Alexion Pharmaceuticals, Inc.
Q2 2020 Earnings Call Transcript

Published: 30 Jul 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Alexion Pharmaceuticals’ Second Quarter 2020 Conference Call. At this time, all participant lines are in a listen-only telephone. Please be advised that today's conference maybe recorded. I would like to hand the conference over to your speaker today Mr. Chris Stevo, Head of Investor Relations. Sir, you may begin.

[Christopher Stevo:]

Thank you, operator. Good morning. Thank you for joining us on today’s call to discuss Alexion’s performance for the second quarter of 2020. Just as we did last quarter, we are practicing physical distancing and are each doing the call from home.

[Ludwig Hantson:]

Thank you, Chris. And good morning, everyone. I'm pleased to share our second quarter performance. The last several months have tested the global community, health care systems worldwide and individuals and families around the world. We know the rare disease community has been greatly impacted and remain committed to supporting them. Our ability to successfully navigate through this challenging time is a result of strong execution against the contingency plan we developed at the beginning of the pandemic. This will guide us as we move forward. Our continued performance demonstrate the overall strength of the business and the resilience of your organization. I would like to thank our employees worldwide for their hard work and relentless commitment to our mission of transforming the lives of people with rare diseases and devastating conditions. Turning to the progress we have made in the second quarter, we have delivered another very strong financial performance with 20% revenue growth and 18%, non-GAAP EPS growth year-over-year. As a result, we have increased our full-year financial guidance to reflect the momentum of the business.

[Aradhana Sarin:]

Thank you, Ludwig. Starting with Slide nine. We reported second quarter total revenues of approximately 1.4 billion an increase of 20% year-over-year. We are pleased with the momentum we saw over the quarter, which was driven by strength in our neurology franchise onto the growth in the core PNH and atypical HUS businesses, and volume growth in our metabolic business. Operating margins trend continued into Q2, with non-GAAP operating margin of 58%. Non-GAAP EPS was $3.11 representing 18% growth year-over-year, driven primarily by strong top line growth. Moving to Slide 10. Second quarter total net product sales are primarily driven by volume growth across each of our medicines and key markets. Starting to Slide 11, SOLIRIS revenues in the second quarter was approximately 976 million, year-over-year SOLIRIS revenue was flat and growth in SOLIRIS neurology indications was offset by conversions to ULTOMIRIS in PNH, and atypical HUS. ULTOMIRIS revenue in the second quarter was 251 million, including contribution from the ongoing launches in atypical HUS. As a reminder, we made the strategic decision to lower the annual cost per patient on ULTOMIRIS compared to SOLIRIS. In the maintenance phase ULTOMIRIS, represents a 10% and 30% lower annual costs for patients compared to SOLIRIS for PNH and atypical HUS patients respectively. Total C5 franchise revenues were 1.2 billion an increase of 19% year-over-year. Metabolic revenue for the second quarter was 218 million representing 30% growth versus prior year driven by volume. On the right of the slide, we highlight ANDEXXA historical revenues as reported by Portola, which are not included in Alexion as well. Second quarter ANDEXXA estimated sales, which has not been conformed to Alexion's accounting policies were adversely impacted by COVID related demand productions.

[John Orloff:]

Thank you, Aradhana. Starting on Slide 18, you can see our current development portfolio, and the significant evolution it has undergone since 2017, resulting in a robust clinical stage pipeline today. This year, we have made significant progress in advancing our programs, despite the challenges posed by COVID-19.

[Brian Goff:]

Thank you, John. Turning first to Slide 23. I would like to start by reflecting back over the past 18-months when we first launched ULTOMIRIS in the U.S. for PNH. At that time, we set an ambitious target to establish a new standard of care through a best-in-class conversion of 70% of patients within two years. Today, I couldn't be more proud to share that we have achieved that 70% conversion established ULTOMIRIS as the standard of care in the U.S. And we did so within 18-months, six months ahead of our initial goal. Japan has also reached this its 70% ambition in less than a year since launch and Germany is nearly there in just over one year since initial launch. That is an incredible accomplishment and speaks to the meaningfulness of ULTOMIRIS for patients and our team’s excellent execution capabilities. Our ULTOMIRIS journey continues as we remain on-track to achieve a similar ambition of 70% conversion within two years for atypical HUS. We received a great news of EMA approval for atypical HUS in late June. And we expect Japanese approval in the second half of this year. Beyond the strength of the current ULTOMIRIS value proposition, we remain committed to leadership and the diseases we serve and continue to innovate for patients to improve their experience overall. In this being we are excited about the opportunity to bring our higher concentration formulation of ULTOMIRIS to patients, which when approved will reduce the infusion time from two hours to 45 minutes. This remains on-track for approval and launch in the second half of this year. We also look forward to expanding the ULTOMIRIS franchise with a potential once weekly subcutaneous formulation, with the goal to provide an alternative choice to patients who prefer to self administer. With that, let's turn to neurology. Despite one of the most challenging times to-date with respect to accessing physicians due to the ongoing pandemic. Our U.S team has added 189 net new patients within the quarter for a total of 2,341, U.S GMG and NMOSD patients on SOLARIS. Since we set the ambition to increase the number of treated neurology patients, four fold by 2025 at the start of this year, we have progressed approximately 10% of the way towards achieving that goal. This is made possible by the strong value proposition of SOLARIS in both indications, it has a proven safety and established efficacy profile providing continuous control in patients with GMG suffering from unresolved symptoms and exceptional relapse free rates for NMOSD patients at risk of devastating attacks. I'm incredibly pleased with this progress in the past two quarters, especially considering the pivot, the team continues to make to find new ways of working in light of COVID-19. Building on this track record of success in neurology, we continue to see a path forward for expanding the addressable population we serve with ULTOMIRIS in GMG with the Phase III trial enrolling patients, regardless of their prior treatment regimen. With potential launch estimated for ULTOMIRIS in late 2022 or early 2023, we expect to ultimately expand our target market to approximately 20,000 patients with the opportunity to move earlier in the patient journey. This is one of the key drivers of success to our ambition of quadrupling the number of both GMG and NMOSD patients we treat in the U.S. by 2025. We see this goal is achievable, especially with the potential for additional products to come to market with the possibility to expand the overall treated patient population and disrupt earlier line treatments. Turning to Slide 25. I'm incredibly pleased to be able to talk in more detail about the ANDEXXA following the close of the portfolio acquisition, patients on Factor 10A inhibitors who experienced life threatening or severe bleeds, often faced sudden and uncontrolled bleeding. If left untreated, these patients can face extremely high mortality rates. So, it is imperative that these patients get health quickly when they first present in the critical care setting. ANDEXXA provides a solution for these patients through targeted and rapid reversal of Factor 10A activity with a growing body of both clinical and real world evidence that advances its value proposition. As the first approved treatment for these patients ANDEXXA is a strong strategic fit with our mission of bringing transformative treatments to patients with rare diseases and devastating conditions. Moving to Slide 26. The urgency of treating patients in the critical care setting requires significant alignment across numerous stakeholders. Alexion has been operating in this space for almost a decade since the launch of atypical HUS. While SOLIRIS and ULTOMIRIS both have an incredibly strong value proposition as innovative therapies, the key to our success in atypically HUS goes well beyond the treatments themselves. Our teams focus on a system wide approach that encompasses all stakeholders in the hospital, including dedicated access and field reimbursement support to work with financial decision makers. We have also made significant progress by working with large hospital systems across the country. For example, recently, we have been able to work with a large, geographically diverse hospital system to establish a consistent approach in treating atypical HUS, that system has already adopted ULTOMIRIS for 100% of their patients. This has led to continued growth in our underlying atypical HUS with this past quarter generating the highest number of new patient initiations in the U.S. to-date. Considering the impact of the ongoing pandemic on hospitals across the country, this is a testament of the teams working on atypical HUS and the product profiles of both SOLAIRIS and ULTOMIRIS. While we are in the early days of integration, we are excited to bridge these capabilities with the value proposition of ANDEXXA. As you will see on Slide 27, we have continued to see positive momentum for ANDEXXA since we announced the deal in early May. New doors have opened to support access in the U.S. including proposed in tap renewal through October 2021, an issuance of a J Code for drip and shift use. And the American College of Cardiology’s updated consensus guidelines for managing patients on oral anticoagulants now recommend ANDEXXA as the preferred reversal agent for Factor 10A inhibitors, over four Factor PCC. Our focused in ramping up ANDEXXA, there will be a three pronged approach for value creation. While still important, we will shift from a heavily weighted focus on demand generation to a multi faceted approach that is similar to our comprehensive atypical HUS model. We are investing in additional resources to enhance market access, health economics and GPO IDN contracting capabilities to ensure patients and providers are able to access ANDEXXA. And we will also be building out capabilities for a Thought Leader Liaison Team to focus on gaining support across high potential institutions. While it will take some time to execute fully, our teams have hit the ground running to lay the foundation, and I look forward to sharing additional updates on future calls. So with that, I would like to now hand it back over to Ludwig for closing comments. Ludwig.

[Ludwig Hantson:]

Thank you, Brian. In the second quarter, we continue to build on the momentum of the last few years. The main focus on our value creation strategy of leading and compliment, expanding our base C5 business into new therapeutic area and diversifying beyond C5 to drive durability and long-term growth. As a result of execution and delivery against our objectives we have entered a new phase of the company growth and diversification, which enables us to return value to shareholders. This includes our updated capital allocation strategy. It is a commitment to directing $500 million to $560 million this year and an average of at least one-third of free cash flow towards share repurchases annually from 2021 through 2023. I also want to note that Directors from all Boards and Management being proactively engaged in discussions with many shareholders. We appreciate the prospective we have heard and the support we have received of our mission. We also get the feedback and share the perspective that we are undervalued. We are working with diligence and urgency to increase shareholder value and demonstrate to investors that significant returns our heads as we continue to execute on our strategy, we look forward to more discussion in the months ahead. In closing, we continue to adapt to the COVID-19 pandemic and to-date have demonstrated organizational adaptability and resilience that will remain critical in this uncertain environment. I'm confident that we will be able to continue to deliver for patients and shareholders alike. I'm very proud of a strong execution thus far in 2020, especially in the face of this challenging environment. And I look forward to carrying this momentum into the rest of the year. With that, we will now open the call to question. Operator.

[Operator:]

Thank you. Our first question comes from Josh Schimmer from Evercore ISI. Your line is open.

[Josh Schimmer:]

Thanks for taking the questions jut two quick ones. If you are committing it to a return of capital to investors in the midterm, why not issue a dividend? And then why are you starting new pediatric Phase III studies with SOLIRIS as appose to ULTOMIRIS? Thanks.

[Ludwig Hantson:]

Yes we will start with the capital allocation question. And I just want to jump in and then John will talk about peak study. As far as capital allocation, as I said, we believe we are in a position of strength and we have now more flexibility because of a strong commercial execution, because of strong cost management, strong free cash flow generation a strong pipeline. So it puts us in a situation of strength and that is why we have the flexibility on capital allocation. So, we talked about the sector was committed to at least one-third of our free cash flow towards a share buyback because of the situation that we are in. And this is a commitment that we have made towards the next three or four years. Why we are focusing on buyback? buy gives us opportunities to increase desire to dial up or dial back. While we stay disciplined on the business development side, and I know Aradhana you want to answer this?

[Aradhana Sarin:]

No. I think that is the reason for Josh for doing the buyback and to have the approach that is both balanced as well as flexible. And we are not committing to a dividend at this point. We don't think as a company we are at that stage of maturity yet. But we are committing to at least one-third of our free cash flow towards buy back for the next few years.

[Ludwig Hantson:]

And John do you want to talk about the pediatric studies?

[John Orloff:]

Yes, Thanks Josh, with SOLIRIS generally these are post marketing regulatory commitments, we do have an ongoing pediatric study in MG303 study that is ongoing now that again is a regulatory requirements through our tip requirements and interactions with other regulatory authorities to generate data in the pediatric population.

[Ludwig Hantson:]

Okay. thanks for the question Josh. So operator we will take the next question.

[Operator:]

Thank you, sir. Our next question comes from Cory Kasimov from JPMorgan. Your line is open.

[Cory Kasimov:]

Hey good morning guys. Thanks for taking my question. I wanted to ask you about your sales guidance. When you consider your first half C5 sales were, I think 2.47 for the franchise. If you annualize that you get to little over 4.9 billion versus your guidance that is in the range of 4.75. So, obviously, there is a different pricing dynamic is more patients convert to ULTOMIRIS. But it still seems conservative, especially in light, as SOLIRIS’s continued strong performance in neuro. So, I'm just curious if there is something else there that I'm missing, such as a more accelerated conversion in atypical HUS or anything like that. And then just really quickly on the pipeline regarding the plans to start a Phase III trial for 2040 and PNH before year-end. Would you consider waiting on 2050 given the sub optimal PK/PD profile you described for C3G or do you remain confident in the data you have already demonstrated in our PNH indication? Thank you.

[Ludwig Hantson:]

Thanks for the questions Cory and a lot of questions in your one question, but let me start with the with the guidance before I give it to Aradhana and I think Brian might also jump in to talk about what we see in the marketplace. Needless to say that the COVID-19 situation adds complexity and uncertainty and forecasting. But I can tell you that we believe we see continued strength in our business, despite the current environments, he 12% top-line growth is a very strong item for the year. Even with Portola our operating margins continue to be competitive, very competitive within the industry. And there continues to be uncertainty in the market moving forwards and Brian can talk about, yes, we are adding new patients, but we do see a little bit of a slowdown, but Aradhana Do you want to build on this?

[Aradhana Sarin:]

Sure. Thanks Cory. So, you are right that our guidance for the second half is a little more conservative, but there are obviously various variables that we are constantly monitoring. One is compliance rates, which we haven't seen the impact in our second quarter, but it is definitely a factor that we monitor very closely. The second is the queue of new patients and the new patients adds, which as you can imagine it takes time for patients from the time of identification to vaccination, reimbursement, and actually getting on therapy. So there is a lag time and we are seeing slowdown in sort of new patient adds. And third is the conversion to ULTOMIRIS, which have been great given the every eight week profile of ULTOMIRIS. The fourth is the payer mix, which again takes a little bit time with the unemployment rates and so forth. The payer mix takes time to go through. And, we are watching that for the second half of the year as well. And then overall, theirs is the uncertainty as Brian mentioned, our field force is not you know back yet. There is uncertainty around COVID and ways to and access and so forth. So taking all those factors into account is what our guidance is based on. And, as a company, we generally try to set guidance, which we can meet or exceed.

[Ludwig Hantson:]

Yes maybe before we go to the question on 2040, 2050 Brain, do you want to talk a little bit about what you see in the markets? I can tell you that I'm very proud of what the commercial team has done over the months and quarters fine.

[Brian Goff:]

Yes and Cory thanks for the question. The only thing I wanted to add, I think it has been covered really well is to end on a positive note. Here we are a full quarter in through the pandemic and we have learned a lot, the teams continue to get more effective in their virtual engagements. We are certainly not fully physically present in the offices, but we have started on that journey. And as I had noted, we have got a couple of bright spots, first of all, the conversions with ULTOMIRIS continue to track really well. And then secondly, what you see in terms of atypical HUS, as I had mentioned is a record quarter in terms of new patient initiation. So we are trying to monitor fluid very carefully as every company is, but we feel good about the continued progress that we continue to make.

[Ludwig Hantson:]

Okay. So we will take your second question Cory. So John 2040, 2050 PNH.

[John Orloff:]

Yes. Cory so with regard to the Factor D program, recall that we had now very strong Phase II results with 2040 danicopan that showed a nice bump in hemoglobin of 2.4 grams per deciliter, as well as a dramatic reduction in the requirement for transfusion. So based on that data and the PNH population with patients that have a co-existing, extravascular hemolysis as add on therapy to either Solaris or Ultimris, we will be proceeding with a Phase III trial that we will start in the second half of this year. So confident based on the Phase III data. The 2050 program, as you know, is also being explored in a Phase II program in PNH and our focus there is on evaluating its optionality for monotherapy, whether it can actually adequately control both intravascular hemolysis and extravascular hemolysis, which remains to be determined. We also, of course, with 2050 are most excited about expanding into additional indications. We will be starting our Renal Basket trial in the first half of next year that will include among potentially Lupus Nephritis, IgA Nephropathy, and membranous nephropathy. And again, there could be other indications that we might pursue as well and other disease areas that we are looking at right now.

[Brian Goff:]

And I would just add that the C3G data. I think there is a difference between liquid phase and solid phase with regard to Factor D targeting and alternative pathway inhibition. It was pretty clear based on PK/PD analysis that we did on the Study 204 to 205 data that there is a PK/PD relationship such that in patients who achieved higher pharmacokinetics with 2040, they had better alternative pathway inhibition, as well as reductions in complement BB Factor. And with that in subset of patients over half in the study 205 had meaningful reductions in proteinuria, which both our internal experts as well as external advisors believe is a meaningful impact on proteinuria that what would not have been realized spontaneously.

[Ludwig Hantson:]

Thanks. Operator we will take the next question.

[Operator:]

Thank you. Our next question comes from Geoffrey Porges with SVB Leerink. Your line is open.

[Geoffrey Porges:]

Thank you very much, and congratulations on the quarterly results. Terrific to see. So, from the financial - the capital deployment question. First, is your intention around that to achieve an absolute reduction in share count with the buyback? Or do you expect initially at least this year to just offset employee stock option dilution? And then have you contemplated providing long-term guidance? Obviously, there are a host of issues this year with COVID, but it would be helpful to know whether that was something that you were considering. And then just related to that, which indications and geographies Are you still seeing most affected by COVID you know would just be helpful to know where the risks are there?

[Aradhana Sarin:]

Sure. So, the capital allocation strategy that we provided, even for this year that is clearly in excess of what we would say is clear share stabilization, to offset the dilution from employee stocks. So, that is only again for this year, which is a smaller amount than what we expect for the next several years where we said one-third, or at least one-third of our free cash flow for the next few years. So, that was your first question. I think your second question was, do we plan to provide long-term guidance? And I really can't comment on that. But we will obviously take that under advisement and see how much more clarity and transparency and information we can provide with it. With relation to your third question, which is what geographies are being impacted by COVID. So, we are starting to have the field force and some of the offices open in Europe and Japan. In the U.S., the field force is still not back and as Brian mentioned, we have essentially pivoted a lot of our calling efforts and a lot of our strategies to more digital means, which obviously is not the same. So, I think we are using a lot of different tools and mechanisms to keep our physician days engaged driving more depths right now instead of breath. But continuing to explore new means not knowing how long this continues. Brian, I don't know if you want to add to the third question.

[Brian Goff:]

Yes. Good morning, Geoff. The only thing I would add is it is probably what you would expect in terms of severity and life threatening status of the indications if you stratify that way. So, as I mentioned, atypical HUS continues to track really well that as, you know, an unforgiving acute manifestation, it is not dependent on testing per se. So that has progressed. And then within neurology, we gave you the aggregate numbers, but always GMG is unfortunately thought to be less severe than NMOSD and so NMOSD continues to progress very nicely. GMG is just a function of our continued focus, more on the depth side of prescribing and less so on breadth, i.e., generating prescriptions with new first time clinicians. So I would say in large part, that is how it breaks apart and then PNH is an indication that is disproportionately depending on testing volume. So in the COVID era as you can imagine, as testing starts to slow that you will see a subsequent impact on PNH prescribing as well.

[Ludwig Hantson:]

Okay. Thank you, Brian. Operator, we will take the next question.

[Operator:]

Thanks you. Our next question comes from Chris Raymond from Piper Sandler. Your line is open.

[Christopher Raymond:]

Thanks. Just wanted to ask a couple of questions here. First on OpEx, I'm trying to understand what is involved with this new guidance just sort of midpoint-to-midpoint it is up $242 million. I think if you back out the Portola component of that of 125 million that is up about 117 million. I know, you have talked about a lot of puts and takes, but maybe just kind of walk through what is sort of driving that. And then maybe just clarify, I think from your answer to the last question, you guys mentioned that, and you were talking about the differences in indications, but can you just clarify, are you seeing in the field that NMO is indeed more resilient to COVID-19 disruptions and MG? Thanks.

[Ludwig Hantson:]

Aradhana do you want to take the first question.

[Aradhana Sarin:]

Sure on OpEx, I think you were comparing it to the guidance that we had given last quarter. And if you remember some of the commentary from the last quarter, we actually had talked about various controls and various things that changed in OpEx some of which were involuntary. For example, TNE expense and conference related expenses and so forth. And some of it were voluntary because of the uncertainty on the top-line and our buying into that point, we have actually taken several actions internally to manage OpEx. The other part of the OpEx is we had also anticipated perhaps delays in studies and therefore, given the OpEx guidance appropriately. However, we now expect a number of the studies to actually start in the second half of the year. So you can imagine that our R&D expenses in second half of the year, will also be going up. And then, as also mentioned, we are absorbing 125 million of Portola OpEx. So those are the various elements as to why it is different from the guidance from the last quarter.

[Brian Goff:]

Yes Chris, just on your second question within neurology it is as we had expected, generally, that GMG tends to be a longer journey of conversion. Unfortunately, the perception with many clinicians is the suffering is less obvious to them that the patients go through. And so, it is a lot of educational lifts and it is a lot of convincing on breaking those successive immunosuppressive therapy cycles to convert over to SOLIRIS. NMOSD as you know is a highly unforgiving disease, it is event oriented when those attacks happen, they are devastating. And so it tends to be more front and center in terms of the acute nature of the convergence and in during this COVID era, less access to physicians, I would expect it will continue to play out that way.

[Ludwig Hantson:]

Okay. Thanks Aradhana, thanks Brian. Operator, we will take the next question.

[Operator:]

Thank you. Our next question comes from Phil Nadeau from Cowen & Company. Your line is open.

[Philip Nadeau:]

Good morning, congratulations on the quarter Just two questions for me first, pushing on kind of longer term trends and guidance. It seems like you have highlighted a couple of headwinds in 2020 and specifically the second half such as COVID in the conversion of patients, from SOLIRIS and to ULTOMIRIS. It seems like going into 2021 and certainly 2022 the convergence likely are going to be over and hopefully COVID would be behind us. So, is it reasonable for us to expect revenue acceleration over that intermediate term? And then second question is just on the pipeline you have highlighted, ULTOMIRIS maybe broadening the patient population in GMG recently saw data from that FcRn's. How do you think that competition is going to affect ULTOMIRIS’s opportunity and where will ULTOMIRIS fit in to the treatment paradigm in light of FcRn is coming? Thanks.

[Ludwig Hantson:]

Yes, Aradhana, could you take the long-term guidance and then maybe Brian and John, will go to ULTOMIRIS and decisions within MG?

[Aradhana Sarin:]

Sure. Thanks, Ludwig. So, as it relates to your question on what we could anticipate for 2021 obviously we are not in a position to give guidance for next year. But I think the same factors will apply for next year as well. The first being the compliance rate. And if you can imagine where we landed at the end of this year, and what our ending number of patients on therapy are across all various indications, and what the compliance rates we see towards the end of the year will determine where 2021 is. I think also with hopefully COVID fading away, we will see a pickup in the new patient adds and the new patient queues. Your right that you would be behind the conversion to ULTOMIRIS and PNH. But we still have the conversions of ULTOMIRIS really going strong in atypical HUS and that will continue into next year. And then the fourth factor that I mentioned was the fear mix, which also may take some time to play out and may have in fact in 2021 as well. So, I think those are the four major factors that we constantly monitoring and will have an effect on next year as well. Maybe, I will hand over to -.

[Brian Goff:]

So, I will just jump in on the second question about neurology and in potential new competitive insurance. I mean, first of all, we do see this is a very large market. It certainly is the largest we operated with GMG in particular 60,000 to 80,000 patients in the U.S. alone. What will be interesting is, there are analogs to show that as new competitive insurance come in, when you look at MS, for example, or RA, there are great examples of how the market volume had continued to grow for many years. And so we see that expansion potential as well in GMG, namely, because the different modalities are likely to occupy very different position spaces. in the case of SOLIRIS, we are talking about more severe out of option, less controlled patients and with FCRN we are certainly with our own pipeline interested as well. That is more towards first line displacement, IVIG and immunosuppressive therapies, high dose steroids, and alike. So it is a very different treatment approach. And, the other thing that is unique about the SOLIRIS and then bridging to ULTOMIRIS is we do firmly believe given that this is a chronic disease in continuous not cyclical therapy. And this is taking a little bit of a playbook out of some experience in the hemophilia world where it is unfortunate if patients wind up paying the price with waiting until symptoms return and then retreating. So we are quite in static about the continuous aspect of therapy. With ULTOMIRIS we see the addressable market significantly expanding, as I have mentioned, it could be up to 20,000 patients. And then the last thing I will just mention is we don't intend to rest on any of the progress that we are making. Now two and a half plus years in we are working on ULTOMIRIS higher concentration, we are working on subcutaneous as we have discussed. We have other assets in the pipeline that we will be looking at, including Factor D. And so as this market grows, we will intend to continue to innovate to serve those patients.

[Ludwig Hantson:]

John do you have anything to add to this?

[John Orloff:]

Yes. The only thing I would add is that as you know, GMG trial has opened the aperture, so we are going to be enrolling patients and we are enrolling patients who are over 65% enrolled now, that have not actually failed an ISP. So we are moving earlier in the course of the disease. In addition, as I said, we will be pursuing MG with our own FCRN program 1830, but we will be looking at continuous therapy, as opposed to cyclical therapy to avoid a loss of a treatment effect and carrying that response out throughout the full duration of the dosing interval.

[Ludwig Hantson:]

Okay. Thank you John. We are at the top of the hour, so we will take one more question.

[Operator:]

Thank you. Our last question comes from Geoff Meacham from Bank of America. Your line is open.

[Geoff Meacham:]

Hey guys, congrats on the quarter and thanks for taking the question. I just had a few. So Brian, as you prepare for the ultra, you launch for HUS, just help us with maybe the nuances with the U.S. in terms of switch dynamic and pricing, and then real quick, Ludwig, I like the new capital allocation strategy with the emphasis on buybacks. Should we view this as maybe de-prioritizing BD now that you have Portola behind you and the pipeline is starting to mature? Can you do both optimally? Thanks guys.

[Brian Goff:]

Yes. I will start Geoff on the first one about ULTOMIRIS. First of all, we are already underway now in Germany and thrilled about that with ULTOMIRIS for atypical HUS, I guess just quickly that the high level is I don't see a lot of differences between U.S. and what we would expect in Germany. The one advantage we have with the atypical HUS launch is ULTOMIRIS is not new to many of the institutions and the clinicians. And so that is why we have stated pretty emphatically or our continued ambition to have that 70% facilitated patient conversion within two years. And, I expected atypical HUS with ULTOMIRIS will really deliver for patients just as it has with PNH.

[Ludwig Hantson:]

Yes, Geoff on capital allocation parts. As I said, we are in a position of strength and we have the flexibility now because of the strong execution, but also because the situation that we are in with our R&D which is much stronger than before. You know as John was saying, We have now 20 programs in development and lump sum for 10 launches by 2023. So, when you look at that our BD strategy and external innovation has been a very critical external source to drive innovation that have a pipeline now has strengthened significantly, you are going to see that we are going to rely less on business development. And as we discussed during this call, our short-term focus for this organization as we have had over the quarters and really delivering quarter after quarter after quarter. So, for the next quarters, we are going to focus on the integration of Portola and really making sure that we maximize the assets. So, you are going to see a much more focused approach towards what we have internally with being opportunistic on share buybacks so that means we can drive it up if we want to, above the one-third that we discussed, and on the business development side, as I said, we will rely less on BD moving forward, but we will remain disciplined. So, that has not changed.

[Ludwig Hantson:]

So, with that, thanks for joining us this morning. Needless to say, I'm very proud of what this team has achieved quarter-after-quarter delivering or even over delivering on what we said we are going to do. And we are looking forward to keep you informed on our progress. So, enjoy the rest of your day everybody and thanks for calling in.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect everyone. Have a wonderful day.