Horizon Therapeutics says the financial results it will report next month will have exceeded its expectations for 2020 despite the challenges of COVID-19, thanks to its two best-selling drugs generating more than $1 billion in combined net sales.
Horizon is a rare and rheumatic disease drug developer unrelated to Horizon Discovery Group, the gene editing and gene modulation tool company that was acquired last year by PerkinElmer for approximately $383 million. The drug developer said recently that its full-year 2020 net sales surpassed the high end of the company’s guidance range of $2.12-2.14 billion—while its full-year 2020 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) went beyond the high end of Horizon’s guidance range of $920-940 million.
How much Horizon’s net sales and adjusted EBITDA exceeded its guidance won’t be known until the company reports its fourth quarter and full-year 2020 results in February.
At that time, Horizon is expected to pinpoint how much in net sales it generated from Krystexxa® (pegloticase) and Tepezza® (teprotumumab-trbw).
Horizon says Krystexxa, approved in 2010 to treat chronic gout in adults refractory to conventional therapy, racked up more than $400 million in net sales while Tepezza, the first and to date only therapy approved for treating thyroid eye disease, won approval in January 2020 and finished last year exceeding $800 million in net sales—among a handful of the most successful launches for a rare disease drug, according to the company.
The strong sales results have attracted investors to Horizon’s stock, which closed Friday at $77.73, double its closing price of $38.56 a year earlier. The company’s market capitalization has more than doubled, from $6.8 billion at the end of 2019, to $16.1 billion at the end of 2020, to roughly $17.2 billion on January 22.
At the recent virtual J.P. Morgan 39th Healthcare Conference, Horizon’s Chairman, President, and CEO Tim Walbert restated projections made last year that Tepezza will generate $3.5 billion in peak global annual net sales, while Krystexxa is expected to achieve peak net sales of $1 billion. The company hasn’t said when it expects to reach those sales peaks.
Raising Guidance Twice
Tepezza outperformed expectations strongly enough for Horizon to twice raise its net sales guidance for the drug—from the original range of between $30-40 million when the drug was approved to more than $200 million in May, to more than $650 million three months later.
Thomas J. Smith, Director, Immunology and Metabolism and a Senior Research Analyst with SVB Leerink, wrote in a research note last August that Horizon’s strong sales start for Tepezza “signalssignificant demand and underappreciated opportunity for novel therapeutics in thyroid eye disease (TED).” Horizon estimates there are 15,000 to 20,000 patients, with more than 70,000 patients estimated to have chronic TED.
Three months later, Smith elaborated that in TED, “we are currently witnessing significant TAM [total addressable market] expansion marked by impressive early sales growth for Horizon Therapeutic’s (HZNP) Tepezza.”
That market growth, Smith added, should also benefit the developer of another TED candidate, Immunovant’s IMVT-1401, a first-in-class, fully human monoclonal antibody targeting the neonatal Fc receptor (FcRn).
Brian P. Skorney, CFA, Senior Research Analyst at Baird, echoed that sentiment: “If IMVT-1401 demonstrates a similar clinical profile to [Tepezza], this readout could be a major catalyst for shares, as Tepezza has already seen significant commercial uptake.”
On January 12, however, Immunovant pushed back its scheduled release of results for IMVT-1401 in the Phase IIb ASCEND-GO-2 trial (NCT03938545) in TED, from the first half to the third quarter. Immunovant blamed the delay on temporary site closures for new enrollment in the trial related to the recent surge in COVID-19 cases.
In an interview, Walbert told GEN that Horizon expects to make further progress toward fulfilling its lofty sales ambitions for Tepezza and Krystexxa.
“We continue to expect to accelerate there,” Walbert said. “There’s a lot of significant upside runway with those two medicines.”
“I think we’ve shown we can launch medicines and drive our business. Year-over-year, our net sales are up 65% or greater in 2020, with our adjusted EBITDA being up 95%, all of this in the middle of a 100-year pandemic,” Walbert added.
Supply Disruption
How quickly Tepezza achieves its upside potential will hinge in the short-term on how soon Horizon can resolve a supply crunch affecting the drug.
Horizon warned last December that supplies of Tepezza would be disrupted because its contract manufacturer Catalent was ordered to cut capacity under Operation Warp Speed—the Trump administration’s effort to accelerate COVID-19 vaccine and drug development—to enable production of therapeutics against the virus.
The shortage is expected to stretch through the first quarter. How far into Q1 will depend on how quickly the FDA approves release of the first large-scale manufacturing lot produced by Horizon.
“FDA has indicated to us that once we get that into them this month, they will review it faster than the normal timeframe. We’ve looked at precedent; that could be as early as weeks,” Walbert said. “FDA has agreed to work with us to rapidly review the data from those manufacturing lots, and get the product back to patients.”
“It’s really outside of our control, but now we’re trying to work with them to get supply back to help these patients who have no other option and are suffering significantly,” he added.
Walbert attributed the positive net sales results to strong pre- and post-launch engagement efforts with patients and physicians despite COVID-19, as well as the effectiveness the drugs showed in clinical trials.
Tepezza, for example, is marketed to the half of the nation’s three million Graves’ disease patients who develop TED during their lifetimes. Horizon began direct-to-consumer advertising of Tepezza during the third quarter—the drug’s second full quarter on the market.
“We heard that of ophthalmology offices, over 70% of them closed during the pandemic” due to state and local lockdowns, Walbert said. “We began a significant direct-to-consumer program to be able to educate those patients around, what symptoms are you seeing? And if you start to see these symptoms, it’s really important that you get in to see your ophthalmologist as soon as possible.”
Ramping Up Advertising
In November, Horizon expanded its advertising to a national direct-to-consumer campaign. The ads, which were ramped up in December, led to more than 1 million hits to the company’s Tepezza.com website, as well as over 1 million hits—60% of them in December alone—to thyroideyes.com, a Horizon website that draws users to a web link for “A different treatment option,” which leads to the Tepezza.com website.
“That has translated into 120,000 visits to for patients looking to find the right physician to treat their thyroid eye disease,” Walbert said. “That’s performed much better than expectations, and a great way to help patients get diagnosed earlier and potentially treated before their disease gets too severe.”
Tepezza also won patients, Walbert said, based on positive clinical results. Horizon cites its Phase III OPTIC-X trial (NCT03461211), where 89% of patients (33 of 37) who received placebo during the earlier OPTIC trial (NCT03298867) before entering OPTIC-X, then received Tepezza achieved the primary endpoint of a 2 mm or more reduction in proptosis at Week 24, with an average reduction of -3.5 mm. Those results were consistent with OPTIC, in which 83% of Tepezza patients (n=41) showed a proptosis reduction of 2 mm or more at Week 24, with the average reduction being -3.3 mm.
Krystexxa has also generated positive clinical results in recent months. At the European League Against Rheumatism (EULAR) European E-Congress of Rheumatology 2020 (EULAR E-Congress 2020), Horizon presented data from the Methotrexate to Increase Response Rates in Patients With Uncontrolled Gout Receiving Krystexxa open label trial (MIRROR OL, NCT03635957) showing that after treatment with Krystexxa and methotrexate in patients with uncontrolled gout, 78.6% of patients (11 of 14) achieved a complete response, defined as the proportion of serum uric acid (sUA) responders (sUA < 6 mg/dL) during Month 6.
The company also presented data from in-practice cases and an investigator-initiated trial for two other immunomodulators with Krystexxa, all along the lines of earlier data showing high response rates in patients using Krystexxa with an immunomodulator.
“These are patients that are canceling amputations to get treated with Krystexxa. So, it’s having a dramatic benefit in these patients,” Walbert said. “A number of our studies have shown where we can actually double the efficacy of a medicine 10 years after approval, where the studies are showing 80% to 100% response rates in patients with chronic uncontrolled gout.”
He contrasted that with the 42% efficacy (36 of 85 patients) shown by every-two-week dosing of Krystexxa a decade ago in a Phase III trial (NCT00325195) whose data was published in JAMA, versus 35% for every four weeks and 0% for placebo.
Six New Programs
At the 2021 J.P. Morgan Healthcare conference, Horizon announced plans for six new clinical programs this year, raising its total to 14. Two programs are set to start in the first half of this year and involve Krystexxa. The company plans an open-label trial to assess whether the drug can be dosed for once a month use with methotrexate, to treat people with uncontrolled gout. Krystexxa is now indicated for dosing every other week.
“We’re doing a faster infusion trial to shorten the time from two hours sitting in an infusion chair to one or less,” Walbert said. “You would essentially get to the equivalent of two infusions in one monthly setting.”
Horizon also plans another open-label trial designed to evaluate Krystexxa with methotrexate in patients who previously failed to show improvement with the drug alone. The study aims to evaluate whether patients can benefit from the combination treatment after developing an immune response to Krystexxa.
Two other programs involve Tepezza—a randomized, controlled trial in chronic TED, expected to begin in the second quarter; and an exploratory Phase I trial in diffuse cutaneous systemic sclerosis, set to start mid-202.
Tepezza was developed by Genmab through a collaboration with Roche. In 2013, River Vision Development Corp. licensed the drug from Roche and began overseeing clinical development in TED and other ophthalmic indications. Four years later in 2017, Horizon acquired River Vision for $145 million upfront and up to $325 million in regulatory and sales milestone payments—of which $105 million was paid out in Q1 2020 following FDA approval—plus royalties.
The other two clinical programs are Phase IIb pivotal trials for HZN-825, an oral selective lysophosphatidic acid receptor 1 (LPAR1) antagonist that according to Horizon has shown early signs of positive benefit in several fibrotic conditions.
Horizon acquired HZN-825, renaming it from CZN001, when it purchased Curzion Pharmaceuticals in April 2020 for $45 million in upfront cash, plus undisclosed additional payments tied to achieving development and regulatory milestones. HZN-825 was originally discovered and developed by Sanofi, which remains eligible for payments tied to achieving development and commercialization milestones and royalties based on revenue thresholds.
During the first half of this year, Horizon plans to launch one pivotal trial assessing HZN-825 in diffuse cutaneous systemic sclerosis, a rare, chronic autoimmune disease marked by fibrosis, or skin thickening, in areas that include the hands, forearms, upper arms and thighs. The other pivotal trial of HZN-825, set to start in mid-2021, will evaluate the drug in interstitial lung diseases beginning with idiopathic pulmonary fibrosis. The primary endpoint for both studies will be forced vital capacity.
HZN-825 has the potential to reach more than $1 billion in peak annual sales, Horizon has estimated.
“Significant Capital”
Horizon said it ended 2020 with cash and cash equivalents of $2.08 billion, double the $1.076 billion it had at the end of 2019. That cash cushion, Walbert said, will help expand Horizon’s pipeline through mergers and acquisitions: “We’ve got significant capital on hand to aggressively pursue acquiring development stage or pre-approval stage medicines that we can further develop,” Walbert said.
Another spending priority for Horizon is expanding its R&D effort. Horizon has also stepped up its R&D spending in recent years, finishing January-September 2020 with $138.48 million in R&D expenses—up 34% from the $103.17 million spent in 2019, and 67% from $82.76 million the previous year.
“We’ve doubled the size of our R&D organization, doubled the number of our R&D programs,” Walbert said. “We expect to double our R&D spend here in 2021 as we advance key programs like HZN-825.”
To manage Horizon’s planned R&D growth, the company has appointed Karin Rosén, MD, PhD, as Executive Vice President, Research and Development and Chief Scientific Officer. She joined Horizon from GlaxoSmithKline (GSK), where she was senior vice president, U.S. medical affairs, leading more than 300 physicians and medical professionals in disease areas that included immunology, respiratory, and inflammation.
“What is really unique about the company is the culture, and the fact that it feels like a small biotech, despite the fact that we’re 1,400-1,500 people because of the strong collaboration between R&D, Medical Affairs and commercial,” Rosén said.
“Our approach to R&D is not about just thinking, ‘We have a good product where you provide infusion capabilities.’ But how do you reduce that infusion time also? How do you provide other types of delivery opportunities, so that you can get as many patients as possible that can get help from this drug?”
