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Edited Transcript of HZNP earnings conference call or presentation 8-May-19 12:00pm GMT

Q1 2019 Horizon Pharma PLC Earnings Call

Dublin May 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Horizon Therapeutics PLC earnings conference call or presentation Wednesday, May 8, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Paul W. Hoelscher

Horizon Therapeutics Public Limited Company - Executive VP & CFO

* Robert F. Carey

Horizon Therapeutics Public Limited Company - Executive VP & Chief Business Officer

* Shao-Lee Lin

Horizon Therapeutics Public Limited Company - Executive VP, Head of Research & Development and Chief Scientific Officer

* Timothy P. Walbert

Horizon Therapeutics Public Limited Company - Chairman, President & CEO

* Tina E. Ventura

Horizon Therapeutics Public Limited Company - SVP of IR

* Vikram Karnani

Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer

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Conference Call Participants

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* David A. Amsellem

Piper Jaffray Companies, Research Division - MD and Senior Research Analyst

* David Reed Risinger

Morgan Stanley, Research Division - MD in Equity Research and United States Pharmaceuticals Analyst

* Gary Jay Nachman

BMO Capital Markets Equity Research - Analyst

* Jennifer M. Kim

Cantor Fitzgerald & Co., Research Division - Analyst

* Kenneth Charles Cacciatore

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Liav Abraham

Citigroup Inc, Research Division - Director

* Nicholas Carl Rubino

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

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Presentation

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Operator [1]

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Good morning, and thank you for standing by. Welcome to the Horizon Therapeutics plc First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference call is being recorded.

I would now like to introduce Ms. Tina Ventura, Senior Vice President of Investor Relations.

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Tina E. Ventura, Horizon Therapeutics Public Limited Company - SVP of IR [2]

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Thank you, Jimmy. Good morning, everyone, and thank you for joining us. On the call with me today are Tim Walbert, Chairman, President and Chief Executive Officer; Shao-Lee Lin, Executive Vice President, Head of Research and Development, Chief Scientific Officer; Paul Hoelscher, Executive Vice President, Chief Financial Officer; Bob Carey, Executive Vice President, Chief Business Officer; and Vikram Karnani, Executive Vice President, Chief Commercial Officer.

Tim will provide a high-level review of the first quarter and an update on the business, and Shao-Lee will discuss the clinical development programs for our rare disease medicine. Paul will then provide detail on our financial performance and guidance. After closing remarks from Tim, we'll take your questions.

As a reminder, during today's call, we will be making certain forward-looking statements, including statements about financial projections, our business strategies and the expected timing and impact of future events. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2018, subsequent quarterly reports on Form 10-Q and our earnings press release, which were issued this morning. You are 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 on 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.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [3]

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Thank you, Tina, and good morning, everyone. We're off to a strong start this year, reporting first quarter results that outperformed expectations. We achieved net sales of $280.4 million, representing 25% year-over-year growth; and adjusted EBITDA of $88.4 million, up 163% year-over-year. As a result of our strong execution, we're raising our full year net sales guidance range to $1.26 billion to $1.28 billion and our full year adjusted EBITDA guidance range to $450 million to $465 million. Importantly, we are raising guidance while further increasing our investment with the potential U.S. launch of teprotumumab, our biologic in development for active thyroid disease (sic) [active thyroid eye disease] or TED.

In addition to our strong commercial performance, we're executing on our pipeline strategy. We announced unprecedented results from our teprotumumab Phase III trial in the first quarter, which was a major milestone for the company. The Phase III results, along with the Phase II data, form a highly convincing body of clinical evidence that support our planned mid-year U.S. regulatory submission. Preparation for U.S. commercial launch continues where we're investing in market development and market access activities to bring teprotumumab to patients who have no other options as well as investing in a second manufacturing site to increase commercial supply for our long-term needs. I will discuss our plans and our thoughts on the active TED market in a moment.

Regarding our uncontrolled gout pipeline programs, we have now finalized the design of our KRYSTEXXA immunomodulation trial, the MIRROR trial, and expect it to begin next month. As a reminder, we've adapted this trial for registration to evaluate the effect of adding methotrexate to KRYSTEXXA to improve patient response rates.

In addition, during the quarter, we selected a lead PASylated uricase candidate, HZN-007, that we intended to advance further in development. Shao-Lee will discuss our R&D progress in more detail.

In line with our evolution to an R&D-focused company, last week shareholders approved the changing of our name to Horizon Therapeutics plc. Our new name reflects more clearly both our long-term strategy to develop and commercialize innovative new medicines to address rare diseases as well as the fact that our work with patients, caregivers, physicians and communities goes well beyond our medicines.

I'll now summarize our first quarter results. Our orphan and rheumatology medicines generated net sales of $185.9 million, driven by KRYSTEXXA, RAYOS and PROCYSBI. Net sales for this segment increased 10%, excluding the divested ex-U. S. rights for RAVICTI, BUPHENYL and LODOTRA. KRYSTEXXA net sales of $52.3 million increased 12%, meeting our expectations, driven by more than 30% year-over-year volume growth. The KRYSTEXXA team continues to execute extremely well, opening more than 600 new accounts over the last 12 months.

Vial growth in existing accounts increased approximately 30% compared to the first quarter last year. We continue to see strong interest from nephrologists with good sequential growth and are looking forward to initiating our trial in kidney transplant patients later this year.

Demand remained strong as we enter into the second quarter, and we remain on track for our double-digit full year net sales growth expectation.

RAYOS generated strong double-digit growth during the quarter as well, driven by continued focused execution by this team.

Demand remained strong for both PROCYSBI and RAVICTI in the first quarter, driven by mid-single-digit year-over-year patient growth and improved compliance. PROCYSBI net sales increased 13% year-over-year. RAVICTI net sales increased 5%, excluding the impact of divested rights for RAVICTI outside of North America and Japan.

Our first quarter outperformance has put us in a very strong position for the year, allowing us to increase our investment in teprotumumab while also increasing our full year guidance.

I'll conclude my remarks this morning with an update on our teprotumumab U.S. commercial launch preparations and our latest thoughts on the active TED market. Following the dramatic Phase III results, we received significantly more interest in teprotumumab from patients, caregivers and physicians. As I mentioned, we are increasing our investment in teprotumumab and the pace of that investment to successfully bring this medicine to patients as quickly as possible upon approval.

Based on a significant amount of research we have conducted internally and with external parties, we have very good understanding of the U.S. TED patient population. As is done for most rare diseases with limited published data, we have built our estimates using patient level data, including actual claims and hospital admissions data. As we have previously discussed, we estimate that 15,000 to 20,000 active TED patients are eligible for teprotumumab treatment each year. This is the annual incident patient population. Because TED patients of active disease for up to 3 years, a portion of those patients roll over into the following year and are additive to the teprotumumab eligible patient population each year.

Given the impressive efficacy data for teprotumumab, we expect significant interest and demand from both physicians and patients for an approved therapy. Patients with TED are desperate for treatment given that there is no approved treatment today.

The active TED market is one we need to build from the ground up, which is typical with rare diseases and requires significant investment in market development and market access. Today, with no well-defined treatment path or successful patient journey for those with active TED, endocrinologists and ophthalmologists in United States typically take a watch-and-wait approach until patients progress from active TED to inactive TED. At that point, they refer to an oculoplastic surgeon to perform surgery to reduce proptosis or eye bulging and its deleterious effects. The surgery is highly complex, invasive and often partially effective and often needs to be repeated multiple times given the technical challenges in this disease.

If teprotumumab is approved, we believe that this treatment paradigm will shift. Early on, we see ophthalmologists and oculoplastic surgeons playing a larger role. And once the market is more established, we believe that both endocrinologists and ophthalmologists will play a central role in comanaging active TED. From the qualitative feedback we have received to date, key opinion leaders and clinicians across all specialties are very enthusiastic about this potential treatment option.

A significant amount of market development is required to identify and educate potential treating physicians and help them get their active TED patients to a place where they can receive proper administration of therapy. This requires a dedicated infrastructure that we're in process of building out now. It includes sales professionals, medical affairs professionals, patient educators and reimbursement specialists. As teprotumumab is an infused therapy, both endocrinologists and ophthalmologists, who primarily prescribe oral medicines, will need to establish a treatment path, infrastructure and a referral pattern to ensure patient access and success.

We remain extremely encouraged by the opportunity we see for teprotumumab and even more confident today in our annual peak U.S. net sales guidance of more than $750 million. We're excited about the benefit teprotumumab could potentially offer to many patients living with the challenges and pain of active TED. So we look forward to updating you as our BLA submission and launch activities progress.

I will now turn the call over to Shao-Lee.

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Shao-Lee Lin, Horizon Therapeutics Public Limited Company - Executive VP, Head of Research & Development and Chief Scientific Officer [4]

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Thank you, Tim, and good morning, everyone. The first quarter of 2019 marked a milestone quarter for us as we reported positive top line results for our teprotumumab Phase III confirmatory trial.

As Tim mentioned, we achieved our primary endpoint of reduction in proptosis of 2 millimeters or greater with an impressive 82.9% response rate in the teprotumumab group compared to 9.5% in the placebo group and with a p-value of less than 0.001. Proptosis or eye bulging is the main cause of morbidity in TED. All secondary endpoints were also met with a p-value of less than or equal to 0.001. The safety profile was consistent with that reported in the Phase II trial with no new safety events noted relative to Phase II.

In patients with active TED, the IGF-1 receptor is over-expressed on orbital tissues, resulting in local inflammation, orbital cellular proliferation, tissue expansion, which in turn causes proptosis. Patients may experience discomfort simply closing or blinking their eyes, which can lead to poor sleep patterns and result in painful ulcers on the surface of the eye itself. Proptosis can result in diplopia or double vision. Overall, the morbidity that patients experience with active TED can be highly detrimental to activities of daily living, such as the ability to drive a car, read or even walk down stairs. In some instances, pressure on the optic nerve from proptosis can even result in blindness.

Currently, no pharmacotherapy is approved for the treatment of active TED. And by blocking IGF-01 receptor signaling, teprotumumab is believed to specifically target the downstream autoimmune pathophysiology that underlines active TED, resulting in the efficacy and safety seen in the clinical program.

At the AACE meeting 2 weeks ago, we shared additional secondary endpoint data from the Phase III trial. These data showed a rapid reduction in proptosis, reaching statistically significant differences at the first measured time point of week 6. The secondary endpoint of mean proptosis reduction showed an average reduction over the span of the trial, essentially the average of how patients did at week 6, 12, 18 and 24 altogether, and demonstrated an average of 2.82 millimeters with the teprotumumab group versus 0.4 -- 0.54 millimeters for placebo with a p-value of less than 0.001.

Perhaps more clinically meaningful is the proptosis reduction seen from baseline to week 24 representing proptosis response after the full 6-month course of therapy. That result from baseline to week 24 was 3.32-millimeter reduction for the teprotumumab group versus 0.53 millimeters for placebo.

Additionally, the overall responder rate at week 24, which was the primary endpoint in Phase II and was defined as proptosis reduction of more than 2 millimeters plus Clinical Activity Score improvement of 2 points or more, was significantly better for patients treated with teprotumumab. The overall responder rate was 78% for patients treated with teprotumumab compared with 7.1% in placebo.

These Phase III results give us confidence that teprotumumab has the potential to become the first approved therapy for active TED, and if approved, could improve the lives of many people living with this debilitating disease.

We remain on track to submit a BLA in mid-2019 with breakthrough therapy, orphan drug and Fast Track designations. We anticipate the potential for approval in the first half of 2020.

We are also evaluating an early access program for teprotumumab given the level of interest we have received since sharing top line results from the Phase III confirmatory trial. As we continue to explore ways to further advance our understanding of the mechanisms through which IGF-1 receptor is providing clinical benefit, it shows that we can consider potential for benefit in additional patient populations. We look forward to sharing more with you on these investigations in the future.

Moving now to KRYSTEXXA and our uncontrolled gout programs. We continue to make progress towards our goal of maximizing the benefit of KRYSTEXXA for patients. As we have discussed in the past, in the KRYSTEXXA pivotal Phase III trials, 42% of patients achieved complete response, maintaining a serum uric acid level of less than 6 milligrams per deciliter over 6 months.

In the MIRROR study, we are investigating the use of the immunomodulator methotrexate to enhance the response rate of KRYSTEXXA and increase the number of patients who can benefit from it. We have finalized the trial design. It is a randomized, placebo-controlled study that will enroll approximately 135 patients to receive either KRYSTEXXA plus methotrexate or KRYSTEXXA plus placebo. The primary endpoint is a comparison of the proportion of responders defined as patients with serum uric acid levels less than 6 milligrams per deciliter at 6 months between treatment arms. We remain on track to initiate this study in June.

As discussed last quarter, in support of our strategy to expand KRYSTEXXA's use among nephrologists, we are also initiating a clinical trial in the second half of 2019, evaluating KRYSTEXXA in kidney transplant patients. Managing uncontrolled gout is both a common and significant unmet need in kidney transplant patients. This trial will also serve as an opportunity to further inform nephrologists as to the use and effectiveness of KRYSTEXXA and its potential benefit for their chronic kidney disease patients with uncontrolled gout.

Across both the MIRROR trial and the study of KRYSTEXXA in kidney transplant patients, we are gaining additional information to advance our understanding of gout as a chronic systemic disease, such as a better understanding of the effects of KRYSTEXXA on uric acid deposition in organs beyond the joints.

Finally, we've made good progress in our early-stage, next-generation biologic programs for uncontrolled gout. We're working on 2 programs with different technologies to enhance response rates and target subcutaneous dosing. One program is evaluating a PASylated uricase technology, and we recently selected a lead candidate known as HZN-007. The other program underway optimizes PEGylation as well as the uricase, and it's HZN-003. We are committed to rigorous research and development in the area of uncontrolled gout to enhance our leadership position in this space and improve the therapies available for gout patients. As always, I look forward to updating you on our continued progress.

And I'll now turn the call over to Paul.

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Paul W. Hoelscher, Horizon Therapeutics Public Limited Company - Executive VP & CFO [5]

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Thanks, Shao-Lee. My comments this morning will primarily focus on our non-GAAP results, unless otherwise noted.

First quarter net sales of $280.4 million were driven by another quarter of strong commercial execution. Our orphan rheumatology segment generated net sales of $185.9 million in the quarter, an increase of 8%; and generated segment operating income of $46.7 million, also an increase of 8%.

As we have discussed previously, we are no longer recognizing RAVICTI and BUPHENYL net sales outside of North America and Japan or any net sales of LODOTRA. Excluding the impact of those divestitures, net sales for our orphan and rheumatology segment increased 10%, and RAVICTI net sales increased 5%.

As Tim referenced, demand for RAVICTI remains strong, driven by year-over-year patient growth, along with improved compliance and adherence. We also recently gained additional insight into downstream inventory levels, which, along with an increased Medicaid mix has resulted in the need to improve somewhat higher Medicaid rebates, resulted in a lower net price for RAVICTI in 2019 compared to 2018.

Net sales for the primary care segment were $94.5 million, and segment operating income was $41.4 million. This exceeded our expectations, driven by continued execution by the commercial team, which has led to stabilization of this business over the last several quarters. Importantly, we are investing the cash flow from this segment into the orphan and rheumatology segment, including increasing our investment in the preparation for the potential U.S. launch of teprotumumab.

Our non-GAAP first quarter gross profit ratio was 89.8% of net sales. Non-GAAP operating expenses were $163.8 million. This included GAAP -- non-GAAP R&D expense of $17.1 million, reflecting investment in teprotumumab as well as our rheumatology pipeline programs.

Non-GAAP SG&A expense was $146.7 million. Adjusted EBITDA was $88.4 million for the first quarter. Non-GAAP income tax expense for the first quarter was $12.8 million. Non-GAAP net income and non-GAAP diluted earnings per share were $53.9 million and $0.30, respectively. The weighted average shares outstanding used to calculate first quarter 2019 non-GAAP diluted EPS were 180.3 million shares, and non-GAAP operating cash flow was $62.2 million.

We continue to execute on our capital allocation strategy, and we are well on our way to achieving our goal of aligning our capital structure to be closer to that of our aspirational biopharma peers.

As of March 31, cash and cash equivalents were $1.033 billion. On March 11, we closed an underwritten public equity offering of 14.1 million ordinary shares, and we received net proceeds of $326.8 million. We used the net proceeds, along with cash on hand, to fund the repayment of $300 million of our term loans in March and $250 million of our senior notes due 2023 on May 1, reducing the principal amount of our debt outstanding to $1.443 billion. As of March 31, our net debt was $660 million, and our net leverage ratio defined as net debt to the last 12 months adjusted EBITA was 1.3x. This compares to 3.6x at March 31, 2018, a reduction of more than 2 turns compared to a year ago.

Moving to our outlook for 2019, we now expect full year 2019 net sales to be in the range of $1.26 billion to $1.28 billion versus the previous range of $1.23 billion to $1.25 billion. We continue to project double-digit full year net sales growth for KRYSTEXXA, and we now expect primary care net sales for the full year to be roughly similar to 2018.

Full year 2019 adjusted EBITDA is now expected to be in the range of $450 million to $465 million versus the previous range of $440 million to $455 million.

We continue to expect our non-GAAP gross profit ratio to be approximately 90%, and we continue to expect non-GAAP R&D expense as a percentage of net sales to be in the high single digits for the full year. We anticipate a higher year-over-year increase in non-GAAP SG&A expense, which primarily reflects the investments we are making to prepare for the potential teprotumumab U.S. commercial launch, which we have increased following the receipt of the Phase III data in late February.

Following the repayment of $550 million of our outstanding debt that I mentioned earlier, we expect full year non-GAAP net interest expense to be approximately $70 million, a decrease from our previous guidance of between $90 million and $95 million.

We continue to expect a full year non-GAAP tax rate in the low to mid-teens and the cash tax rate in the low to mid-single digits. In line with what we've seen in previous years, we anticipate variability in our non-GAAP tax rate on a quarterly basis. And as always, this projection could change significantly as a result of any acquisitions or divestitures we make or any changes in tax laws.

Following our recent equity offering, we now expect our full year 2019 weighted average diluted share count to be approximately 190 million shares.

With that, I'll turn the call over to Tim for his concluding remarks.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [6]

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Thank you, Paul.

In summary, we're off to a great start for 2019, exceeding expectations on both net sales and adjusted EBITDA.

The outperformance we achieved this quarter allowed us to raise our full year guidance while at the same time further increasing our investment in the potential U.S. commercial launch of teprotumumab.

The first quarter of 2019 was significant from an R&D perspective with 2 key milestone developments. The dramatic Phase III results of teprotumumab that we announced in February and the additional data we presented at AACE 2 weeks ago, are highly significant and gives us increased confidence that teprotumumab has the potential to be the first approved therapy for active TED patients and improve the lives of many people living with this debilitating disease. And secondly, our KRYSTEXXA immunomodulation trial, MIRROR, is on track to begin in June.

Looking to the future, both of these high-growth opportunities, KRYSTEXXA and, if approved, teprotumumab, could more than double our full year 2018 total company net sales, with each expected to be generate more than $750 million in peak net sales.

We also completed our underwritten public offering in March, which helped us reduce our gross debt by $550 million and reduced our net leverage ratio to 1.3x, well below our target.

Finally, we have changed our name to Horizon Therapeutics, which more clearly reflects both our long-term strategy to develop and commercialize innovative, new medicines addressing rare diseases, as well as the fact that our work with patients, caregivers, physicians and communities goes well beyond our medicines.

With that, we'd now like to open up for questions. Tina?

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Tina E. Ventura, Horizon Therapeutics Public Limited Company - SVP of IR [7]

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Jimmy, go ahead.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from David Amsellem with Piper Jaffray.

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David A. Amsellem, Piper Jaffray Companies, Research Division - MD and Senior Research Analyst [2]

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So just a couple. So first on KRYSTEXXA. Can you talk about how users are evolving regarding the usage of the product with immunomodulatory agents? I mean do you have a sense of the portion of practitioners who are actually using that combination now in practice?

Secondly, you talked about the nephrology setting. Do you have a number in terms of the number of nephrologists who are actually using the product?

And then lastly, just switching gears to tepro. Tim, maybe if you can opine on pricing, price per infusion or give us your thinking to the extent you can? I know it's early days. That would be helpful.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [3]

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Sure. Thanks, David. From a pricing standpoint, we're not going to get into specifics until after approval. Certainly, we are very excited with the positive data that we saw, and we are continuing to do our work to understand the full cost involved with the surgery, the multitude of surgeries and the overall care involved for these patients to ensure that the value reflects the benefit of the medicine. But beyond that, we'll comment more as we get closer to -- after the approval time frame.

And maybe with the KRYSTEXXA question, Vikram can handle that.

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Vikram Karnani, Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer [4]

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Yes. So David, on your question about use of immunomodulation agents with KRYSTEXXA, it's the -- it is still quite low, but it is growing. We hear anecdotal evidence continuously from the field, especially post the ACR presentation of Dr. Botson and Dr. Peterson's abstract last year. There's certainly a lot more interest given the dramatic results that they've showed, 100% response rate in 9 out of 9 patients. So we continue to hear more and more about it, but it is still quite low, and -- but we expect that to continue to increase over time.

As far as nephrology is concerned, I'd say that nephrology is quite in line with our expectations. In terms of specific numbers of nephrologists, it's a little bit difficult to give you the exact number just because often, nephrologists and rheumatologists comanage those patients. So when the patient comes into an infusion center or a rheumatologist, they might have been referred by a nephrologist. So it's difficult to parse the data out exactly until much later. I would say that, that aside, the interest within the nephrology community remains extremely strong and is increasing over time.

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Operator [5]

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Our next question comes from Annabel Samimy with Stifel.

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Nicholas Carl Rubino, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [6]

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This is Nick Rubino on for Annabel. On tepro, you just came out of AACE, where you had a big presentation to endocrinologists. Based on the reception from those docs, what are your expectations for creating market among these physicians and ease of creating a referral network between all of them?

And given so few patients did not respond in the OPTIC trial, what can we expect from enrollment in OPTIC-X?

And then lastly, on KRYSTEXXA. You mentioned vial growth of 30% quarter-over-quarter, can you give us some color about how you're thinking about it accelerating or decelerating through the rest of the year?

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [7]

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Starting in the back end, I think our guidance maintains with KRYSTEXXA to have double-digit net sales growth, which would indicate an excess of continued growth of over 30% on a year-over-year basis. So we continue to have strong expectations that that will continue.

From an OPTIC-X standpoint, we do have significant enrollment from the placebo population, and as you noted, a smaller number because of the high response rate with teprotumumab. So that enrollment is continuing over time.

And from the standpoint of teprotumumab and the AACE meeting, as you'd expect with the dramatic data that we received, there was significant excitement in receiving the data, understanding the secondary endpoints that the team presented, and Dr. Ray Douglas presented in his session.

As we look at the distribution network and the referral network, I think there is a -- this will be a sequential process. Oculoplastic surgeons have given us a strong inclination that they would like to begin to infuse the medicine themselves, and we've heard that from some endocrinologists as well. We do see this as an area of focus in our prelaunch and launch efforts to make sure that those referral networks are appropriately set up to ensure that when a patient is prescribed the medicine that they are efficiently infused in a way that works for both the patient and the physician.

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Operator [8]

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And our next question comes from Ken Cacciatore with Cowen and Company.

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Kenneth Charles Cacciatore, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [9]

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I wanted to drill down a little bit more on the TED marketing and where the patients are. So just to give us a sense, obviously, KRYSTEXXA was fantastic investment. But would this be a similar size, do you think, Tim, in terms of sales force and investment?

And then going back to where the patients are, you did mention ophthalmologists and endocrinologists, obviously, the surgeons. Is it your sense right now that in every local area, there is a thought leader? Or is it really spread out into many different practices? So just a little bit more color and commentary there.

And then in terms of KRYSTEXXA, in penetration, obviously, you're giving us nice metrics into accounts and changes in account penetration. Can you give us a sense of where we are in the spectrum? Are we nearing? Are we 3 quarters penetrated into the accounts? Kind of maybe a broad thought on how many more clinicians we could theoretically get on board as you continue to educate.

And then real lastly, timing of the MIRROR results, when can we expect that?

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [10]

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Sure. Well, I'll start with some and then pass on the KRYSTEXXA to Shao-Lee and Vikram. As far as the investment, the overall framework of reimbursement specialists and patient support and overall sales representatives, in the general range of what we have with KRYSTEXXA, we're still finalizing and beginning the hiring process there relative to where these patients now exist. As you know, the current process for these patients is to be seen by -- for the Graves' disease by the endocrinologists. For their eye disease, the thyroid eye disease, they are then referred on to the ophthalmologists. And primarily, the treatment is being done by the oculoplastic surgeon because surgery is the only viable outcome for our most of these patients.

So in the early phase, we would expect most of these patients to be in that network of oculoplastic surgeons as the primarily relationship and continue to build that comanagement in the early phase, and we expect endocrinologists to play a more active role in the treatment of TED as time progresses.

And with KRYSTEXXA, maybe on the MIRROR trial, Shao-Lee can address it, and then Vikram can get into the commercial question.

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Shao-Lee Lin, Horizon Therapeutics Public Limited Company - Executive VP, Head of Research & Development and Chief Scientific Officer [11]

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So with regards to MIRROR, we anticipate starting that trial in June and having about a year of enrollment, so that'll take us to the second half of 2020. If you add 6-month treatment to that, we think it's reasonable to anticipate some data could be available by the end of 2021.

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Vikram Karnani, Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer [12]

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And on your question around KRYSTEXXA and penetration, remember, when we expanded the team last year, we -- the reason we did that was so that we could penetrate up to 75% from what was 50% addressable, the target of rheumatologists.

And as we said before, our patient population is 100,000 patients, and we've accomplished or we've treated right around 3,000 patients. So there remains a significant amount of headroom for future growth, and we'll continue to provide the metrics around same-account growth as well as new-account growth as we progress here.

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Operator [13]

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And our next question comes from David Risinger with Morgan Stanley.

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David Reed Risinger, Morgan Stanley, Research Division - MD in Equity Research and United States Pharmaceuticals Analyst [14]

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Yes, I have 2 questions. First, with respect to tepro, could you talk about your plans to pursue ex-U. S. commercial opportunities and discuss the potential timing and magnitude relative to the U.S. market?

And then second, with respect to primary care, were there any reversals in accruals or anything this quarter? And I believe that the guidance implies that we should be modeling sales to be lower going forward for primary care than you booked in the first quarter, but it'd be helpful to understand how you would suggest remodel primary care sequentially in the second quarter.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [15]

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So there were no reversals or anything material involved there from a modeling standpoint. We expect to have similar sales that we saw last year.

With teprotumumab and outside the United States, we continue to evaluate those markets and have had preliminary discussions in Europe with regulatory authorities. As we get through the U.S. filing and approval, we'll look to then accelerate our ex-U. S. activities. We see a significant opportunity in the China market given experience with a number of different key opinion leaders in the treatment of thyroid eye disease, and we will update more as time goes along.

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Operator [16]

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Our next question comes from David Steinberg with Jefferies.

(technical difficulty)

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Tina E. Ventura, Horizon Therapeutics Public Limited Company - SVP of IR [17]

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Perhaps we can move on to the next question in the queue. Maybe you could hop back in, David. We're having trouble hearing you.

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Operator [18]

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Understood. Our next question comes from Louise Chen with Cantor Fitzgerald.

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Jennifer M. Kim, Cantor Fitzgerald & Co., Research Division - Analyst [19]

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This is Jennifer Kim on for Louise. I have 2. My first question is just on tepro. Is there any additional data between now and approval or other than OPTIC-X, that you think physicians or patients would find most meaningful? And what would the timing be on that extra data?

And then also you mentioned that you're considering additional populations for tepro, and I'm wondering if you could give more color on that and what the potential upside is in terms of patient size.

And then just on primary care, you talked about stabilization in the business. Last quarter, you talked -- you gave data on the U.S. market share for RAVICTI and PROCYSBI. And I'm wondering if you could give updated market share now and then also give color on exactly what the extent of the net pricing impact on RAVICTI was this past quarter.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [20]

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Sure. So Paul, maybe take the RAVICTI question, and we'll go from there.

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Paul W. Hoelscher, Horizon Therapeutics Public Limited Company - Executive VP & CFO [21]

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Yes. I mean the actual price and volume on RAVICTI is laid out in the MD&A and the Q, so it gives you the exact dollar amount of volume growth and net price decline. So that's in that filing readily available.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [22]

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So as Paul mentioned, there were some Medicaid accruals that increased the net price -- or decreased the net price with RAVICTI.

Relative to data for teprotumumab, we expect to have a number of meaningful endpoints and data from that presented in several fall conferences this year, and we expect that data to be meaningful to potential prescribers.

Shao-Lee, do you want to talk about how we look at other indications?

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Shao-Lee Lin, Horizon Therapeutics Public Limited Company - Executive VP, Head of Research & Development and Chief Scientific Officer [23]

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Sure. So we're in the early stages of evaluating the potential benefit. We're really focused on understanding better how we think that IGF-1 receptor is really having clinical impact in the case of thyroid eye disease and asking ourselves how we can apply that potentially to additional populations. So it's early stages there.

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Vikram Karnani, Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer [24]

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Your question around PROCYSBI and RAVICTI market share, it's in the mid-50s, as said -- as we said before as well.

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Operator [25]

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Our next question comes from Gary Nachman with BMO Capital Markets.

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Gary Jay Nachman, BMO Capital Markets Equity Research - Analyst [26]

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First on tepro. For the oculoplastic surgeon specifically, how do they think about the value proposition of using tepro versus the economics that they might get from doing the surgery?

On ACTIMMUNE, will you be able to turn that around? Or will we see similar declines over the course of the year?

And then just talk about the spending cadence, how that might look over the course of the year, both SG&A and R&D.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [27]

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Sure. So from a surgery standpoint and looking at the oculoplastic surgeons, importantly, they have played a lead role in the development of teprotumumab with Ray Douglas being one of the top oculoplastic surgeons in the U.S. and rest of world. So they see the opportunity with teprotumumab and the magnitude of the data when you get a 83% response rate versus placebo and the opportunity to benefit their patients. They want, as they've indicated to us, to be a key part of offering teprotumumab to their patients.

One of the key things for them is how they view the success of surgery. They see that as something that is rarely effective from a long-term perspective and very difficult to perform with minimal improvement and outcomes for patients. So at least as they've indicated to us, they are very excited with the opportunity for teprotumumab to enter the market.

And maybe, Paul, you want to talk about the spend?

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Paul W. Hoelscher, Horizon Therapeutics Public Limited Company - Executive VP & CFO [28]

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Yes. I think on the OpEx, you should expect it to sequentially increase as we go through the year. And as we've said, a lot of that is driven by increased investment behind the preparation for the potential U.S. commercial launch of tepro, and so that will build as we move through the year and get closer to the end of the year.

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Vikram Karnani, Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer [29]

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Your question on ACTIMMUNE, we expect ACTIMMUNE as a -- we view it as a maintenance brand. It's stable. Expected to be in the $100 million range or in that area. Not a growth driver, but a significant source of cash in the business.

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Operator [30]

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(Operator Instructions) Our next question comes from Liav Abraham with Citigroup.

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Liav Abraham, Citigroup Inc, Research Division - Director [31]

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Two quick ones. Firstly, on the MIRROR study, can you quantify the potential revenue contribution that this treatment paradigm could have as it relates to KRYSTEXXA revenues over the longer term?

And then secondly, I might be interested in any additional comments that you have on business development, the types of transactions you're looking at and the sense of urgency just given the maturating of the teprotumumab clinical trial.

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Timothy P. Walbert, Horizon Therapeutics Public Limited Company - Chairman, President & CEO [32]

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So maybe, Vikram, talk about the potential, and Bob can handle the BD.

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Vikram Karnani, Horizon Therapeutics Public Limited Company - Executive VP & Chief Commercial Officer [33]

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Yes. I would say the way to think about the MIRROR study is in the event that it proves out the way we think it should, it should result in a twofold impact on the medicine. It should either impact the number of vials per patient. That should increase because of increased patient compliance in the MIRROR, as well as for those physicians that feel that they hesitate in putting patients on that would significantly alleviate their concerns. So we will expect that it will have a material impact on the medicine depending on the outcome of the study.

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Robert F. Carey, Horizon Therapeutics Public Limited Company - Executive VP & Chief Business Officer [34]

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And Liav, it's Bob. We continue to see good opportunities to pursue in the marketplace. We are optimistic about the opportunity to build out a pipeline behind the commercial organization. We do have a sense of urgency in attempting to accomplish that objective. However, our first order is do no harm. So we will not go out and do something that is outside of strategy or off from a financial standpoint. We've been good stewards of capital, we believe, over -- growing the company to this point. And you should expect that that's what we'll do in the future.

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Tina E. Ventura, Horizon Therapeutics Public Limited Company - SVP of IR [35]

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That concludes our call this morning. Our replay of this call and webcast will be available in approximately 2 hours. Thank you for joining us.

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Operator [36]

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Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program, and you may all disconnect. Everyone, have a great day.