Edited Transcript of GWPH.O earnings conference call or presentation 26-Feb-19 9:30pm GMT

Justin D. Gover, GW Pharmaceuticals plc - CEO & Executive Director [3]

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Thank you, Steve, and welcome to all those who are able to join us. With the Epidiolex launch this past November, we are excited to report U.S. sales for the first time. This initial two-month selling period was primarily about setting the successful commercial wheels in motion for 2019, which is effectively the product's launch year.

As we enter this year, we are pleased with the high level of awareness and interest among physicians, strong demand from patients, and a reimbursement landscape that is favorable. These factors are driving a prescription growth trajectory that is encouraging and one that we believe will result in the successful market introduction of this important new treatment option.

In today's press release, we have chosen to provide you with specific prescriber and patient metrics, to help investors develop a more accurate understanding of the product launch. Beyond the 2 months of revenue in the quarter, we are also sharing patient start forms and prescriber numbers for those 2 months, which offer a view to early demand as well as prescription growth from December to January, which offers a view of prescription trends into the new year.

I do want to note that we are providing these metrics to offer investors more color, specifically on the initial launch period, and we are not committing to providing each of these metrics on an ongoing basis. In a moment, Julian will offer additional perspectives on the early Epidiolex market dynamics.

Beyond the United States, we are now in the final stages of the European regulatory review of Epidiolex, with a CHMP recommendation expected in the second quarter of this year. In anticipation of a positive outcome, our European commercial preparations are in the final stages for commercial launches in the first five countries later this year. Chris Tovey, our Chief Operating Officer, will provide more on these preparations later on this call.

We also expect 2019 to be a year in which we continue to advance research efforts in several key programs, including new indications for Epidiolex, Sativex U.S. developments, and other programs. Volker Knappertz, our Chief Medical Officer, will provide an update on these pipeline developments later in the call.

And finally on this call, Scott Giacobello, Chief Financial Officer, will review our financial results.

Let me now hand the call to Julian for his update. Julian?

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Julian S. Gangolli, GW Pharmaceuticals plc - President of North America [4]

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Thank you, Justin. I wanted to begin by expressing how pleased we are to see the strong level of support for Epidiolex in these first few months of commercial availability. We always believed that Epidiolex had the potential to become an important new treatment option within the epilepsy field, and we are encouraged by the fact that early into the launch we are seeing Epidiolex demand coming from both major academic epilepsy centers as well as private practice epilepsy clinics.

The sales organization has to date interacted with about 70% of the target universe of 5,000 physicians. In addition, 100% of all level 3 and 4 epilepsy centers have been called on by our sales organization. These interactions have also been supported by an extensive series of educational broadcasts and speaker programs to support the launch with over 600 physicians attending these educational events. We have also hosted approximately 160 local events with patient advocacy organizations as they represent an important channel of communication and sharing within these patient communities.

Turning to demand, just to remind everyone on the call, the commercial launch date for Epidiolex was November 1 of last year. Through the first 2 months of launch to December, over 4,500 Epidiolex new patient enrollment forms were received. In this same two-month period, over 500 physicians out of our target audience of 5,000 physicians generated dispensed prescriptions. We are highly encouraged by this level of new patient enrollment and prescriber activity in just the first 2 months.

In light of the short selling period from November 1 to December 31, we thought it would be helpful to provide investors with some color on activity in January in order to shine some light on initial trends beyond the 2-month time period. Prescription growth in January 2019 over December 2018 was approximately 150%.

We are encouraged by this month-on-month growth but would like to point to two important factors that have contributed to the strong growth in January. The first is that the extent of demand in the first month of launch, namely November, limited our hub's ability to process new patient enrollments in a timely fashion. That, coupled with the standard new-to-market block that some payers use to regulate and control new product introductions, created a bolus of commercial patients eligible for reimbursement in the January time frame.

In addition, many of the states only made their coverage determination known in January of this year, again causing another bolus of Medicaid patients to get prescriptions filled in January.

Building on the payer discussion, I'd like to update investors on our payer initiatives. Over the last 18 months we have shared with you that one of our major priorities has been engaging with payers. As I mentioned earlier, both in the commercial and Medicaid channels, it is not unusual for plans or states to institute a new-to-market block before they make a coverage determination. This can make the process of getting prescriptions dispensed onerous during this time period.

We are very encouraged, however, that many payers early into the launch have understood the value proposition for Epidiolex and have made a coverage determination for the product. Turning first to the commercial payers, building on our early win in November with Express Scripts, which placed Epidiolex as a preferred brand on their national formulary, we have seen a number of the major payers in December and January make favorable coverage determinations.

If we look at all commercial lives covered in the United States, 80% of lives now have a coverage determination with 60% of all lives with either no PA or PA-to-label.

Turning to state fee-for-service Medicaid, as of the end of January, 99% of states' covered lives have made a coverage determination with over 50% of them with either open access or a simple PA-to-label. And in managed Medicaid, again, as of the end of January, 90% of lives have a coverage determination; 10% are uncovered; and some 30% with a PA-to-label. The balance have coverage, but many require a second requirement be met such as a failure on another AED or some other requirement.

Overall, we are happy thus far with our payer coverage and our goal for 2019 is to work on reducing the PA burden for the physician and work with those payers that have not made a coverage decision or where improvements can be made.

I did want to briefly touch on our distribution model enhancements. We launched Epidiolex in November with a closed, in-network set of providers including a hub vendor that triages new patient enrollments to one of our five specialty pharmacies. As I mentioned earlier, due to the meaningful demand generated in the first month, it became clear that we needed to improve efficiency both at the hub and the speed with which the specialty pharmacies needed to move through the PA process.

During the November/early December time frame, it was taking somewhat greater than 4 weeks in some cases to fill product. We instituted a number of enhancements including significantly improving the hub's triage efficiency and also opening up a number of other specialty pharmacy sites, including some 40 institutional-based specialty pharmacies, i.e., SPs that reside within a key academic medical center. And in addition, we have opened up a number of CVS and Walgreens community-based specialty pharmacies, bringing our distribution network to about 130.

The impact of these enhancements has been significant, with many dispensing locations now being close to key epilepsy centers which is a major benefit for patients, caregivers, and physicians. In addition, the overall effect of these changes has been to meaningfully reduce the time it takes from presentation of the prescription to dispense, or what is known as time-to-fill.

We believe this retail-lite model will serve the needs of physicians, patients and caregivers over the coming years.

Looking qualitatively at the prescriber base feedback, we see that clinicians are focused on their young LGS and Dravet syndrome patients first. They have also indicated that due to the complex nature of the disease, and the number of concomitant drugs, they are likely to titrate Epidiolex with the label guidelines: titrating to 10 milligrams per kilogram and observing the efficacy effect before titrating up to higher doses. So these early months are also titration prescriptions, which is important as you model early revenue.

We are now actively migrating the approximately 900 expanded access and open-label extension patients to commercial product. This transition is expected to be complete by end of this second quarter for most of these patients. I know that many of you have done physician calls to gain a sense for early interest. We've been running our own waves of primary research since launch with over 200 healthcare providers or HCPs, to assess their initial perspectives. What we found was that HCPs exhibited high awareness of Epidiolex FDA approval and recent commercial introduction. HCPs characterized existing LGS and Dravet patients as being highly refractory, and few are adequately controlled, thus making the vast majority immediate candidates for Epidiolex.

55% of these respondents indicated they had already prescribed Epidiolex with 92% expecting to increase their prescribing in the next 3 months. 89% have been asked by patients or caregivers about Epidiolex specifically, with 79% having been asked about Epidiolex on a weekly basis. I hope these observations are consistent with what you have heard in similar surveys.

Our marketing and medical information teams continue to be very active in the marketplace, delivering an extensive array of resources and materials to support the sales team as they educate healthcare providers, caregivers and patients. Our medical information team hosts a dedicated, in-house support center for both caregivers and HCPs with the objective of providing high quality, consistent and comprehensive information in an empathetic and caring manner. This resource is being widely utilized.

Finally, and perhaps most importantly, we have been heartened by the number of spontaneous reports that we have received, both from physicians and caregivers, as to the meaningful difference Epidiolex is making in patients' lives and the reduction in seizures that these particular patients are experiencing.

Overall, I am encouraged by the high level of interest from physicians and patients, encouraged by the number of very important commercial and state payers that have made early and favorable coverage determinations, and that our world-class U.S. Epidiolex commercial team is executing the launch plan effectively. The metrics we share today are, we believe, positive and support our belief of a successful launch year for Epidiolex here in the U.S.

In Europe, we are also making significant progress. Let me now ask Chris Tovey, GW's COO, to provide an update on Europe commercialization. Chris?

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Christopher John Tovey, GW Pharmaceuticals plc - COO [5]

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Thank you, Julian. In Europe, we look forward to the CHMP opinion in the next quarter. It is one quarter later than previously communicated for two reasons: first, we've been keen to update the file to include the results from the second positive Dravet trial reported towards the end of last year, which we believe will be very supportive and important for label discussions; second, we've taken administrative steps related to Brexit, which has necessitated the transfer of the file from our U.K. affiliate to a continental European affiliate. Subject to a positive CHMP recommendation, formal E.U. approval would occur 2 months after that opinion.

Turning to commercialization now, I wanted to start by reinforcing that we strongly believe that European commercialization will benefit from sharing a common brand name, Epidiolex, with the U.S. market. One small point to note though, is that the European brand name, while sounding exactly the same as the U.S. name, is spelled slightly differently, with a letter Y in place of the second letter I in the U.S. brand name Epidiolex.

Moving on to preparations, we're now in the final stages of the Epidiolex European medical and commercial buildout, and are planning to launch it in the five major European markets starting in 2019, with exact timing dependent on securing appropriate pricing and reimbursement. We are now training the sales force for the early launch markets of France and Germany. Additional E.U. country launches are expected to start in 2020. Our commercial leadership team is currently focused on completing necessary pricing and reimbursement pre-launch activities which have been encouraged by strong engagement from the respective reimbursement authorities.

The extensive medical and pre-commercial activities required to deliver a successful European launch also continue and we are actively connecting with the key physician communities we plan to serve. We have completed National Advisory Boards in all the major markets, and we will continue to have a significant presence and data exposure at key national and international congresses throughout this year to reinforce the successful activities of the last 18 months.

Based on recent primer research in the EU5 countries, awareness is high amongst specialists, and typically they have patients in their clinics on a weekly basis asking for CBD. In addition, this market research also shows that spontaneous awareness of Epidiolex was similar in the EU5 countries compared with that recorded during the U.S. pre-launch period.

The GW European commercial organization is deploying a hub-and-spoke model for the initial EU5 launch phase, comprising a centralized and very experienced GW team working closely with a high-quality country-based contract customer-facing organization. Across the five major markets, we plan a total of 17 sales professionals and 17 MSLs, a model that reflects the concentrated prescribing base in Europe and the high science approach we plan.

Looking at manufacturing, which also falls under my responsibility, our commercial manufacturing supply chain is running very smoothly. We are confident that our capacity is more than sufficient to meet launch requirements in both the U.S. and Europe, and our manufacturing expansion plans are on track to service what we expect to be robust, long-term demand.

Thank you, and let me hand the call to Volker for his update.

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Volker Knappertz, GW Pharmaceuticals plc - Chief Medical Officer [6]

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Thank you, Chris, and good day, everyone. I'm pleased to report to you today that all three core elements of our pipeline are progressing well. These are Epidiolex and its life cycle management, development of Sativex for the U.S. market, and our clinical pipeline programs with a primary focus on CBDV.

Regarding Epidiolex life cycle management, we are working on important clinical developments as well as formulation enhancements. On the clinical front, we are currently focusing our efforts on Tuberous Sclerosis Complex, or TSC, and Rett Syndrome. TSC affects approximately 50,000 individuals in the United States and 1 million individuals worldwide, both children and adults. Epileptic seizures are the most common clinical manifestation of TSC, affecting more than 70% of patients. Comorbidities include cognitive impairment, Autism Spectrum Disorder, and neuro-behavioral disorders. The results from the TSC trial are expected in the second quarter of this year. In this trial we are testing doses of 25 and 50 milligrams per kilogram per day, which were chosen based on open-label experience in TSC patients from the expanded access program. These doses are higher than those tested in the Dravet and LGS trials, and will provide useful additional information about efficacy and safety at these different dose levels.

The primary endpoint of this trial is the change in frequency of seizures associated with TSC through the treatment period compared to baseline. This primary endpoint shared some similarities to that of the LGS and Dravet pivotal studies but it also includes TSC-associated seizures, which consist of focal seizures with and without impairment of consciousness or awareness; focal onset seizures with secondary generalized convulsive seizures; and generalized seizures that are countable.

In the previous Epidiolex epilepsy development program, several of these seizure types were responsive to Epidiolex.

Subject to positive results, we expect to file a supplemental New Drug Application for the TSC indication in the fourth quarter of 2019.

Shifting to Rett Syndrome, we have opened the IND for a pivotal, placebo-controlled trial in 252 patients and expect this to commence in the second quarter of 2019. Regarding Epidiolex formulation enhancements, we have developed a capsule formulation and an improved oral solution, both of which have promising intellectual property protection potential. Phase I work on both these formulations is underway and we believe that these initiatives will be valuable elements of our life cycle management strategy for Epidiolex.

Beyond Epidiolex, Sativex represents an exciting late-stage pipeline opportunity for GW. We believe that the most rapid path to FDA approval for Sativex is for an indication of spasticity in multiple sclerosis. Let me remind you that Sativex is currently approved in over 25 countries outside the United States on this indication. In December 2018, we held a highly constructive meeting with the neurology division of the FDA, and believe that they now have a good understanding of the optimal regulatory pathway for this product in the U.S. This centers on conducting an additional pivotal clinical trial to buttress the wealth of existing clinical trial data. We expect to commence this trial towards the end of this year.

Importantly, Sativex also represents an exciting opportunity in the U.S. beyond MS spasticity where a CBD-THC botanical product is scientifically appropriate. But with over 10 placebo-controlled trials of Sativex completed in other indications, we believe there are numerous follow-on indications to explore.

As an example of the breadth of opportunities that Sativex may present, you may have read recent media coverage regarding an investigator-led study that has recently commenced in the United Kingdom to evaluate Sativex for the treatment of patients experiencing symptoms of agitation or aggression associated with their dementia. As many of you appreciate this can often be one of the most challenging aspects of the illness, both for the person with dementia and those caring for them.

This study will evaluate whether it's feasible and safe to treat agitation in people with Alzheimer's disease with this medication.

There have been no new dementia treatments in over 15 years, and it is vital that we develop and understand the contribution cannabinoids can make in improving the symptoms and lives of people, as well as their caregivers.

Regarding cannabidivarin, or CBDV, we are pursuing development of this molecule in the field of autism spectrum related disorder. This program includes a company-sponsored, open-label study in autism which we expect will include approximately 30 patients, an investigator-led 100-patient placebo-controlled trial in Autism Spectrum Disorder, to commence in the first half of 2019, and an open-labeled study in Rett Syndrome with seizures which is due to commence in the first half of 2019 as well.

Finally we expect to actively advance our IV CBD formulation in a condition called neonatal hypoxic ischemic encephalopathy, or NHIE, by commencing a Phase II clinical trial in the second half of 2019. We hope to continue to evaluate the promising data from both the glioblastoma and schizophrenia Phase II studies with a view to advance these programs and will update you on our next steps during the course of this year.

Thank you, and I look forward to updating you regarding our progress over the course of 2019. And let me now hand the call to Scott Giacobello to provide the financial review.

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Scott M. Giacobello, GW Pharmaceuticals plc - CFO [7]

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Thank you, Volker, and good afternoon. I'll now provide some high-level comments on GW's financial results for the 3 months ended December 31, 2018. Our results are presented in accordance with U.S. Generally Accepted Accounting Principles, in U.S. Dollars.

As previously communicated, we changed our year-end from September 30 to a calendar year-end. As a result, we will file the requisite transition report on Form 10-KT shortly with the SEC and this filing will include a more detailed discussion of our results.

Starting with revenue, total revenue for the quarter was $6.7 million, an increase of $2.7 million from the prior-year quarter. This increase is due primarily to Epidiolex net sales of $4.7 million in the quarter following the November launch.