Alexion Pharmaceuticals, Inc.
Q1 2019 Earnings Call Transcript

Published: 25 Apr 2019

[Operator:]

Good morning. And welcome to the Alexion Pharmaceuticals Incorporated Conference Call to discuss First Quarter 2019 Financial Results. Today's call is being recorded. For opening remarks and introductions, I would now like to turn the call over to Susan Altschuller, Vice President Investor Relations. Please go ahead, ma'am.

[Susan Altschuller:]

[Ludwig Hantson:]

Thank you, Susan, and thank you everyone for joining us this morning. I'm very pleased with the strong start to the year. We've delivered on the top and bottom line and have already made great progress so far on our 2019 key objectives here. Here on Slide 5, I want to highlight some of these achievements. First, with ULTOMIRIS, we have an opportunity to redefine the standard-of-care in PNH and HUS. Our US launch for PNH is on track to meet our best-in-class goal of 70% or greater conversion by year two. We hope to launch in Germany mid-year and in Japan by the end of this year. Furthermore, I'm pleased to announce that just this week we filed the approval of ULTOMIRIS for atypical HUS in US with a potential launch in early 2020 and are also planning to file in Europe and Japan this year. Second, we are accelerating on the neurology portfolio, building on the best Alexion launch to date. We're seeing continuous strong patient growth with SOLIRIS in gMG. With a PDUFA date of June 28 for SOLIRIS in NMOSD, our team is dedicated and focused on launch preparedness, as we hope to expand into our next neurology indication. We also received orphan drug priority review for filing in Japan.

[Paul Clancy:]

Thanks, Ludwig. We delivered an excellent quarter to start the year. Starting with Slide 8, we reported total revenues in the quarter of $1.140 billion, an increase of 23% year-over-year, driven by growth in gMG, the ULTOMIRIS conversion in growth in the core business. Our non-GAAP operating margin was 57% in the first quarter, an expansion of 741 basis points driven by top line leverage in phasing of R&D spend. Non-GAAP earnings per share was $2.39, representing 42% growth year-over-year. Moving to Slide 9, first quarter net product sales were driven by volume growth of 26%, partially offset by FX headwind of 1% and a price headwind of 2%. The price headwind was largely a result of SOLIRIS price changes in Turkey, driven by our formalized reimbursement agreement in the third quarter of 2018.

[John Orloff:]

Thank you, Paul. We continue to execute on advancing and building out our pipeline. We've made significant progress in each of our four blockbuster pillars, which I will highlight today. As seen in the three right hand columns, we currently have 16 development programs in our pipeline. During the past 12 months we reported positive pivotal data in ULTOMIRIS and PNH and atypical HUS and with SOLIRIS and NMOSD have progressed ULTOMIRIS into additional Phase 3 trials and have announced a total of seven business development deals, four clinical stage and three preclinical stage. Last month at our Investor Day we conducted a deep dive on the R&D portfolio and I would encourage you to take a look if you haven't done so already. On slide 17, we have outlined our R&D program phasing over the next 18 months. As you can see we expect clinical trial activity to ramp up towards the back half of 2019 into 2020 with numerous Phase 3 ULTOMIRIS programs in our ongoing Phase 3 superiority trial for 1840 in Wilson disease. We expect early clinical research and business development will also contribute. Moving now to slide 18, you can see our plans to expand patient optionality with our innovative C5 portfolio. Focusing on haematology, nephrology, we have an ambition to raise the standard-of-care with ULTOMIRIS every week IV in PNH and have filed for approval in atypical HUS. With our planned higher concentration formulation which we plan to file in the back half of this year, ULTOMIRIS patients will benefit from both every eight week dosing and reduced infusion time of only 45 minutes.

[Brian Goff:]

Thank you, John. Starting on slide 24, while only four months into the launch of ULTOMIRIS for PNH in the US, we're very encouraged with the initial progress we've made. As of the beginning of this week 27% of PNH patients were enrolled in one source, a leading indicator of conversion and 22% of PNH patients are on treatment with ULTOMIRIS. So we believe we're on a very solid path towards achieving our goal of facilitating a best in class SOLIRIS to ULTOMIRIS PNH patient conversion of at least 70% within the first two years of launch. The commercial and operational expertise of our team are critical to the success of our launch, and we believe ULTOMIRIS sets a new bar for patients. As you see on the left, ULTOMIRIS delivers on the key attributes of a best in class therapy for PNH. So far patient and physician feedback has been positive and from a payer standpoint there have been minimal barriers for conversion and to date over 60% of commercial lives now have a defined policy for ULTOMIRIS. We have a similar ambition to facilitate a rapid best in class conversion in Europe and Japan and pre-launch planning is underway with a first potential x-U.S. launch in Germany mid-year. Turning to Slide 25, our neurology franchise represents a significant growth opportunity both near and long term. This franchise is built upon the success of our launch of SOLIRIS and gMG, the best Alexion launch to date. In fact, as of this month we're proud to announce that in the U.S there are over 1000 patients currently being treated with SOLIRIS and by the end of this year our second full year of launch we anticipate gMG to be the largest US SOLIRIS syndication by patient volume. We're excited to build upon our success with gMG, as we actively prepare for our potential expansion of SOLIRIS into NMOSD in the US midyear. There are currently no approved therapies for NMOSD. Patients live in constant fear of the unpredictable and potentially devastating effects of another attack. Therefore relapse prevention remains the primary treatment goal. Given the strength of our data and the significant need, we have a sense of urgency to serve these patients. We are right now expanding our field and medical teams and pre launch internal training as well underway. We believe we have the right infrastructure in place ahead of our June 28 PDUFA date. Moving to our metabolic franchise on slide 26, we reported first quarter STRENSIQ revenue of $130 million. We expect continued growth coming from STRENSIQ in 2019 as we identify new patients and seek reimbursement agreements in additional geographies. KANUMA ended the quarter with revenue of $24 million and continues on a path of steady growth. With the addition of ALXN1840 for Wilson disease, we have the potential to further strengthen and grow our metabolics portfolio. We believe 1840 could provide meaningful differentiation and superiority over the current standard of care for Wilson disease with approximately 20,000 patients in the U.S. and EU 5 and the potential to be the first approved therapy in decades. We see significant opportunity for 1840, which if approved will share a strong call point synergies with KANUMA. I want to thank our team for their dedication to bringing hope to patients suffering from rare diseases and we'd like to reiterate the organization's enthusiasm and commitment as we move through the year. I'll now turn the call back to Ludwig for closing comments. Ludwig?

[Ludwig Hantson:]

Thank you, Brian. We have already made great progress in the first few months of the year, but we are not stopping here. We are well positioned to build on the momentum and deliver on our 2019 objectives. Alexion 2.0 is in its next phase of growth. We continue to execute on our strategy with the goal to make a meaningful impact on patient lives and create long term shareholder value. As always, I would like to thank our global employees for their dedication to our mission and the patients we serve for their continued trust in us.\ With that, we will now open the call to questions. Operator?

[Operator:]

We will now turn to the question and answer portion of our call. Our first question comes from Geoff Meacham with Barclays. Your line is now open.

[Geoff Meacham:]

Morning, guys. Thanks for the question. I just had a commercial one and then a real quick one for John. So on ULTOMIRIS in the US Brian, what's been the gating factor for access, it seems straightforward to do so to switch and fairly quickly, but how would you expect that to differ outside the US? I would obviously think pricing would be a big driver outside the U.S. for example? And then for John, you guys obviously have a pretty broad rollout for ULTOMIRIS in terms of new studies and it's having an impact on perhaps the competition enrolling patients, I want to maybe ask you that more broadly, are you finding it tougher as you - as you expand the ULTOMIRIS breadth of development to find patients for some of that - for you know, for - going back to aHUS and then also we're looking forward to gMG or to NMO?. Thank you.

[Brian Goff:]

Yeah. Hey, Geoff. It's Brian. I'll start with your first question on access and for all ULTOMIRIS as I mentioned we're pleased with the progress. As I noted, we're now over 60% of commercial covered lives with a determined policy and that's right on track with the pace that we expected we saw the same general progress with gMG with the launch of SOLIRIS for gMV. And really what in the US what is you noted price of course, that's a key factor in the value story. But there's also - a lot of these payers have scheduled timing for the reviews to make their policy determinations. So we're working through that. And then a little bit deeper in the institutional setting there also are formulary decisions that likewise need to be made and that's what covers the academic access for the most part. X-US, I think you have similar dynamics in a way pricing, value becomes a key part of the discussion of course. And then there will be single payer policy determinations, which in a way could accelerate that pathway and then you get more locally the same thing at the institutional level. I think just keeping in mind what happens for 2019 beyond the US, it's really a story about Germany at the mid year point and in Germany you essentially have free pricing in the first year of pre-AMNOG, and then later in the year we would look to a reimbursement determination for Japan, our second key launch. And then John…

[John Orloff:]

Geoff, this is John. So with regard to trial enrolment, as you know, we've completed the atypical HUS study we filed now in the US and we're on the verge of filing also in Europe and Japan. The gMV is probably the highest competitive intensity and yet we have the advantage of knowing those investigators and those sites worldwide. And we are in the process now of enrolling that study. So we're pretty confident we'll be able to enroll that as quickly as we possibly can. For NMO that's going to start later this year. Lower competitive intensity, but again we know the players in the field and with regard to the high reward, high risk indications ALS and PPMS assets totalling new territory. So we're confident we can execute on the clinical development plan.

[Geoff Meacham:]

Okay. Thanks, guys.

[Ludwig Hantson:]

Okay. Next question?

[Operator:]

Thank you. Our next question comes from Kennen MacKay with RBC Capital Markets. Your line is now open.

[Kennen MacKay:]

Hi. Thanks so much for taking the question. I was wondering maybe if you could help us understand a little bit what some of the manufacturing issues were before getting the Phase 3 started - Phase 3 started for the FcRn and is this something that was in-house or is this an issue with the CMOs or intellectual transfer here? And then, separately I was just wondering about the Russian biosimilars, I was wondering if you could help us understand the clinical trial that got that biosimilar there from Generium and whether that was something that could be supportive of an approval for that agent in the rest of Mainland, Europe, given that you have some partnerships with European such as?

[Ludwig Hantson:]

Please go ahead.

[Brian Goff:]

For the 1830 program as you know, we acquired Syntimmune and process the manufacturing that supported those clinical trials. And as you also know we had three Phase Ib/IIa studies ongoing in PV warm autoimmune hemolytic anemia and healthy volunteer Multiple Ascending Dose Study. And those were progressing well. But we discovered an impurity in the drug a product that we've investigated. We've identified the cause and the source and we've corrected those manufacturing issues with new drugs substance runs that will allow for a clinical supply by the end of this year when we can sort of reinitiate these clinical program. So we're doing everything we can to preserve the original timelines. But there will be a delay in starting the pivotal programs as we articulated previously for WAIHA and for gMG.

[Paul Clancy:]

So Brian for the Russian biosimilars, so no surprise for us and also no surprise moving forward.

[Ludwig Hantson:]

And maybe I'll start and Paul, if you want to add anything. As Paul had noted in his commentary, that we have worked this into our guidance. It's already included. We believe it's generally limited to Russia CIS. In terms of the exact specifics of the clinical program, we don't know, we haven't seen it. But for EU and boundaries outside of Russia CIS there are different regulated requirements, like conducting clinical trials and having sites in Europe. And so generally we believe that this is isolated to Russia CIAs. Anything else, Paul.

[Paul Clancy:]

I'd also Mac just point you to, that we have protection in Europe right now, as well as ODD protection. And just to reinforce what Brian said, the regulatory hurdles are fundamentally different.

[Brian Goff:]

Yeah, which we didn't have in Russia. So…

[Paul Clancy:]

Exactly.

[Brian Goff:]

Our IP was - we didn't have an IP in Russia. So I would say it is as expected. I think most of us and all of us have experienced with dealing with the Russian markets. We think it's going to be isolated to Russia, plus the countries that Brian highlighted. So we don't see anything happening in Europe with Generium.

[Ludwig Hantson:]

Next question.

[Operator:]

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

[Geoffrey Porges:]

Good morning and thanks for taking my question. One perhaps for Brian and then one for Paul if I may. Brian, just quickly on the NMOSD as you prepare for the launch, can you give us a sense of what the unmet need in the patient population is, particularly what the population of recent relapses or more active and refractory diseases that you think is it's possible to start on treatment relatively quickly? And then Paul, looking at all of the clinical trials you have getting under way in the beginning of next year and also the investments you're making in the neuro and muscle franchises. Could you give us a sense of where you think your operating margin could go? Is it feasible for us to be modeling stable operating margins next year or is it inevitable that they'll come under pressure?

[Brian Goff:]

Yeah. Hi, Jeffrey. Good morning, it's Brian. I'll start with your first question on NMOSD and of course, I'll begin by saying that we're really pleased to have the opportunity, every time we reflect on the data and the strength of what we saw in terms of the patients who were relapse free, which we really think will be the key aspect of focus on NMOSD. The fact that we had nearly 98% at 48 weeks is very significant. So that's kind of the starting point for where our focus will be. It's all about the relapse. That said to your question about you know, how do we think about the opportunity. We've talked that in the US it's 4 to 5,000 patients that are - that align with the present pivotal Phase 3 clinical program. It's a subset of that that we would expect in the early days would be in the so-called actively relapsing segment and that would be our very initial area of focus, once we do have approval from the FDA. There are also important differences between them NMOSD and the launch that we had in gMC, maybe just to name a couple. One is that there are no approved therapies available but RITUXAN is commonly used as off label treatment and because of the severity and the significance of these attacks or these relapses in NMOSD, we do anticipate that there will be some patient reluctance to switch therapies and we're going to have to work through the educational aspects of both the patient level, as well as the provider level. Secondly, we're also aware that there is potential near-term competition on the horizon, although what will be unique of course about SOLIRIS is the complement mechanism of action which we believe is fundamental to addressing this disease. And then the third point is what I already mentioned that, the population is smaller than gMG. But still for us another example of potentially moving from ultra rare to rare. So we're excited to have the chance to expand on neurology footprint and focus.

[Paul Clancy:]

Geoff, this is Paul. Thanks for the question. I'm going to try to answer it at a little bit more of a conceptual level because obviously we're not kind of getting into 2020 numbers at this point in time. But I think you're absolutely right, from a thesis perspective that what we would love to see in it's part and parcel to the strategy of the company is growing R&D, driven by a growing and expanding pipeline. And as we progressed through the year, it's exactly as you kind of pointed out is probably three things that really drive that growing R&D, which is ULTOMIRIS broadening into additional indications and additional studies subQ, gMG and NMOSD, ALS, PPM.S. So it's a really big strategy around ULTOMIRIS for the long-term. Progression of kind of what I call the newly - the newer assets into the pipeline through business development activity over the last 12 to 18 months, including Wilson, both the FcRn assets moving forward Caelum and we have dollars earmarked for additional pipeline coming from business development. So we – you know, that's not - you know, we don't know what that is yet, but we do in that - that will flip over into 2020. I think that is very, very healthy and it's actually consistent with the strategy and it will result in a growing, hopefully a growing R&D budget. I think we see SG&A leverage on the flip side and I wouldn't point to kind of SG&A dollars, you know, meaningfully coming down or anything like that. It's just more SG&A leverage on top of hopefully double-digit kind of revenue growth. And the combination of those things I think can expand margins modestly and continue to progression margins. We will do what's right for growing the business over a long period of time, but with that mentality kind of - so keep it at a conceptual level for the for the time being. Hopefully that helps.

[Operator:]

Thank you. Our next question comes from Paul Matteis with Stifel. Your line is now open.

[Paul Matteis:]

Great. Thanks so much for taking the questions. A couple of quick questions on MG and ULTOMIRIS. I was wondering if you could offer any color on the characteristics of the early adopters of the ULTOMIRIS population, whether or not they're younger, whether or not they have more or less comorbidities and the insurance mix? And then separately gMG, it looks like the patients on therapy are remarkably stable over the past couple of quarters. Are the underlying drivers of that stable being new prescriptions and also discontinuation? Thanks so much.

[Brian Goff:]

Yeah. Hey, Paul. It's Brian. So I'll start - I'll go in the order that you just mentioned with ULTOMIRIS, I probably won't be able to give you as much detailed color as you're looking for - for the patient types. I think what you're seeing in the - in the uptake we've had so far which has been steady. I mean, we've been consistently reporting out the progress we've made is a function of a few different attributes. One is patients who have awareness of the availability of ULTOMIRIS of course, and the motivation to benefit from that shift going from living life in two week cycles to every two months, which is significant. That has to be matched up with the doctors themselves being aware of ULTOMIRIS. And it's interesting with PNH, it's an ultra rare disease. So in a lot of the cases you have doctors who - it might be the first time that they've actually been exposed to an PNH patient in the case of new patients. With the switchers, the awareness is pretty high with doctors who have PNH patients and then it's gated by their access. That's why we're pleased with the progress that we're making with commercial payers, as well as - as I'd noted at the institutional level. And I just think as we progress you'll see continued different cohorts of patients moving on therapy once they pass through that access and their awareness of the product. So far, so good and very consistent uptake, as you've seen in the numbers. In the case of gMG, I would agree with your commentary that it is remarkably stable, it's what we had predicted. That's the dynamic that we see. In rare diseases, we're looking at in the case of gMG a larger population of course than in PNH. And we continue to make - we continue to make progress on both breadth of prescribing, new prescriber, new neurologists who are experiencing SOLIRIS in understanding the complement mechanism and gMG for the first time. And we're also beginning to make some inroads in terms of depth of prescribing, repeat prescribing that is and that with again the background of strong payer support and a product profile with SOLIRIS that plays out very nicely has just continued us on that journey of continued uptake.

[Susan Altschuller:]

Okay. Next question.

[Operator:]

Thank you. Our next question comes from Chris Raymond with Piper Jaffray. Your line is now open.

[Chris Raymond:]

Thanks. Just on the ULTOMIRIS PNH conversion. So your chart on slide 24, I think shows a really nice linear conversion trend and I guess I'm just eyeballing it, you know, it looks like if that trend continues linearly, you could be at that 70% number, quite a lot earlier than your guidance for that two year point. So maybe could you just talk. Is there something that you see down the road that indicates the flattening of that conversion curve? You know, any sort of color there would be great. And maybe for John, on the antibody compound, I know you guys have guided to disclosing initial indications I think in pursuit by the end of the year. But can you talk about what's gating that disclosure. Is it a matter of deciding between multiple options and that the healthy volunteer data will be you know, critical to picking that - those indications or are you more focused on keeping competitors in the dark you know, as long as possible?

[Ludwig Hantson:]

Good questions, Chris.

[Brian Goff:]

Yeah. Hey, Chris it's Brian. So I'll start. On ULTOMIRIS, we are really pleased with the progress that we've made. We put out what we believed to be a bold, but appropriate ambition to have facilitated patient conversion in PNH of 70% or more by the 2 year mark from launch. And we’re, as I noted, we're right on track with that. I would hedge to make any predictions about where we're going to be at the end of the year, other than to say we stick with the same ambition. Just as a reminder, we're only a little less than four months into the launch in the U.S. and it goes in a way back to the previous questions that Paul had asked about, what types of patients are we seeing in the early adoption. Too difficult to know at this stage and that's what makes it a little bit challenging to know what the exact uptake will be. But I've been in rare diseases long enough to say that we're not seeing a bolus, we see consistent progress and that's essentially what I would expect going forward. And we're really proud of what the team has executed so far.

[Paul Clancy:]

I would add that, the first six months define the success of the launch and we're really pleased with what we've seen so far. But I don't think anything in our business is linear forever. So we're going to stick to a 70% conversion – ambition. That the team has done a great job, but it comes back to the value of this molecule and what it means for patients and then Affibody?

[John Orloff:]

Yeah. With regard to ABY-039, I think we're considering the same menu of indications that we're targeting for 1830 in terms of autoimmune rare diseases. It's differentiating features would include a longer half life, as well as a smaller volume for subcutaneous administration. So we're looking at diseases where you know, that is a key attribute for the target patient population. And I would add also from 1830, we have very strong data supporting that product profile. And while we've had to prematurely pause the Phase 2 program, as we reported last year in pemphigus vulgariswe we had at what I would consider a sub therapeutic dose at 10 milligrams per kilogram, IV weekly over five weeks, a 57% reduction in IGT lowering and a reduction in PDAI scores and with warm autoimmune hemolytic anemia study which we've also had to pause after the first cohort. Again dosing what we consider as sub therapeutic dose at 10 migs per kig, over five weeks we had 55%percent reduction in IGT lowering with a clinical response seen in some patients. And then in the healthy volunteer MAD study, we’re able to get up to 20 milligrams per kilogram IV times three weeks with 64% IGT lowering before we had to pause. So we're very positive on this program. We want to take forward and get into Phase 2/3 seamless adaptive pivotal studies for hemolytic anemia and gMG early next year.

[Chris Raymond:]

Thanks.

[Ludwig Hantson:]

We’ll take the next question.

[Operator:]

Thank you. Our next question comes from Anupam Rama with JPMorgan. Your line is now open.

[Unidentified Analyst:]

Hi. This is Tessa calling in for Anupam this morning. Thank you for taking our questions and for the update here. Maybe two from us, competitively how are you thinking about hemoglobin changes with ULTOMIRIS, SOLIRIS and PNH and what specifically are you hearing in the marketplace on this end point? And then a second one if I could on SOLIRIS gMG. You highlighted a thousand patients on SOLIRIS Solaris in the US in mid-April. Have there been sources of efficiency in getting patients on therapy with time and just curious what percent of those patients are currently enrolled in one source? And how might these trends look outside of the US? Thanks so much, guys.

[Ludwig Hantson:]

John?

[John Orloff:]

So, we've previously reported the results of the 301 and 302 study which had hemoglobin stabilization in three quarters to 85% of patients transfusion independence and 74% in the 301 trial and 88% in a 302 trial. So we have a really positive impact on hemoglobin which did go up in the 301 study. I think you may be referencing some of the competition that's looked at our patients starting out with a low hemoglobin. We have had increases and I think that those are carefully selected patients that had no bone marrow failure, high reticulocyte count and anemia to begin with to demonstrate that response which is a subset of patients as we've said previously with extravascular hemolysis, representing less than 10% of the overall population of patients with PNH that have that as a as a potential issue to address. But it doesn't represent the broad population of PNH patients which is driven by intravascular hemolysis, which is well addressed and the past with SOLIRIS and now with ULTOMIRIS raising the bar.

[Brian Goff:]

And then I'll - I'll pick it up with the gMG question, I tried to get them all, so just let me know if I missed one. But starting with your question on the - more than a thousand patients says of the midpoint in April that we're very proud of the continued progress. I'll try a little bit of alliteration here on - you asked about efficiency, I think it comes down to number one expertise. We now have quite a significant expertise, particularly in gMG and we expect fingers crossed to be moving into the NMOSD space once we have approval there as well. So expertise comes into play. The experience itself, not just our own experience, but as I noted with a growing prescriber base of neurologists, as we build out that breadth and depth. And then the third is, I had noted in my comments that we've expanded and we did that because we see a broad population for gMG that could benefit from SOLIRIS and we want to continue on that journey, and as well as I look ahead to NMOSD and potentially even longer term, other areas in neurology that we'd like to move into. Outside the US, which was the other part of your question. We have gMG in both Germany and Japan. I think both of those markets are different from the US and in fact, different from each other. Japan is making good progress, probably more similar to US types of prescribing dynamics. Germany has been slower going, which we've talked about on prior calls and tends to be more gated by dependency on guidelines, which just inherently take longer to form an update. So that's where we are. But again in the US, which is the bulk of our business in gMG we're particularly proud. And one last one that you had asked about is, one source, the overwhelming majority of those patients are enrolled in the one source program, which is helpful for patients to get on therapy, as well as to navigate through the system.

[John Orloff:]

As we have said SOLIRIS MG is never going to be a big business in Europe, but we're really pleased with the two biggest countries US and Japan.

[Ludwig Hantson:]

Next question please.

[Operator:]

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

[Phil Nadeau:]

Morning. Thanks for taking my question. Just a follow up question on competition from the last one. First on the 301 and 302 studies, have you ever disclosed what the hemoglobin levels were for patients in those trials? And then secondly, what is your understanding of the status of the competition that's out there, so where the biosimilars and enrolling patients, the other branded players like Chugai, Regeneron, are they - are they still planning to move forward in PNH and aHUS or have their plans changed?

[Brian Goff:]

So with regard to the 301, 302 studies, baseline hemoglobin in 301 was 9.5 and we had about 70% that stabilized and there was maybe about a gram increase in response to therapy during the study. The 302 study had a baseline hemoglobin of 11 and I’ll point out are based on our feedback from many KOLs in the field, typically the trigger for transfusion is about 8 grams per deciliter even though you know, a value of 9 or 10 or 11 is below the lower limit of normal. Normally patients don't have symptoms related to that of anemia. Contrast that to some of the other trials that have been conducted where based on hemoglobin have been as low as eight, like in the PADDOCK trial, in a monotherapy naïve PNH patient population, which I think represents a careful selection of patients with anemia and absence of bone marrow failure. So you know, we are enrolling the broad set of patients in our program. This was the largest PNH program ever conducted with nearly 450 patients that represents the PNH population that we treat today.

[John Orloff:]

With respect to the status of the competition for biosimilars we are not aware of any active enrollment in the Phase 3 program for the Amgen Phase 3 study. So our best estimate is that this will take at least three years from start. We think it's an 18 month study, but that's a question for Amgen, the regulatory timelines and so on. So I think it's at least three years away I would say to the best of our knowledge. And then on Chugai and Regeneron, I think we all know the Apitope issue what it means now for PNH and HUS, because that’s a question for Chugai and Regeneron, but we're not aware of any active phase 3 program.

[Operator:]

Thank you. Our next question comes from Josh Schimmer with Evercore ISI. Your line is now open.

[Josh Schimmer:]

Hey, thanks for taking the questions. First, can you provide a little bit more granularity on the timing of the launch of gMG and the MO indications beyond US, Germany and Japan for the key incremental markets? And then there's clearly a pent up unmet need for the gMG population. Any thoughts as to how much longer it will take to work through those patients to get them on therapy and what are the gating steps for them considering the severity of that disease? Thank you.

[Ludwig Hantson:]

John, do you wan to do?

[John Orloff:]

Yeah. I would just say for NMO, we have a PDUFA date in the US for June 28 and we do anticipate approvals both in Japan and in Europe in the latter half of 2019. Those filings are under review currently and then…

[Ludwig Hantson:]

And Japan is a - it could be a strong NMO markets, Brian?

[Brian Goff:]

Yeah. I'll just say that Japan has higher prevalence actually than most other countries in the world. And so it's an interesting opportunity for us in the case of NMOSD to match up with the launch in the US as an opportunity. So those are the near-term launch opportunities which would be in the second half of this year, with approval. And then I think the other question you had was around gMG. And I just want to make sure I understood what you were looking for?

[Josh Schimmer:]

So the first question was markets beyond US, Germany and Japan and then for gMG, how much longer do you think it'll take to work through this pent up unmet need of patients?

[Brian Goff:]

Okay. Well, so for gMG the - I mean, it is a big opportunity. We've talked many times about the population that aligns with the REGAIN trial of in the US, 3 to 8,000 patients. But the overall population is 60 to 80,000 patients. So what's the finish line of that opportunity? I don't know. We're very pleased with the continued progress we've had. The fact that we crossed over 1000 patients in mid-April, not just because it's a round number, but it just signifies that at this point in the continued launch, we are continuing to identify patients and to appropriately educate physicians around compliment as a novel mechanism of action if they've not had experience with before. And I think what you have is a dynamic where the physicians are now seeing themselves personally how the product plays out with their patients and also hearing from others how their peers are experiencing SOLIRIS. And so I just – I’ll go back to the comment that, I think we'll stay on a solid trajectory of continued growth and penetration into that market and not only does that help the patients with gMG, it also continues to build experience for us in neurology and creates a pathway to move hopefully with approval and NMOSD from a peripheral neurological condition to one that acts centrally as well.

[Ludwig Hantson:]

Operator, we'll take three more questions.

[Operator:]

Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

[Matthew Harrison:]

Good morning. Thanks for taking the question. And just a clarification for John and then and then a second question. John on the –on the FcRn study that you've had to stop. Will we end up seeing any of that data or just what you described earlier is that - is that all we're going to hear about that before we see Phase 3 data? And then the second, I'm just wondering if you guys can maybe comment on the current pricing environment and you know, there's been more talk of maybe API coming back as a – as something that HHS will push forward. I wonder if you have a view on that? Thanks.

[John Orloff:]

So with regard to 1830, as you know, we have shared the PV data, it was last year. And right now because we had to prematurely pause the hemolytic anemia Phase 2 program after only dosing the first cohort, we will not be sharing anything further this year beyond what I just said in terms of IgG lowering and the fact that we had a clinical response in some of those patients and look forward to exploring higher doses in the front end of a pivotal program that would include a dose ranging component to that study, so that we can properly identify a dose that we would take into the pivotal stage of the trial.

[Paul Clancy:]

With respect to pricing and we've discussed this several occasions Matthew, so we believe in a global sustainable pricing strategy. It is essential that we continue to focus on innovation in ultra rare diseases. As you know, the 7000 rare diseases that we have a long, long way to go and trying to find solutions for those patients. You also know that our growth is driven by volume, innovation being central. You know, what our ULTOMIRIS pricing strategy is in US where we have a 10% discount for PNH and once we get approval for HUS, we're talking about 30% discount and then we’ll start HUS conversion at that point. We are focusing on a tight pricing band globally and we've done that in the past. And ambition is to continue to do so. Having said that, we also are going beyond that, which means that we are proactively assessing and also implementing innovative ways of working with payers to support patient access. There is also dialogue in addition to the international pricing reference, dialogue, dialogue, potential dialogue a dialogue on a single payer, a potential single payer system in the US. We have successfully operated in countries with single payer system. And so we believe that the focus that we've had as an organization on this important topic is the right one and we believe that we are in a sustainable pricing situation. I hope that helps.

[Ludwig Hantson:]

We'll take two more questions. Susan, I'm looking at you. We have time for two more questions.

[Operator:]

Thank you. Our next question comes from Robyn Karnauskas with Citi. Your line is now open.

[Robyn Karnauskas:]

Hi, guys. Thanks for taking my question. So just a simple questions on FcRn do you think that there can be any difference in the profile as far as headache, given the trial administration and how it's acting on the body or if there is any risk as of lowering albumin too much without being concerned? And second question would be, do you know has an impact in lowering complement not just lowering IgG, do you - like IV, IgG does, so does it do other things besides lowering IgG? Thanks.

[John Orloff:]

Yeah. So with regard to ABY-039, we do know the binding epitope on albumin for that molecule and we know that it does not share any overlap with the binding site for albumin on FcRn, so therefore there is no reduction in albumin with ABY-039. As we have also said for 1830 in contrast to some of the anti-FcRn competition where there is overlap with the IgG binding sites as well, yeah, the albumin binding sites on FcRn. So there is no effect on albumin. I can say that based on the fact that we've initiated the SAD, MAD studies already that are ongoing. And then with regard to additional effects beyond IgG-lowering, we don't have evidence that there is per say reduction in complement, but of course, lowering IgG will have a downstream effect of less activation of complement. The fact that we cannot lower it to zero and we don't want to lower it to zero, there will still be some underlying complement activation and diseases where that plays a role. We also know that these molecules do interact with other receptors Fc gamma receptors and some of them are pro inflammatory or anti inflammatory and that could be potentially differentiating across the class.

[Ludwig Hantson:]

I think Suzanne we can take two more.

[Operator:]

Thank you. Our next question comes from Steven Seedhouse with Raymond James. Your line is now open.

[Steven Seedhouse:]

Thank you. Good morning. Could you perhaps quantify what percent of patients on SOLIRIS and PNH have actually visited their physician so far since ULTOMIRIS approval, with the coverage policy in place and sort of made the explicit decision to either switch to SOLIRIS or switched to ULTOMIRIS to stay on SOLIRIS? And is that number closer to 70% or closer or much higher. I am just trying to understand after you hit 70% conversion what the ceiling might be on total conversion? And then secondly, as you think about new indications for ULTOMIRIS, it's like ALS and PPMS, it looks like those trials will utilize a IV ULTOMIRIS and if that's the case, what I guess drives the decision to start development and new indications with IV formulations as opposed to subQ? And is it because you know, the IV formulation might be the best proof-of-concept test or optimal exposure? Thank you.

[Brian Goff:]

Steven, it's Bryan. Good morning. So I wish I could answer your question, but we're talking about an ultra rare population with a lot of variability actually in the cadence with which these patients visit their clinicians. That's dictated based on their own condition and the agreement that they have with their clinician. So it's variable, you have some who see their clinicians, tends to be once a quarter, some who are every six months or so and some less frequently, again, depending on what intensity they agree on with their physician. So I can't give you the facts as to exactly where we are. I think we're encouraged is that we are making progress as I noted with the payers and so that just removes one more sort of logistical barrier for when they do make that visit. Secondly, the awareness continues to grow, particularly among those who have active PNH patients. And then there's also this scenario of new patients who are not switches per say, but has now been diagnosed with PNH, may see a physician who has not had any experience with cilia SOLIRIS or ULTOMIRIS and there there's a dynamic where they may actually prescribe SOLIRIS first and then what we do is deploy our teams to give appropriate education around ULTOMIRIS as a treatment option and that's also a part of the switching component. But it still is early days and I just can't give you too much more detail than that at this stage.

[John Orloff:]

And with regard to the new indications, as you know we are studying the subQ formulation with an on body delivery device in PNH that will get us approval hopefully, pending successful completion of study in PNH, as well as atypical HUS. I think the decision to go forward with IV is more related to timing and rapidity, as well as the plan to bridge to the 302 subQ through which would apply not only to PPM and ALS, but also to MG and NMO.

[Susan Altschuller:]

Final question.

[Operator:]

Thank you. Our final question comes from Ying Huang with Bank of America Merrill Lynch. Your line is now open.

[Ying Huang:]

Hi, good morning. Thanks for taking my questions. My first one is regarding the guidance you provided today with the update. So if I add up this quarter's revenue for both SOLIRIS and ULTOMIRIS, it gets to about $986.6 million. If I just flat life the next three quarters, I really don't see a lot of room for growth to the midpoint of the guidance. I was wondering if you can elaborate on the factors when you contemplate on your guidance besides the one-time $9 million tender? And then secondly, maybe for John, you announced today that Alexion 1810, you have completed dosing in Phase 1. I was wondering when we might learn about the data from the Phase 1 compared to let's say the PK/PD data and also can you remind us the volume of injection for the subQ? Thanks.

[Paul Clancy:]

I'll start and it's Paul. I just point you to what we kind of have said in the past, as well as today, FX as we move through the year will be a little bit of a headwind. That's kind of a lot of the wraparound impact on Brazil, in Turkey. We think there's a bit of a price headwind that we pointed out, now about one third of that attributable towards SOLIRIS, included in our guidance is - it was included the beginning of the year as competitor trial estimates and we'll see how that plays. And then as we had pointed out at the beginning of the year in some of the international markets we're making a direct to distributor change, that will be plus or minus PBT or profit neutral, but will be a little bit a headwind on the top line. That's a stuff I think I'd just point to. And then you know clearly, you know, on the other side, the underlying growth, we think on a unit basis continues to be high single digit, on PNH and HUS, strong growth on MG contribution from NMOSD in the back end of the year.

[John Orloff:]

And with regard to 1810, we've completed dosing in healthy volunteers study and the results of that indicate that we were able to increase bio availability from the previous studies we've done with 1210 subQ, which is about 60% bio availability and now we can increase that with the addition of PH20 and the 1810 formulation to 73% at a minimum. This allows us to be able to dose at least every two weeks with a single on body delivery system and we're exploring the opportunity to dose it less frequently and of course, that – it depends on the on the volume which may require an additional device or devices.

[Brian Goff:]

In the device, we show you the device during the IIR day, it was the – was small dose drug delivery platform and the volume for that device was 3.5 ml. And maybe you remember that John was on stage using one of those devices that didn't help me…

[John Orloff:]

With the…

[Ludwig Hantson:]

It happen to be though, and no product in it. I hope that answers the question. So we're going to stop the call.

[Ludwig Hantson:]

So needless to say that, I'm really pleased with the start of the year. As you heard ULTOMIRIS is off to a great start, and MG continues to do very well and we continue to see great progress with our pipeline. We have a strong momentum and our objective is to continue to do so. I can tell you I'm very, very proud of the election team. So I want to thank all of our colleagues for what they've done and I wish you a good day. So enjoy the rest of your day everybody. Thanks so much.