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Welcome to Camurus Q1 report 2023. [Operator Instructions] Now I will hand the conference over to CEO, Fredrik Tiberg. Please go ahead.
Thank you so much, and good day, everyone. And thank you for taking the time to joining our first quarter earnings call today. I'm pleased to report on a strong quarter. But first, before starting, please note our forward-looking statements. We will begin today's call with a summary of first quarter highlights, then go to financial results followed by commercial and R&D pipeline updates and finish off with Q&A. With me on today's call as previously is Jon Garay, our Chief Financial Officer; and Richard Jameson, our Chief Commercial Officer.So let me first start with the first quarter highlights. We had an excellent start of the year with good top and bottom line growth. Buvidal net sales grew by 40% year-on-year to SEK 282 million. We received new market and pricing approvals in the Middle East and Europe. And in the U.S., the FDA review of Brixadi NDA continued with the PDUFA date coming up in just 2 weeks time.In the R&D pipeline 4 Phase III trials and 1 Phase IIb trial progressed in different indications, where importantly, the pivotal Phase III trial of CAM2029 in acromegaly is now being completed. In the SORENTO trial, that is clinically, I should say. In the SORENTO trial, we reached 50% randomization out of a target of 302 GEP-NET patients. And then we had also mentioned that our partner Rhythm completed the enrollment in their Phase III trial of weekly setmelanotide for treatment of genetic obesity disease.On the corporate side, we delivered profitability for the fourth consecutive quarter, in this case of SEK 69 million, an increase of SEK 60 million versus Q1 2022. And we strengthened our cash flow. We continue growing the company with new talent, including appointing Alberto Pedroncelli, MD PhD as our new Chief Medical Officer and Member of the Executive Management Team. And we started the buildup of our U.S. commercial infrastructure for CAM2029.So with this brief introduction, I'll hand over to Jon for a financial update.
Thanks a lot, Fredrik, and good afternoon, everyone. The highlights of our financial performance this quarter. From a total revenue point of view, Camurus achieved SEK 284 million in the quarter, delivering a growth of 29% versus same period last year and with product sales of SEK 282 million, growing 40% versus prior year and 6% versus prior quarter. Product sales grew materially higher than our total revenue as Q1 last year recognized other revenues by an amount of SEK 18 million, including milestone by Rhythm Pharmaceuticals. Operating results for the quarter was SEK 74 million, which means a SEK 69 million improvement versus same period last year.Company has achieved an earnings per share after dilution in the quarter of SEK 1.02, equivalent to a profit after tax of SEK 59 million in the quarter. And finally, Camurus' cash position at quarter end was SEK 586 million, which represents a 47% improvement versus same period prior year.If we now move to next slide, we can see the main components of our operating results. Gross margin improved 175 basis points in the quarter, driven by production efficiencies, reducing scrap by 139 basis points and FX favorability driving 36 basis points. In total, gross margin delivered SEK 255 million in the quarter, and year-to-date gross margin reached 89.9%. Total OpEx reached SEK 184 million, which is a 3% decrease versus same period prior year, driven by following the broad factors.Firstly, marketing and distribution investment to support market penetration in own territories and expansion of Buvidal into new markets grew by 32%. Secondly, administrative expenses aligned with corporate evolution to substantiate company development grew by 37%. Thirdly, R&D investment declined 15% versus same period prior year, driven by timing of milestones in our 3 ongoing Phase III studies and clinical trial product generation. And finally, gain for hedging contracts was positive by SEK 3 million in the quarter, while prior year same quarter was negative by SEK 9 million.Company operating results became positive by SEK 74 million in the quarter. Profitability may fluctuate between quarters as we continue our investment in our pipeline to bring product candidates to market as soon as possible.If we now move to next slide, our cash position at quarter end was SEK 586 million, delivering a 47% growth versus same period prior year. Camurus generated SEK 80 million cash in the quarter, mainly driven by company operations generating SEK 86 million, compensated by SEK 61 million investment in working capital, mainly customer receivables following sales growth. Other small drivers drove SEK 4 million cash reduction mainly these liabilities.At end of quarter, Camurus has no debt. Our guiding principles for capital allocation continue being: reinvest in our business to accelerate Buvidal market penetration and geographical expansion. Secondly, bring CAM2029 to market as planned. And lastly, support our company strategy in their organic growth opportunities enhancing our company value.All in all, Camurus closes first quarter with a solid financial position, interesting growth opportunities and is on track to deliver 2023 market guidance. Having said that, I would like to pass the word to Richard. Thank you, everyone, for your attention.
Thank you, Jon. Good afternoon, everybody. So we'll move to a commercial update, and I'll start in Europe with Buvidal's progress in Australia, Europe and MENA. Buvidal continued to grow, and sales for the quarter were SEK 282 million, up 40% year-on-year and 6% quarter-on-quarter. And this increase comes on the back of a strong Q4 where we had large onetime orders from the MENA region following the pricing and reimbursement approvals. We saw good growth across markets, most notably in the U.K., where Buvidal exceeded 5% total patient share as new funding became available and was allocated to the treatment clinics. Similarly, the interest of using Buvidal in criminal justice settings is increasing in several countries and still constitutes a substantial opportunity for further growth.Based on the in-market sales in March, we had about 39,000 patients in treatment at the end of the quarter, a net increase of 3,000 patients since December. Our market expansion efforts also continued during the quarter, resulting in market approval in the UAE and pricing approvals in both UAE and Greece. In addition, we have 4 regulatory applications and 4 pricing submissions under review. Finally, as presented earlier, we withdrew our variation application for Buvidal in chronic pain, and we'll come back to this development after the summer.So now moving over to the U.S. The U.S. approval decision for Brixadi is imminent with a PDUFA date in less than 2 weeks. We see a significant market opportunity for Brixadi in the U.S., and based on the large medical need and the treatment gap shown on the right-hand side of the slide, there are new government initiatives to increase access to treatment. It's a growing market, and there's a clear differentiation and positioning of Brixadi.So if we take you to those in turn, because of the severity of the opioid crisis, several important measures were recently taken by the U.S. government to lower the bar to treatment. These included increase in funding with over $6 billion, removal of data waivers, so physicians can treat more patients and new guidance to support expansion of treatment in the criminal justice setting. The U.S. opioid use disorder market is expected to grow significantly in the coming years to over USD 3.5 billion. Matching injectable buprenorphine is forecasted to be a major growth driver of this expansion and currently only an estimated 3% to 5% of patients receive long-acting injectable treatment.In addition to these positive market dynamics, Brixadi and of course, Buvidal in Camurus' rest of the world market is well differentiated with flexible dosing and pathology, both weekly and the monthly formulations. It's easy to switch from current daily treatment through dose equivalent table. It's the only long-acting injectable that can be initiated from day 1, and it's simple to use and easy to store. With all these factors, we look forward to seeing Braeburn successfully launch Brixadi in the U.S. and making it available to patients.On that, I'll hand back to Fredrik.
So thank you so much, Richard, and I will give a brief update on our lead development program, CAM2029. So during the quarter, we continued to progress our late-stage clinical programs for our subcutaneous octreotide depot CAM2029 across 3 rare disease indications, acromegaly, growth hormone disease, gastroenteropancreatic neuroendocrine tumors, GEP-NET abbreviated and polycystic liver disease, PLD. The goal is to develop a best-in-class therapy in all of these indications or actually in PLD first approved therapy. CAM2029 has the potential to address shortcomings of current first-generation somatostatin analogs and become the first-line medical treatment for acromegaly and NET as well as a new treatment for PLD. This is based on the prospect of improving patient convenience, quality of life and increasing efficacy based on significantly improved drug exposure and bioavailability. So CAM2029 has a high potential peak sales estimated to about USD 2 billion annually across indications with the largest opportunity being in NET.So based on the commercial fit and the large opportunities, Camurus intends to commercialize this product ourselves in the U.S., Europe and Australia. And as you also know, and I've said previously, we have a comprehensive clinical program ongoing with CAM2029. This includes 3 Phase III studies in ACRO and NET and 1 Phase IIb study in PLD. All have progressed very well during the quarter, and I'll give a short status update on them in the next few slides.So our first and most advanced study is the pivotal randomized controlled trial of CAM2029 in acromegaly, where the last patient now has completed treatment, and we are working closely then to close the study as we are speaking. This is a double-blind placebo-controlled trial over 24 weeks in patients treated with standard of care with either octreotide long-acting release ARM abbreviated or lanreotide outages.The primary endpoint is the response rate of biochemical control defined by insulin growth factor 1, plasma levels being below 1x the upper limit of normal at the end of the treatment phase. This is a classical endpoint in this indication. In addition to that, we have several important secondary endpoints, and these include clinical signs and symptoms, several different patient-reported outcome measures, looking at, for instance, treatment satisfaction and quality of life for patients, as well as pharmacokinetic and of course, safety and tolerability endpoints.So over to the overall status in the programs. In acromegaly, our 2 Phase III trials have progressed both of them towards completion. As mentioned, we are in the process of finalizing the pivotal efficacy study of CAM2029 by early June. And a key milestone of top line results from the study is expected to be announced at the end of June.The second trial is a long-term safety study, and we plan to report interim results from this later in the third quarter. And this is also going to be included in our regulatory submissions that are expected to go in late 2023, early 2024. And the work is ongoing here according to plan.In GEP-NET, the second indication, we reached a milestone of 50% recruitment out of the 302 patients planned to be enrolled in the SORENTO trial. I'm really pleased that the recruitment is progressing so well in this largest ever randomized controlled trial of a somatostatin analog in this indication. We remain on track to enroll the rest of the patients during the year.In PLD, recruitment continued in the POSITANO trial with more than 25% of patients being enrolled, and we are expecting to finalize recruitment during the second half of the year. So in parallel with the clinical work, we are also accelerating our prelaunch preparation. Most importantly, we have initiated a buildup of the commercial infrastructure in the U.S. for CAM2029. The medical team is being expanded with key expertise and leadership and will be led by our new Chief Medical Officer, Alberto Pedroncelli, with extensive global experience in both acromegaly and neuroendocrine tumors and also in the U.S. marketplace.In parallel, we are ramping up our medical affairs activities participating in conferences and preparing new scientific publications based on our previous and current clinical trials. We have 2 meeting abstracts about our newly developed patient-reported outcomes tool for PLD accepted for presentation at ISPOR in Boston, here in May and an abstract from our Phase III acromegaly trial accepted for presentation at the ENDO conference in June in Chicago.So moving from this straight over to key takeaways from the quarter. We had an excellent start of the year, I would say, and made good advances towards our goals and strategic objectives. We achieved robust top and bottom line growth, continued market penetration and expansion with Buvidal, and we progressed our late-stage R&D pipeline towards new market approvals.Ahead of us, we expect exciting near-term news flow, including the imminent FDA approval decision for Brixadi in the U.S., top line Phase III results for CAM2029 in June. And in addition to this, several other milestone events summarized on the next slide.So overall, I and the management team, and I think I can talk for the rest of the company. We're very happy with the performance in the quarter and look forward to a strong 2023. And with this, thank you for listening, and let's move into Q&A.Operator, please take over.
[Operator Instructions] Our first question comes from the line of Suzanna Queckborner, Handelsbanken.
This is Suzanna Queckborner calling from Handelsbanken. I have 2 questions to begin with. First of all, on the regulation in Europe. You mentioned that Buvidal is now considered to be first-line treatment in criminal justice settings in Sweden. I'd just like some clarification there. Does this mean that patients that need to start with methadone or oral buprenorphine first, they can immediately go to a long-acting. And also on regulatory changes in Germany, I saw a press release on this, and I was wondering if you've seen that also affect your sales there. And then the second question is in terms of Buvidal revenue per patient. It looks like that's come down for Q1. At the same time, you've mentioned that there are no one-off bulk orders in this quarter. Is this down to pricing pressure? Maybe you can help me understand.
Thank you so much, Suzanna. I will hand over the first question to Richard and then the second question to Jon.
Yes, let's start with the Sweden one. Yes, the guideline was published recently, proposing that long-acting buprenorphine should be first-line treatment in the custodial setting in Sweden. I think obviously, there's a clear reason not to transfer somebody over at very state they are doing well, but generally if patients are coming in and starting treatment, then it is recommended that long-acting injectable buprenorphine is first line. And on the regulatory changes in Germany, yes, I think you're referring to the changes in the [ BTMBV ] regulations there. They are relatively minor changes there to do with the length of take-home treatment. They have recognized that criminal justice settings are a place for treatment, but they are already treating anyway. So whilst they're positive in reducing the regulations in the German market, I don't think they're going to have a material impact on us in the short term.
And regarding the revenue per patient, Suzanna, we have not had any reducing price during the quarter. So any change in the revenue per patient is driven by geographical mix in our accounts around the globe.
Our next question comes from the line of Erik Hultgard from Carnegie.
I have 2, if I may. First, could you disclose a bit on what the market share you have achieved in the other top 5 European markets? I noted progress in U.K. with a 5% share, but can you comment on the level of penetration in the other markets. And second to that, thanks, Jon, for clarification on pricing in the quarter. I noted in the guidance that was provided after Q4 that austerity measures was an uncertainty in your guidance for the full year. And I was wondering if that's still the case? What are you seeing? Any sort of anticipation of the price pressure in the coming quarters? And when, if not, when do you expect to adjust your guidance?
Yes. So yes, Richard, you can -- I guess you can start with the first question.
Yes. So on the market share question, I don't think we're giving too much detail on that. But I can say, I mean, Australia is obviously one of our big markets. We know that long-acting injectable buprenorphine has a share around about 25% of patients and Buvidal has about 80% share of the long-acting buprenorphine segment. The other markets...
So that's 20% approximately.
Yes. And in the other markets, Spain, obviously, now that's accelerating well. Now we've overcome the access hurdles, but they've only been recently overcome. So that's still relatively low share penetration. Similarly in France, we only launched relatively recently. And Italy, where we will launch later on with the partnership that we announced with Molteni later on in this year.
And then thanks a lot, Erik, for your question regarding the austerity measures. So the development we have seen is on one hand, in Australia. The government published a decree in January 2023, reducing the price of several drugs in different percentages. Buvidal was included in that list with a 5% reduction that is going to be implemented on April 1. But this price reduction is already considered in the market guidance we provided for 2023. So it doesn't have any change in the plans that we were developing. In case of U.K., we continue analyzing the law. We are impacted by the rest of the pharma sector in U.K. And we believe also that the potential initial impact we may have is already considered in our market guidance provided for 2023. So these are the main highlights.
And the impact in the U.K., when is that expected to come through in numbers?
We are going through the law at the moment, we have not seen any impact in Q1. We do not expect any impact in Q2 either. But we continue analyzing the law when we have it, we will be able to disclose it, Erik.
[Operator Instructions] There are no more questions right now. So I hand the word back to you, Fredrik, for some written questions, and maybe we can come back if there is any more from the telco.
So we have, from the DNB Markets, can you say anything about the increased dynamics for Buvidal over the months? I assume this was not linear over the period. I think that's a correct assumption. So we had a good finish in March, but I would say that we're very pleased with the development in the first quarter for 2 reasons. One is that we had a very strong, as you remember, Q4. And on top of that strong Q4, we also had a onetime order from Saudi Arabia, for instance. And despite that, we were able to grow 6% into Q1. So we are very pleased with the development. And in Q1, we didn't have any onetime orders. So I think it was a very nice development overall.From -- we have also from [ John Honking, Kindling ]. You're right that you estimate USD 1 billion sales for Brixadi in the positive scenario. In my notes from earlier, I had USD 600 million to USD 1 billion. So we understand this is an upward adjustment to your expectation.Well, I mean, John, I think we are still in the same range, but there has been a number of positive developments that Richard alluded to earlier. And I think in the positive scenario, we are hopeful that Brixadi can do very well in the U.S. marketplace.Can you see anything about the investment needed? This is again from the BMV Markets and the investments needed for the coming 24 months to build up your infrastructure in the U.S.?I can say that we have accounted for that in our guidance. So the SEK 0.1 billion that is accounted that is accounted -- I think largely including the U.S. infrastructure costs.So I have a repeat question about the SEK 1 billion note here. With that said, I don't think there are any further questions here. And if there is nothing on the telephone line, I would like to finish off and thank everybody for joining our earnings call today. It was a pleasure to have you listening in. And I look forward to speaking again at our Q2 call. I think that would be a very exciting call. So please join in and have a great continuation of the day. Thank you, everybody.
That concludes today's call. You may now disconnect your line. Have a nice day.