Camurus AB
STO:CAMX
Earnings Call Analysis
Q3-2023 Analysis
Camurus AB
Camurus delivered a remarkably strong performance in the third quarter, with a significant increase in total revenue reaching SEK 384 million for the quarter, and SEK 1.3 billion year-to-date, illustrating a robust financial trajectory. The operating result was also positive at SEK 104 million for the quarter, reflecting remarkable fiscal health despite substantial costs associated with extensive Phase III programs. This performance led to a fortified cash position of SEK 1.15 billion. Buoyed by this strong showing, Camurus revised their guidance for total revenue upward, setting a new target range of SEK 1,640 million to SEK 1,720 million from a previously estimated SEK 1,530 million to SEK 1,650 million. Profits before taxes are now expected to land in the updated range of SEK 525 million to SEK 600 million, marking a significant upward adjustment from the earlier SEK 425 million to SEK 525 million range.
Camurus saw a 44% year-on-year increase in Buvidal sales, amounting to SEK 346 million for the quarter, which echoes the company's effectiveness in capturing market opportunities. A key highlight was licensee Braeburn's U.S. introduction of the Big study for treating opioid use disorder, which led to the debut of royalty payments for Camurus. Buvidal, now treated by an estimated 45,000 patients, showed robust growth in several regions. The introduction in Italy, coupled with four regulatory and pricing submissions pending review, underlines Camurus' capability to further its market presence. With over 100 people in the field at launch, Braeburn positioned Camurus for a promising start in the U.S., a market with immense potential given the high prevalence of opioid use disorder.
A noteworthy achievement was the company's gross margin, which hit 91.7% for the quarter with a product sales gross margin of 90.8%, marking a noticeable improvement over the previous year. This enhancement stems mainly from supply chain efficiencies as the company scaled up its Buvidal volumes. While the total operational expenditures (OpEx) saw a 37% rise since last year to SEK 253 million, the increase largely fueled market penetration efforts, administrative expenses in line with corporate growth, and R&D investments due to progress in Phase III trials and other R&D initiatives. Strategically, this increase in OpEx was offset by the revenue growth, culminating in a positive operating result.
Camurus is well-poised for the future, having laid a strong foundation for both commercial execution in the opioid dependence market and R&D advances. The company looks forward to continuing its trend of excellence and is poised to deliver on ambitious plans and strategy going forward. Despite challenges in quoting the specific progress of the Phase III programs for CAM2029, it's clear that the company is advancing in its development efforts expected to culminate in regulatory submissions.
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Welcome to Camurus Q3 report 2023.[Operator's Instructions] Now I'll hand the conference over to CEO, Fredrik Tiberg. Please go ahead.
Thank you so much, and good day, everyone. It's a pleasure to have the opportunity to share our third quarter performance and results with you today has certainly been a good quarter for Camurus. Before starting the presentation, please note our forward-looking statements. The agenda for the call today is a third quarter highlight overview, followed by financial results, commercial and pipeline updates, and then we will finish off with Q&A. In today's call, I'm joined by Jon Garay, our Chief Financial Officer; and Richard Jameson, our Chief Commercial Officer. As you may already have seen in this morning's report, cameras delivered a strong third quarter performance, resulting in very positive financial development with high double-digit revenue growth to SEK 384 million in the quarter and SEK 1.3 billion year-to-date. Our operating result was SEK 104 million in the quarter and SEK 554 million year-to-date, including also costs for 3 extensive Phase III programs. Our cash position increased to SEK 1.15 billion, including a USD 35 million payment received from Braeburn. As a result of the strong financial performance in the quarter, we have recently raised our guidance for 2023. We continued our commercial execution in the opiodependence area and saw Buvidal sales grow by 44% year-on-year to SEK 346 million in the quarter. In the U.S., our licensee Braeburn launched Big study for treatment of more used disorder, which was, of course, an important highlight. And this also resulted in the first royalty payments in the quarter. In addition, we had good progress in our R&D programs with positive top line Phase III results acromegaly, pre-NDA meetings with the U.S. FDA and accelerated recruitment in our large Sorento study. All in all, our team delivered excellent performance in the quarter, and we are well positioned to deliver on our ambitious plans and strategy going forward. And with this, I'll leave over to Jon for the financial update.
Thanks a lot, Fredrik, and good afternoon, everyone. We would like to share key highlights of our financial performance this quarter. Camurus achieved SEK 384 million total revenue in the quarter, delivering a growth of 59% versus same period last year with product sales of SEK 346 million, growing 44% versus prior year and 13% versus prior quarter. Additionally to product sales, Camurus recognized SEK 25 million revenue related to the expiration of Braeburn's auction period for Buvidal in China, Japan, Korea and Taiwan. And by first time, Begsavi sales in the U.S. represented a SEK 1 million in realty income following its commercial launch on September 5. Company achieved an earnings per share after dilution of SEK 1.5 equivalent to a profit after tax of SEK 86 million in the quarter. Finally, company cash position at quarter end was SEK 1.15 billion, representing a 122% improvement versus same period prior year. If we now move to next slide, we can see the main components of our operating results. Company gross margin reached 91.7% in the quarter with product sales gross margin at 90.8%, representing an improvement of 80 basis points versus same period prior year, which is driven by supply chain efficiencies as Buvidal volumes scaled up. On a year-to-date basis, product gross margin was 90.4%, representing 135 basis points improvement versus the first 9 months of prior year. Total OpEx reached SEK 253 million, representing a 37% increase versus same period prior year, driven by following 3 factors: marketing and distribution investments to support market penetration in own territories and expansion of Mobilan into new markets grew 41%. Administrative expenses aligned with corporate evolution, to substantiate company development were flat versus same period last year. And R&D investment reached SEK 148 million, growing 39% versus same period prior year driven on one hand by progress on going 3 Phase III trials, mainly recruitment progress in net and and on the other hand, readout of our renovated top line results. Company operating result as a consequence, became positive by SEK 104 million in the quarter. The weave company cash position at quarter end was SEK 1.15 billion. Camurus generated SEK 0.5 billion cash in the quarter, driven by following 3 factors: firstly, company operations generated SEK 121 million. Secondly, working capital improvement drove SEK 365 million, driven by collection of Isavi milestone following FDA approval in Q2. And thirdly, exercise of Warrants program delivered SEK 17 million cash. As end of quarter, Camurus has noted. All in all, Camurus closed third quarter with a strong financial position, solid operational performance and interesting growth opportunities. As a consequence of such a strong performance year-to-date and Q4 expectations, Camurus guidance for total revenue was increased to the range of $1640 million to SEK 1720 million from prior range of $1,530 million to SEK 1,650 million, with profit before taxes estimated in the updated range of SEK 525 million to SEK 600 million from a prior range of SEK 425 million to SEK 525 million. And company is on track to deliver the long-range plan vision shared at Capital Market Day accelerated in September last year. Having said that, I would like to pass the word to Richard. Thank you, everyone, for your attention.
Thank you, Jon. So I will give a brief update on the strong progress in camurus markets and an update for the U.S. following the first 3 weeks of the launch of Rikard. So if we start with the Camurus markets. Q3 was another strong quarter for our teams in Europe, Australia and the MENA region. Our net sales reached for SEK 346 million, which is 44% up against the same period last year and 13% ahead of Q2. We had underlying strong end market performance with additional positive contributions from currency exchange rates and also some stocking from distributor markets. We now have an estimated 45,000 patients being treated with Buvidal in the quarter. We saw good growth across our markets noted for the U.K., Nordics, Germany, Austria and Spain, and highlights include further acceleration in the U.K. as recent funding from government reach treatment clinics, 6% of the patients across the U.K. are now in treatment with Buvidal. And additionally, the U.K. Health elect committee who reviewed the progress on the government's drug strategy reinforced the value that long-acting brupanorphine can bring to patients. In Germany, we saw good expansion into the prison setting with 5 new prisons initiating treatment with Buvidal in the quarter. And in Australia, we maintained our leadership position in the long-acting buprenorphine segment and continue to see growing patients on Buvidal. There has also been structural changes in the treatment system in Australia with one positive result being a reduction in the co-pay for many patients, and this has the potential to see more patients enter treatment. Buvidal was also launched in Italy in Q3, Montani, our distribution partner, who have wide experience in the nation space with space already established commercial team. We continue to expand into other markets and have 4 regulatory and 4 pricing submissions under review and other markets are under assessment. Now moving to the U.S. As already mentioned, Brixadi was launched into the U.S. market in September by our latency Braeburn and already progress has been made and leading indicators are positive. Braeburn have a sizable and focused commercial team in field at launch with more than 100 people across sales, marketing, market access and alongside the medical 13. All 50 states have access to Buvidal as the beginning of October, with good prospects for obtaining unrestricted access with both Medicaid and private payers. As Jon mentioned, in Q3, we received our first royalty payment of SEK 1.2 million for the first 3 weeks of sales. And to remind you, the market opportunity in the U.S. is significant with an estimated 6 million people suffering from opioid use disorder, of which 1.8 million are in treatment. The market dynamics are positive with increasing funding improved and improved legislation to make treatment more accessible to patients. Rick Ale has a unique position in the U.S. market. It's the only product with weekly and monthly formulations as flexible dosing aligned to current clinical protocols and an indication for initiation of treatment after a single test dose sublingual brucenorphine. Additionally, the product attributes of low-volume injections more needle multiple sites for injection and room-temperature storage or other advantages. So in summary, with the strong product profile and the sizable commercial team in place, the prospects for a successful launch are good. And on that, I'll hand back to Fredrik.
Thank you, Richard. And so over to a brief update on our lead R&D program, 2029. As you've heard previously, 2029 often times subcutaneous depo is being developed for the treatment of 3 rare disease indications, acromegaly, a rare growth hormones, gastroenteropancreatic neuroendocrine tumors, GEP-NET is slow-growing tumors in the gastrointestinal system and polycystic liver disease, where there is currently no treatment available. The product that is CAM2029 is designed for enhanced efficacy and patient convenience. Our 3 Phase III programs for CAM2029 are extensive and have progressed well in the quarter. We completed the randomized placebo-controlled ACROINNOVA-1 study of CAM2029 acromegaly patients, delivered positive top line interim Phase III results from the long-term ACROINNOVA-2 study, and accelerated recruitment in the randomized Currenta trial of CAM2029 in patients with GEP-NET. Aim of this largest ever prospective randomized controlled study with somatostatin in amyloid is to demonstrate superiority in progression-free survival with CAM2029 versus standard of care. We believe that would be very valuable. Finally, we made also good progress in the Positano trial of CAM2029 in patients with PLD. The expected time lines for the different programs are outlined in the slide. Going forward, in acromegaly, we are preparing for the submission of the NDA for CAM2029 around the year-end. This follows 2 positive pre-NDA meetings held with the FDA where we aligned on strategy and content for the submissions, including chemistry manufacturing and controls, nonclinical and clinical information. Following the NDA, we also plan to submit a market authorization application to the European Medicine Agency during the first half of next year. In GEP-NET, we are aiming to randomize the last patients during the fourth quarter, reaching our target of 302 patients. The primary endpoint will be read out when 194 progression events have occurred and been documented. Following this important milestone, we expect to submit the first regulatory application in GEP-NET sometime in 2025. This is the current estimate. In polycystic liver disease, we plan to complete recruitment around the end of the year and have top line results early 2025. Alongside the significant progress in our clinical programs, we continued our work to establish our own commercial organization in the U.S. Ongoing activities include establishment of the distribution model in the U.S., building medical affairs and market access teams, updating market research and developing our framework. I'm pleased to report that we are on track to be launch-ready for the planned U.S. approval in acromegaly in the fourth quarter 2024. So in conclusion, Camurus had a successful third quarter with strong operational performance, resulting in strong growth of Vivera in our markets. It's actually the 19th consecutive quarter with unrelenting quarter-on-quarter growth. Brixadi was launched in the U.S., which, of course, was a major event for us. We received positive Phase III results for CAM2029 in acromegaly and continue to improve our sustainability performance in ratings, ending the quarter with a solid financial position. With this, I would like to thank you all for listening, and let's go over into the question-and-answer session. Can we please -- Ana, can you take over the call?
[Operator's Instructions] The first question comes from the line of Suzanna Queckbörner from Handelsbanken.
I wanted to start with a question regarding your experience is genetic obesity disorders, specifically your licensing partner, Rhythm Pharmaceuticals product, CAM472. I'm curious to hear your view on different modes of action to tardive -- and could it make sense to apply the fluid crystal technology for this class of drug.
So I mean, if we're talking about the program by Rhythm, of course, our technology is already being applied. I guess you're talking more in the broader context of GLP-1 and GIP and so forth. Is that the question?
Yes.
Yes. I mean, I cannot comment on our internal development, but I think that we have shown that the fuel crystal technology is applicable to peptides and these are typically peptides and in a size range where the technology is useful. So in that sense, I can say that and confirm that there are, of course, potential with the technology.
And then maybe as a follow-up, you've mentioned before that down the line, you will announce further products. Perhaps, can you give me a sense of what kind of indications do you think are the most opportune for the fluid crystal technology, which conditions would benefit most from improving dosing frequency in a chronic setting and what weighs into your decisions here when you choose an asset?
Yes, I think I mean, if we -- historically, of course, we have always been focused on the medical need aspect and the possibility of improving treatment for patients, both in a strictly individual and more broad perspective. Going forward, of course, we have a focus in certain areas, and I think that makes sense for us to focus our efforts there. I mean if you're looking at diabetes, for instance, that it's not an area where obesity in general where we have the resources to commercialize product. That doesn't mean that we couldn't develop products. So I think we are looking at a number of different components when selecting programs and -- but I cannot go into them in more detail right now.
The next question comes from the line of Viktor Sundberg from Nordea.
So first, what that you've seen in your quarterly quarter from the House of cons. Any idea when this could be implemented in a more formal recommendation that Buvidal should be considered as a first-line option in the U.K. for opioids disorder patients. I also wonder, is it consider a second line alternative at the moment as in France or how it pushed in the U.K. for the moment?
I mean it depends which region you're in, in the U.K. So in some state it's already first line to they're still waiting for funding to come through. So the Health Select Committee report on to that question is it just review the progress and they've identified the value that the long-acting is bringing -- so they're flagging with the government that they should continue to make it available as widely as possible to patients so they have that as a treatment choice. So it's ongoing is your answer. It's not as though we're waiting for some of the change is ongoing already.
Okay. And secondly Australia, now with opioids on this Ipsen. What will be the impact here going forward, do you think? As I understand, the transition period has been going on and will go on until 13th November for smaller clinics and so on. So after 13 November is stepping, we should expect to see some potential fluctuations in seismaller clinics, potentially with the senior dispensing dollar, what would be the correct way to look at this?
I mean it's a bit -- it's not really very clear at the moment. What we do know is as you exactly right, that the system is open in the old way until -- for some clinics until the end of November. So there is potential to think maybe breaking some stock in at this stage before they go to that the change in the PBS. But I mean, I think the way to look at it is underlying our growth is on track is where we thought it would be, and these are just fluctuations in invoice sales between the quarters. So we want to make a huge difference.
But I think, I mean, it's fair to say that if we're looking at the potential of impacting us that short term and may come in association with this change.
Yes. As I said already, I think that there is potential for more patients to access treatment now because the co-pay they have been tried for supervised dosing has been reduced quite significantly. There's a set fee now. So we anticipate that some patients -- more patients may come as a treatment.
Okay. And just a final one here also on the competitive landscape in acromegaly. I just wanted to hear your thoughts on Prenetics and its oral drug that had positive results there in the PATHFINDER 1 study. What do you see as the competitive advantage here for CAM2029 versus that drug?
Yes. I mean, of course, we are addressing 3 different indications. But if we're looking specifically at acromegaly, I mean, this is a market that has been completely dominated by injectables up to now. And there is a big, let's say, belief in injectable treatments. It's also convenient because you have to dose it once every month. Of course, there may be, for some patients, a positive view on an oral medication. It does require fasting conditions but not to the extent that we have seen from a -- but I think that when we listen to our different clinical contacts in the U.S. or elsewhere, there is a very strong view on a positive view on a self-injectable long-acting product. So we'll see exactly how this pans out in going over to guessed, -- of course, it's a different situation because that's -- there, we are the only company developing a product for treatment of -- for tumor control, which is the lion part of this market. So it depends on the indication, but we believe that we are in a strong position.
[Operator's Instructions] One more question from Suzanna.
Yes. I wanted to switch to CAM2029. The larger indication is and this is a superiority trial, much more competitive. You have a 500% higher dose than, I think, regular attestation analog. There has been some sort of questioning as how achievable is superiority would be. But that aside, given the regulatory route you're choosing with the FDA, is there a possibility for approval outside of a superiority trial. Perhaps you can sort of outline how you're thinking about your regulatory submission in GEP-NET if you do receive the superior outcome?
Yes. I mean I think, first of all, I would say that our firm view and belief is that we will be able to demonstrate on the clinical side, this advantage. And that's what we have power decided for, and we have on data has been uses for this. So obviously, there are many other etages with technology and discussing this with the agency, it will be on the basis of solid data. I cannot give you an exact answer how that would pan out. But I can say that there is a very good response to the treatment in the studies, and I think that's a positive indicator. But I would like to stress still that our emphasis and focus is on demonstrating superiority.
There are no more questions at this time. So I hand the word back to you, Fredrik.
So if there are no more questions, then I would like to thank everybody for attending this presentation today. It was a great quarter for camurus, and we are looking forward to providing an update at our next call, which will be Q4. And so thank you very much for listening, and have a great day everybody.
This concludes today's call may you disconnect your line. Have a nice day.