment of the disease is continually being redefined. We see symptoms versus time from diagnosis as a key driver of patient uptake.
As you've seen in our DTC commercials and other digital activities, we're expanding our messaging to cover a broader set of signs and symptoms beyond proptosis, symptoms such as diplopia, eye mobility, eye lid retraction, orbital pain and swelling around the eye. We see significant potential to access many more patients with thyroid eye disease where appropriate for TEPEZZA.
For KRYSTEXXA, first quarter net sales were $141 million, representing year-over-year growth of 32%. We generated strong performance despite the impact of the Omicron variant. This was driven by continued adoption in both rheumatology and nephrology market segment, as well as uptake of KRYSTEXXA plus immunomodulation, which is now running at approximately 50% of new patients.
This is up from 35% just a year ago, and remarkable considering the MIRROR data is not currently available for promotion by our commercial organization. We expect the rate of immunomodulation use to continue to increase over time.
We are preparing for the July 7 PDUFA action date to modify the KRYSTEXXA label with the results of the MIRROR trial, which demonstrated 71% of patients who receive KRYSTEXXA plus methotrexate achieved a complete response, more than 30 percentage point improvement compared to placebo patients who received KRYSTEXXA alone.
With an expanded label, our commercial team would, for the first time, be able to actively promote the benefits to physicians. We expect this to drive higher clinical conviction, broadening our reach to more physicians and deepening our penetration among current treating physicians.
This will help to address the significant ongoing unmet need for more than 100,000 patients living with the debilitating effects of uncontrolled gout. The team is preparing for the potential approval and will be ready to launch a new promotional campaign in early July.
Additionally, our clinical team continues to work on MIRROR data dissemination at medical meetings and throughout key publications. We'll be conducting peer-to-peer education programs to continue to build a broader understanding of the MIRROR clinical data.
We're also very pleased that the MIRROR trial was accepted as an oral presentation at the upcoming European Rheumatology Medical Conference, or EULAR, in June. We've been significantly investing in KRYSTEXXA to change its perception since we acquired it in 2016.
Really look forward [ph], as a company been able to completely transform the profile of a 12-year-old medicine as we have with KRYSTEXXA, and we are now incredibly proud to be of this next step in its transformation to bring the medicine to so many more patients, which gives us increased confidence in our peak annual net sales expectation of more than $1 billion.
Moving on to UPLIZNA, which we began to relaunch in the fourth quarter of last year. We delivered another strong quarter, generating first quarter net sales of $31 million, approximately $5 million is international revenue from our international partners. We continue to make good progress with our relaunch, expanding the prescriber base and driving new patient starts.
In the first quarter, more than half of the patient enrollment forms are generated by new prescribers, building a foundation for long-term growth. While the majority of new patients are switching from other therapies, which is in line with our commercial strategy, we're also seeing a good portion of new patients that are naive to therapy. This speaks to the confidence physicians have in UPLIZNA as a next-generation B-cell depleting therapy.
We continue to see faster and higher patient pull-through driven by the strong support provided by our patient services, reimbursement and site of care teams, [indiscernible] which is a critical component of the UPLIZNA relaunch. On the clinical side, we continue to invest in medical and scientific engagement to drive patient and physician preference for UPLIZNA, based on its strong clinical data. It's differentiated mechanism of action and clear patient benefits.
We significantly expanded peer-to-peer speaker programs, with more programs held in the first quarter than all of last year. In addition, we presented new data at several key medical meetings, continuing to build on its long-term safety and efficacy data. As part of our global expansion strategy, we will be launching UPLIZNA in Europe, starting with Germany, following the recent European Commission approval. We're increasingly confident in the prospects for UPLIZNA in animosity as well as in other indications we're pursuing for the medicine, and are progressing towards our peak global annual net sales expectation of more than $1 billion across all indications.
I will now turn the call over to Liz.
Thank you, Tim, and good morning, everyone. On this call a year ago, we shared that we completed the Viela acquisition, and we're in the process of integrating the two companies. We've come a long way since then and have a busy year ahead as we continue to drive our pipeline forward. This morning, I'll update you on the progress of our key programs, starting with our TEPEZZA trial in chronic thyroid eye disease.
We're continuing to enroll patients in our Phase IV randomized placebo-controlled trial in chronic TED. The results of this trial will add to the emerging literature studying TEPEZZA in patients with chronic TED. We now expect the top line data readout for this trial in the first half of 2023. This is somewhat later than we had originally expected, and is due to a slower level of patient enrollment, which is primarily due to the impact from the Omicron variant.
We've since put in an -- we've since put in place a number of measures that are helping drive enrollment and we're tracking to a topline readout in the first half of next year. We continue to advance our TEPEZZA subcutaneous administration program, where we're on-track to begin enrolling TED patients in a Phase Ib trial midyear, and we continue to progress our work on our high concentration formulation. We also continue to enroll patients in the OPTIC-J study in Japan. We remain focused on developing scientific leadership in TED through attendance at key medical meetings during the year, including endocrinology, ophthalmology, oculoplastic and optometry conferences. In the second quarter alone, we plan to attend seven key medical meetings.
Moving to daxdilimab, or HZN-7734, the first and only plasmacytoid dendritic cell or pDC depleter in clinical development. pDCs are found in high concentrations in disease tissues of individuals with certain autoimmune and inflammatory diseases, and the activity of these cells can result in significant inflammation and tissue damage. The Phase II trial for our first potential indication for daxdilimab in systemic lupus erythematosis, or SLE, continues to enroll, and we continue to expect results for this trial in 2023.
We expect to begin clinical trials in four additional indications this year. The first, alopecia areata is an autoimmune disorder characterized by nonscarring hair loss. As we discussed in significant detail on our last earnings call, we remain on track to initiate this Phase II open-label trial in the second quarter in approximately 30 patients with moderate to severe disease.
We expect to initiate our discoid lupus erythematosis, or DLE, trial midyear. DLE is a chronic inflammatory skin condition characterized by lesions. It's a scarifying disease that can be significantly disfiguring and can also result in hair loss. One of the mischaracterizations of DLE is that it only affects systemic lupus patients. However, 80% of DLE patients do not have systemic disease and, therefore, have primary DLE. We estimate about 30,000 patients with DLE are candidates for novel therapies, including biologics. The current standard of care is not uniformly effective and is associated with potential side effects.
Our DLE clinical trial will be a Phase II randomized, placebo-controlled trial in patients with moderate to severe active primary disease. The primary endpoint will be the mean change in the clause aid [ph] disease severity score from baseline to week 24. We'll also be looking at a variety of other measures of disease activity. We also expect to initiate our trials in lupus nephritis and dermatomyositis later this year.
Moving on to dazodalibep, or HZN-4920. This is our CD40 ligand antagonist designed to block a central pathway involved in many autoimmune and inflammatory diseases. We recently completed enrollment in the Phase II double-blind, placebo-controlled trial evaluating dazodalibep for Shogan syndrome, a chronic systemic autoimmune condition that impacts exocrine glands, including the salivary and tier lands. We expect results in 2023.
Yesterday, we also announced top line results from our Phase II double-blind, placebo-controlled trial of dazodalibep in rheumatoid arthritis patients, demonstrating that the primary endpoint was met in all four dazodalibep dosing arms, and showing that dazodalibep was well tolerated. We expect to present the full results at an upcoming medical congress. This marks the first of what we hope will be many clinical validations of the value we saw in the Viela pipeline.
As a reminder, our rheumatoid arthritis trial gives us the opportunity to accelerate our learning about dazodalibep in a large and reasonably accessible patient population using well-understood clinical end points. This trial reinforced our understanding of the CD40 ligand pathway in immune mediated and autoimmune diseases, and provides us with important insights as we consider dosing regimens for future trials in Shogan syndrome and the progressive and rare kidney disease FSGS. We expect to initiate our dazodalibep trial in FSGS in the fourth quarter.
Moving to HZN-825, our oral selective LPAR1 antagonist, which has shown early signs of clinical impact in fibrotic disease. We enrolled our first patient in our pivotal Phase IIb trial for HZN-825 in idiopathic pulmonary fibrosis in January of this year. This trial, and our trial in diffuse cutaneous systemic sclerosis, continue to enroll.
UPLIZNA is our anti-CD19 humanized monoclonal antibody indicated for NMOSD, a rare and devastating neuro inflammatory autoimmune disease that attacks the optic nerve, spinal cord, and brain stem.
As Tim mentioned, the European Commission recently approved UPLIZNA for the treatment of adult patients with NMOSD for AQP4 autoantibody positive. This is a great accomplishment for the R&D team, but an even more important step in our efforts to bring a new option to people impacted by this disease.
We also continue to contribute to the literature regarding the efficacy and safety profile of UPLIZNA. Most recently, in April, multiple new data from the Phase 3 trial were presented at the American Academy of Neurology meeting. The new data demonstrated that there were no significant differences in attacks or worsening of the expanded disability status scale between NMOSD patients treated with UPLIZNA who had experienced one pre-study attack and those who had experienced two or more pre-study attacks.
A separate new analysis of the Phase 3 trial showed that long-term treatment with UPLIZNA improved pain and quality of life outcomes for at least three years. We continue to advance our enrollment in our two Phase III clinical trials evaluating UPLIZNA for myasthenia gravis and IgG4-related disease.
Finally, as Tim mentioned, July 7 is the PDUFA action date for the sBLA that supports updating the KRYSTEXXA label to include co-administration with methotrexate. Data from the MIRROR randomized controlled trial will be presented at EULAR in early June where all of our KRYSTEXXA and gout-related abstracts were accepted. We also hope to share additional details from the MIRROR trial at other key medical meetings.
And I will now turn the call over to Paul.
Thanks Liz. My comments this morning will primarily focus on our non-GAAP results, unless otherwise noted. I'll start with our first quarter results followed by our 2022 financial guidance.
First quarter net sales were $885 million, in line with our expectations. Our orphan segment generated first quarter sales of $834 million, driven by the strong performance across the portfolio. Our Orphan segment operating income was $352 million.
Net sales for the inflammation segment were $51 million and segment operating income was $15 million. Our non-GAAP first quarter gross profit ratio was 88.9% of net sales. First quarter non-GAAP operating expenses were $420 million. This included non-GAAP R&D expense of $92 million where we continue to invest in multiple clinical trials, many that we are initiating this year.
Non-GAAP SG&A expense was $328 million. First quarter adjusted EBITDA was $371 million or 41.9% of net sales. The non-GAAP tax rate for the first quarter was 10.2%.
Non-GAAP net income in the quarter was $316 million and non-GAAP diluted earnings per share were $1.34. The weighted average shares outstanding used to calculate first quarter 2022 non-GAAP diluted EPS were 236 million shares. First quarter non-GAAP operating cash flow was $223 million.
As of March 31st, cash and cash equivalents were $1.64 billion. Backed by the strong cash position and expected future cash flows, business development will continue to play a critical role in expanding our pipeline.
The total principal amount of our outstanding debt is $2.6 billion, with the earliest maturity in 2026. Our gross debt to last 12 months adjusted EBITDA leverage ratio is 1.6 times as of March 31. Additionally, in March, Moody's upgraded our corporate family rating to Ba1 from Ba2.
I'll now turn to our outlook for 2022, and how we see the rest of the year playing out. We are maintaining our full year 2022 net sales guidance of $3.9 billion to $4 billion, representing year-over-year growth of 22% at the midpoint.
For TEPEZZA, we expect full year 2022 net sales percentage growth in the mid-30s. For KRYSTEXXA, we expect full year 2022 net sales growth of more than 20%. We continue to expect full year 2022 gross margin of approximately 87%. We expect full year adjusted EBITDA to be between $1.63 billion and $1.7 billion, representing a 42.1% margin at the midpoint, a 230 basis point expansion compared to 2021.
Our adjusted EBITDA guidance reflects our expectations for strong sales growth, partially offset by our increased investment in R&D, which we expect to be in the low double digits as a percentage of net sales.
As we think about our 2022 operating expenses, we expect a steady increase over the course of the year, mainly driven by R&D. As it relates to our net interest expense, we recently entered into an interest rate swap to move $800 million of our floating rate debt to a fixed interest rate.
Given the expected rising interest rate environment, our new fixed versus floating debt mix, along with our significant cash balance, positions us well to manage expected increases in interest rates. As a result of the swap transaction, $1.4 billion or 54% of our gross debt outstanding has fixed interest rates, which will provide more certainty to our interest expense over the next several years.
We now expect our full year non-GAAP net interest expense to be approximately $85 million to $90 million, a modest increase from our prior expectations of $80 million to $85 million.
We continue to expect our full year 2022 non-GAAP tax rate to approach 12%. As with every year, we anticipate variability in our non-GAAP tax rate on a quarterly basis. We continue to estimate that our 2022 cash tax rate will be in the mid to high single digits.
As always, our tax rates could change significantly as a result of any acquisitions or divestitures we may make or any changes in tax laws. We continue to expect our full year 2022 weighted average diluted share count to be approximately 238 million shares.
Finally, as Tim mentioned, Aaron Cox will assume the role of CFO when I retire in a couple of weeks, and I look forward to staying involved with Horizon in an advisory role for another year.
I want to take this opportunity to say thank you. I've enjoyed the opportunity to work with all of you in the investment community during my time at Horizon. I also want to thank Tim and the Horizon team for the opportunity to have been part of the incredible growth of Horizon over the past eight years.
With that, I'll turn the call over to Tim for his concluding remarks.
Thanks, Paul. I also want to thank you again for your many years of service and partnership contributing to our tremendous success and transformation. It's pretty amazing to look back on the day you start with us eight years ago, almost today and three medicines, I think no rare disease medicines and a market cap of about $1 billion. And we've had incredible transformation since the period you joined and you were certainly a critical part of that and we appreciate everything you've done, and appreciate that you continue to be available, and consulting in working with us. So thanks so much, Paul. Really appreciate that.
In closing, we generated strong financial results for the quarter, positioning ourselves for another year of top-tier growth. We made meaningful progress on our strategic priorities, including initiating two of the seven clinical trials planned this year, as well as advancing our dazodalibep program in two indications, evidence of our efforts to aggressively maximize our pipeline.
The positive readout of our dazodalibep study in rheumatoid arthritis is an important proof of concept, validating the dazodalibep mechanism of action as well as providing further validation of the acquisition of Viela. We look forward to many more, with multiple trial readouts as we move into 2023.
We're significantly preparing for the potential KRYSTEXXA sBLA approval in July, after which we plan to launch a new promotional campaign to drive the use of the KRYSTEXXA and TEPEZZA, and our international expansion efforts are taking shape in support of recent and future approvals such as the announcement for the EC approval this week. We're off to a good start and look forward to continuing to deliver progress on our pipeline and our strong commercial execution as we build on this foundation to drive increasing value to shareholders.
With that, Tina, why don't we turn it over to questions?
Yes. Norma, please go ahead.
[Operator Instructions] Our first question comes from Chris Schott with JPMorgan. Your line is now open.
Great. Thank you so much for the questions. I just had two on TEPEZZA. I guess first a bigger picture one, given the supply disruption last year, I think it's been harder for the street to get a clean look at kind of what's happening with underlying growth with TEPEZZA. So just – it sounds like you've done some incremental work on the market. Can you just maybe frame for us right now your penetration rate currently into the acute market and what you see as the primary hurdle for patients who aren't getting therapy that you need to address to get them on therapy? So as a bigger picture one.
And the second one I was looking for, just color on sequential dynamics to keep in mind for TEPEZZA in 2Q. I think in the prepared remarks, you mentioned you're still seeing some Omicron impact, which surprised me a bit. I just like -- I would appreciate a little more color there? Thanks so much.
Sure, Chris. Certainly, with TEPEZZA out from within a few weeks of launch in early 2020, the world change of pandemic began. And we had two years of a non-normal launch sequence. So certainly, there has not been a normal distribution, a normal launch. We had the supply issue, as you talked about and we had the Delta variant in the third quarter. And play the most invasive variant with the Omicron variant in really from mid-December through February.
So, when we look at our penetration, we feel that -- we've had very strong penetration of the acute market, but with significant upside opportunity. Just based on the numbers, we are – I don't know exactly what numbers we've communicated, but I would say roughly minimal penetration relative to the full opportunity in the incident acute population.
When we look at the prevalent chronic population, we continue to make strides there. We've got mid-teens as we discussed last quarter. So, I think we're set up really well for growth. And as I mentioned in my remarks, while we've had a lot of atypical situations with Omicron and the pandemic as well as the supply disruption, we have had tremendous uptake, and we are continuing to learn more and more about the patients, and I talked about in my remarks that we're seeing symptoms being a much more important impact alongside of just proptosis.
So, we're seeing that significant opportunity to expand to broader patient populations of proptosis plus key symptoms and also use that as a pathway to bring patients in who are sitting in ophthalmologists, endocrinologists or just sitting at home. So, our DTC efforts, a lot of that, our expanded sales force, as we discussed, is all about driving further referrals and driving further penetration, and getting physicians and patients to the right TED treaters. So, I think we're making good progress with significant continued upside.
On the sequential dynamics, we talked about this again on the last quarter when we looked at during that December to February period, over half of our commercial organization itself was out with Omicron. We had physicians' offices closed, sites of care closed. We had many patients -- and I would say that the first quarter impact for infused medicines like TEPEZZA and KRYSTEXXA was around patients missing infusions, extending infusions, and then we worked through the first quarter to get people back on track and we're able to successfully do that.
Any impacts on PEPs in that Omicron period when you have a PEP IV rate of 90 days, that is a 90-day delay. So, anything we've ever done since launch is set up as a 90-day delay given the average time it takes patient enrollment form to convert to infusions.
So, coming out of Omicron, so coming out of that December to February period, we saw a nice recovery in trends. We're able to engage in more face-to-face interactions. So, those live calls that are such a key driver of performance significantly start to increase in March, getting back out to medical conferences, sites of care have gotten back to normal levels in seeing patients.
But that Omicron lag effect is what drives that delay into the second quarter that we mentioned, and we do expect TEPEZZA net sales to be more heavily weighted in the back half of the year as a result. But really excited about what we do is deal with these situations we have throughout the pandemic and drive the business.
Thanks Chris. Norma, next question please.
Thank you. Our next question comes from Madhu Kumar with Goldman Sachs. Your line is now open.
Yes, thanks for taking our questions. I guess our first one is kind of being a little more into the dazodalibep depth results in RA. And how to think about the kind of dosing implications for some of the other indications? You obviously -- kind of already kind of completing enrollment in the show grids, but thinking more around FSGS, what does the DAS data in RET that could be informative for the FSGS trial?
Liz?
Yes. Thanks for that. So, we were pleased to see these data. It really represents our proof-of-concept for the dazodalibep mechanism of action, which was great. It's the first of what I hope will be many clinical validations of that value that we saw in the Viela pipeline. We did see here positive topline results across the dosing arms and also what appears to be so far, an acceptable safety profile.
I think that this value of this trial in addition to those pieces is exactly as you say, this is an accessible patient population that lets us look at a variety of doses and regimens that we can then take those learnings and apply them to future trials that we might take things forward. And that is particularly applicable for future studies in children that we might do as well as FSGS.
We'll be talking in more detail about these results at upcoming medical meetings, including a little bit more insight into the specifics of the regimens we looked at and the results we got. But overall, we think this really will set us up for success in picking the right doses to take forward in other indications.
Thanks Madhu. Norma, next question, please. Next question, Norma. Madhu, are you still on. Norma, next question, please. Norma, we can't hear you. Yes, but it sounds like everybody else can. Norma's lost audio. We just leaned that Norma’s lost audio. So, what else? See if we can hold and see if we can.
Hope you submit it. We’ll try to connect.
We’ll try to dial back in. Thank you.
[Technical Difficulty]
Norma?
Our next question comes from Yatin Suneja with Guggenheim. Your line is now open.
Sorry about that, everybody. Thank you for your patience.
You’re here.
Yes, we want the operator.
We can hear you. Go ahead.
Go ahead, Yatin.
Perfect. Thank you. So maybe a question on UPLIZNA, a nice quarter there. Can you give a little bit more color on the type of patients you are seeing? And then as you go into Europe, especially in Germany, can you just talk about the size of the market there, and the future expansion plans in the European Union? Thank you.
Sure. With UPLIZNA, our primary focus has been to drive switches from existing treatments. You've got to market roughly 8,000 to 10,000 US, half of those patients being on rituximab and we've seen over half of the patients that have gone on UPLIZNA being switched from rituximab. But we've been pleased to also see treatment-naive patients coming on UPLIZNA as well. So, I'd say the majority of them are switches from rituximab, but we're also seeing treatment-naive patients coming on to UPLIZNA.
Relative to Germany. When we look at each individual European country, we – and Europe as a whole – first, Europe as a whole, we see is a similar market size to the US and Germany on a percentage basis or per capita basis at similar rates around any other countries. The only country with significant increased rates of NMOSD is Brazil, which as a country is the same size as US, or Europe alone. So, our plan is to launch in Germany and the upcoming months and then begin to do the normal sequencing across key European countries and then continue to work to expand into Asia, Latin America and other key markets.
Thank you, Tim. Norma, next question, please.
Our next question comes from Ken Cacciatore with Cowen & Company. Your line is now open.
Thanks so much and Paul, congratulations. Tim, just going back to TEPEZZA and your commentary on the size of the markets at least or larger than what you originally expected. I think previously, you should talk about 15,000 to 20,000 patients and that seemed to be segmented on patients that were two years into using steroids. And then you said about 40,000 to 50,000 were on one year of steroids.
So as we think about kind of acute and active market, is it now somewhere north of 20, south of 40? So just looking for some nuance, now that you're doing more of that work? And then on the chronic, you said talk about 70,000 to 100,000. Again, just wondering, if that pool as you've done the work may be a bit better. So just looking for a little bit more nuance on that?
And then on the increase in the commercial sales force. I know there's been talk previously about 1/3 of the targeted clinicians have adopted and treated. If you're increasing the sales force, is that remaining 2/3, I think you've mentioned ophthalmologists, endocrinologists. Is that really the slower adopters? Is that what we're trying to broaden out into? So just trying to understand the dynamics of the slower adopters and what your expectations are as we go through the balance of the year? Thanks so much.
Sure. I'll start with that part. When we look at the sales force expansion that we're undergoing, it's really looking at driving referral and new treaters. So less about slower adopters. When we look at the top priority or high priority targets at $2,500 to $3,000 that we're calling on. We have high – or early and late and ongoing adopters, so slower adopters within that, and we continue to drive penetration as a priority in that group.
But when we look at the broader ophthalmology and endocrinology, in general, these prescribers have been focused on the subset of oculoplastic surgeons, neuro-ophthalmic surgeons, and -- specialists, we're looking to expand both referrals and treatment into general ophthalmology and also within endocrinology to drive referrals to the right TED treater, people that have experienced with thyroid eye disease. And we've been doing that for the last several years through our consumer programs. We're now going to add to that with direct selling efforts with our sales force.
So, we continue to penetrate in those high-priority targets, but the expanded sales force is really complementing the broader DTC work that we've been doing to drive referrals from ophthalmology and endocrinology into TED specialists, but also to expand the number of writers in general ophthalmology.
When we look at the prevalent market, as you've noted, we've talked about the annual incident population of 15,000 to 20,000, moderate to severe acute patients coming in each year, then we also talked about the -- about 70,000 subset of what is a several hundred thousand chronic population, and we define that as patients less than eight years that are most likely in the system that we can access and drive toward TEPEZZA.
So, if you look at that plus any rollovers that were treated in the prior year, you're talking about 100,000 potential targets for TEPEZZA in our promotional efforts. We see the population being greater, but also we're re-segmenting it. So, no longer we're thinking just acute or chronic. But as I talked about in my remarks, what we're finding is whether you're diagnosed within six months or at four years, if you have high proptosis and high inflammation, that is a very rich population to drive TEPEZZA. And then we're also looking at patients that have moderate inflammation and high proptosis or just high inflammation and then low inflammation. So, we're really segmenting based on the symptoms and how patients present versus the time from diagnosis.
And as we re-segment the market, that we look at a broader opportunity than before, we're continuing to work through those numbers look like, and how we're going to segment and communicate them. But all the work has validated the opportunity that we've seen, the incident population coming in each year.
But importantly, the ability to drive that broader uptake is learning that symptoms is what drive action by patients, whether that's to consumer or to see their physician request TEPEZZA. So, that really is what gives us the real excitement about what we can drive moving forward.
Thanks Ken. Norma, next question please.
Thank you. Our next question comes from Annabel Samimy with Stifel. Your line is now open.
Hi, thanks for taking my question. So, I want to know with regard to TEPEZZA. As you have published, a lot of the chronic data has been presented. Are you noting yet a change in the way physicians are treating the chronic population versus the acute population, and what could that mean for future penetration into chronic and the impact it might have on sales? I'm just curious a little bit about that.
And then maybe you can talk a little bit about the expansion of Brazil -- curious to see that. It was just Brazil that you're focused on the market for -- you said TEPEZZA as large as the US. What is the market for TED look like in Brazil? And when might we see some infrastructure build-out and contribution from there? Thank you.
Sure. So, looking at the chronic versus acute, and it goes back to the segmentation that I talked about. High inflammation, high proptosis is a real active opportunity to penetrate. That's what we're driving. We're seeing that regardless of time from diagnosis. So when we are looking at patients coming on to TEPEZZA, we really look -- did they have a high clinical activity score, did they have high proptosis. That is a broad population across acute and chronic.
When we look at the lower high proptosis of eye bulging plus lower clinical activity scores, that is the population that many of our investigator-initiated studies have been looking at. That’s what our chronic trial is looking at. So we have over 50 patients of evidence showing that high proptosis and lower CAS is an actively treatable population, and we continue to see opportunity to drive penetration there.
From a Brazil standpoint, certainly, we've talked about it from an NMOSD, where there's unique incident population and prevalent population that is equal to the size of US and Europe. We also see it as a significant population for TEPEZZA, similar on a rate basis to other countries. So it doesn't have an increased incidence relative to TEPEZZA. But we do see ex-Europe, favorable dynamics to move forward for the regulatory submissions.
Liz, I don't know if you want to talk anything about the regulatory time lines as we look outside the US. So I'll jump in there. So we are looking in international markets, just like we are in Japan, with the start of the OPTIC-J trial.
We're looking at taking our existing work done from the US approval along with OPTIC-J for Japan, and we're also looking at how can we take the US approval and leverage that into Latin America and Asian markets without doing incremental trials, and we see that opportunity in Brazil and some other markets, and we'll update as we move further.
Great. Thanks, Annabel. Operator, next question.
Our next question comes from Jason Gerberry with Bank of America. Your line is open.
Hey, good morning, guys. Thanks for taking my questions. First, just on the Phase IV TEPEZZA study. I was wondering if you could talk about the inclusion/exclusion criteria, and how that compares against all this investigator-generator -- investigator-generated data sets that you're seeing? And do you feel comfortable the study is adequately powered and enriched for subjects with either elevated CAS scores or baseline proptosis levels?
And then my second question, either for Tim or Andy. Just curious, how optimistic are you guys, can execute a meaningful product transaction in 2022, just given the broader biotech cell? Thanks.
So, I'll start with the market environment. If you look at the enterprise value of the 830 or 840 biotech companies -- list of biotech companies, I think the enterprise value is down around 67% since February of last year. So we've certainly seen those valuations come down.
And we certainly see a lot of opportunities, both of public companies, but also private companies and venture-backed companies as far as ability to do acquisitions. And I think that we're not seeing a rebound in the IPO market or even follow-on markets for existing companies seeking cash. So we do see it as a rich opportunity for deals. Maybe back to Liz to talk about the criteria around the chronic trial.
Yes. For the chronic trial, we really were looking to inform that symptomatology-based way of looking at patients that we've talked about here.
And so in particular, what we were focusing on was patients with low signs and symptoms of inflammation, so low CAT scores, but significant proptosis and potentially also significant diplopia. So, this is a patient population where it is representative of some of what we're seeing in those IoTs that are a little bit more standardized and I think gives us the opportunity to get that gold standard, placebo-controlled, more rigorous data. We feel good about the powering here. We have been informed by some of those case studies – case reports and case series that we've seen out in the literature and we are looking for and expecting that we're going to see a clinically meaningful impact on patients' proptosis in this disease space.
Thanks Jason. Norma, next question please.
Our next question comes from David Amsellem with Piper Sandler. Your line is open.
Hey, thanks. So just on the chronic TED data or the readout, can you just -- and I apologize if I missed this, can you just talk about the delay? And what's driving that? And maybe when in the first half of next year, we could see data? And then for dazodalibep, just a clarification question. I mean I believe you said in the past that the RA study was more for dose finding, and you're not going to go forward in RA, but can you clarify that? And based on what you've seen, I mean how does that inform how you're thinking about where you might get the best signal in [indiscernible] whether the systemic disease or local disease? I know that might be early, but figured I'd ask? Thanks.
So starting with the dazodalibep question. We are – certainly, we were encouraged by the data that we saw here. Rheumatoid arthritis is a crowded market. There are a lot of agents there. We'll continue to look at that, of course. But we really do think that the primary value of this trial is about the validation that it gives us the mechanism of action and the insight it's going to give us into dosing parameters that we can potentially take into other indications. And we'll give more information on that as we get to subsequent medical meetings where we'll put out a little bit more specifics around this.
With respect to the chronic TED trial, we are currently looking at having data for that in the first half of next year, and really what happened here is that, like many other areas of the world, we did see some impact from Omicron. There was a significant step down in our screening and enrollment activities have accelerated our activities and put in place a number of things that we think are going to drive enrollment, some expansion of sites, adding a few more on as well as some additional patient outreach and physician referrals. We're seeing those trends improve, but we expect that we will be completing our enrollment in the second half, which again will give us data in the first half of next year.
Next question please, Norma.
Our next question comes from Derek Archila with Wells Fargo. Your line is open.
Hey good morning and thanks for taking my question. So, just one from us on KRYSTEXXA. I know you talked a little bit about the future marketing initiatives that you plan to roll out for physicians when the new MIRROR data are included on the label. But I was wondering if you're marketing or any messaging strategy for patients and how that might change?
Thanks. I think our strategy for all promotion is to leverage the fact that you're going to significantly improved response with KRYSTEXXA plus immunomodulation, whether that's digital activities or consumer-related activities or physician-related activities, they'll all focus on that broader dataset within rheumatology, KRYSTEXXA methotrexate is a little over 50% and we see an opportunity to drive that across all those populations.
Thanks. Norma, next question please.
Our next question comes from Akash Tewari with Jefferies. Your line is now open.
Hey guys. So, at the risk of being a bit productive, do we have a sense on what new patient adds were for TEPEZZA in Q1? And are you able to kind of quantify the impact Omicron may have had on your performance? And would it be fair to say that new patient adds need to be north of 2,000 per quarter for you to kind of hit that full year growth target that you put out?
Touching on that as well. It looks like consensus is baking in 12% sequential growth heading into Q2. Tim, you mentioned TEPEZZA sales may be back half weighted because of Omicron, do you feel like current estimates are properly accounting for this kind of 90-day delay dynamic you spoke about today? Thank you.
I don’t know what people have in their specific models, but since launch, and with other infused medicines, there is a delay from PEP to IV to work through insurance and other processes, and that hasn't changed with TEPEZZA. So, that is when you have a December to February impact, in the short-term, we did things just as you mentioned, we've worked very hard to get patients who had stopped missed treatments and couldn't get into their sites of care, the difference with TEPEZZA versus a KRYSTEXXA, for instance, with KRYSTEXXA is generally rheumatologist office you're going into. With TEPEZZA, it's site of care.
So, these sites of carriers were more impacted than we saw individual physician offices and that led to delays. So, we were able to successfully get those patients back on treatment and that didn't lead to any significant impact in the quarter, we were able to make up for that. The PEP impact from Omicron is a 90-day delay as it has been since launch.
Great. And then the other question was on new patient adds, thinking about--
We're not guiding on new patient adds or anything specifically there.
Perfect. Great. Operator, looks like we have time for one more question.
Thank you. Our last question comes from Gary Nachman with BMO Capital Markets. Your line is open.
Hi good morning. First, how much did gross to net pressure impact 1Q sales for both TEPEZZA and KRYSTEXXA? Was that a meaningful headwind just order of magnitude? And should that be normalizing, I guess, starting in the second quarter and going throughout the year?
And then just secondly, on UPLIZNA, just talk a little bit more about the competitive dynamics there, how they're shaking out NMOSD, especially when it comes to payer access, how much more work do you need to do on that front, or are you pretty comfortable with where you are? Thanks
Sure. So, gross to net was not materially different for to TEPEZZA, KRYSTEXXA or any of our infused medicines from an NMOSD and reimbursement process. I think if we even go back to when we did the acquisition, reimbursement was not a huge hurdle for UPLIZNA in the early launch phase of Viela and to this day, it has not been a huge issue.
The biggest issue upfront was getting those patients from reimbursement through two sites of care, and ultimately treated. So, building on our patient services organization, the side of care organizations, identifying where people can get infused and then helping the patients get through to that was the most critical aspect in that access on reimbursement area, and that has worked quite well and has not been an impediment to driving uptake.
Thanks Gary and thanks Norma. This concludes our call this morning. A replay of this call and webcast will be available in approximately two hours. Thanks for joining us.
Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Everyone, have a wonderful day.