Pharming Group N.V. (PHAR) Q1 2024 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Pharming Group N.V. Q1 2024 Results Conference Call and Webcast. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sijmen de Vries. Please go ahead.

Thank you very much Sandra, and welcome, ladies and gentlemen, to this -- our first quarter results conference. I'm here with my -- next slide, please. I'm here with my three colleagues, in order of speaking, Stephen Toor, our Chief Commercial Officer, who is joining us from our New Jersey office; Dr. Anurag Relan, our Chief Medical Officer, joining us from our U.S. office as well; and Jeroen Wakkerman, our Chief Financial Officer, who's based with me here in Leiden. Before I do that, I would like to point out to the next slide, please, number three, that is the forward-looking statement slide. We will be making forward-looking statements today in our presentation, and those are based upon our current plans, and insights of the -- and situations of the current market circumstances. And of course, actual results may differ from these forward-looking statements, so you cannot necessarily rely on those. So having said that, I would like to go to slide number four and maybe even onwards to slide number five, because you've seen my picture already. Yes. And here we are. We're building this global -- leading global rare disease biopharma company. And we have -- we do that based on three pillars. And this is a very familiar slide for you, you have seen this before. On the left-hand side, the foundation of our company, the product RUCONEST that comes from our own research and it has already been on the U.S. market for almost 10 years. It was approved in July 2014. Recombinant protein replacement therapy for hereditary angioedema attacks. And as you can see, we are still growing this product and we had an 8% growth versus last year this quarter. Good growth last year as well. And we see increasing numbers of prescribers and patients. And there's many options for these patients available, but RUCONEST continues to play an important role, and we expect that to be continuing for the foreseeable future. And Stephen will talk a lot more about that in his part of the presentation. Next, you see there Joenja, the product we in-licensed from Novartis for the treatment of APS, and also rare immune disorder, a new disease that was only discovered 10 years ago and we already have the first disease modifying drug on the market that we launched now a year ago. You see we have a very successful introduction of the product in the U.S. market. Stephen will allude to that as well. We're very proud that we can actually record $9.6 million sales in this quarter, good growth versus 4Q of last year. And you see here, if you add both numbers, we realized $28 million of sales for this product in the first 12 months on the market. It's new to describe an ultra-rare disease, and there's a very strong focus there from patient finding. Both Stephen and Anurag will talk about that and how we go about that to find those patients. We're also very pleased to see that very recently we got the second approval in Israel at the end of April '24. We have a lot of regulatory reviews ongoing and a lot of trials ongoing and Anurag will talk about that a lot more. And on the right-hand side, the possibility to leverage our commercialization infrastructure both in the U.S. and outside of the U.S. by not only finding new compounds, we're hunting for clinical stage or later stage compounds to in-license or acquire to actually leverage. But first and foremost, we have a very interesting opportunity in leniolisib to develop it further for a second indication for primary immune deficiencies with immune dysregulation beyond APDS where we are preparing -- final stages, we're preparing a Phase II study. And in addition, we're working on a third primary immune deficiency indication in early stage at this point in time. And Anurag will talk about that a lot more. And on the bottom of the slide, you see that we have a total revenue guidance out between $280 million and $295 million for this year. Driven, of course, by Joenja, but the foundation is, of course, RUCONEST underneath that. And then you see the next slide, a little bit more in detail, because we're going to talk a lot about the potential for Joenja today. Joenja for APDS is the first stage where we are currently now in the market with a 12-plus indication in the U.S. where we already found a significant portion of the identified patients on paid therapy, where we have a lot of ongoing search for patients and so-called variants of uncertain significant mutations that's ongoing. The next step, of course -- and where you already see and that's, of course, an interesting observation on almost $1.1 million of sales in this quarter already outside the U.S. So, in other words, we're starting to work on the global expansion of the product and the pediatric studies. We'll further boost that to get a full label and full geographic coverage for Joenja and APDS. And then as I said already earlier, the bigger indication that we are starting with proof-of-concept trial in the not-too-distant future for the bigger indication of PIDs with immune dysregulation with similar symptomatology to APDS. So having given you this introduction, I would like to now point out -- I would like to now hand over to my next -- the next speaker to Stephen Toor, our Chief Commercial Officer. Steve, over to you, please.

Thank you, Sijmen. Thank you, everybody. If you could go to -- okay. So the key things [technical difficulty]. Those unique product attributes and the exceptional customer service and execution by [technical difficulty]. That remains the case despite the transformation of the treatment landscape with [technical difficulty] and it will continue to remain in the face of more acute competition in the coming years. [Technical Difficulty] generally have a more severe cause of disease and they need a virtually guaranteed and fast efficacy that stops an attack [indiscernible]. RUCONEST's unique product features in the mode of administration deliver that in a way that future options can't. So, as you know, 2023 was a strong year with solid growth in prescribers, new patients and sales. That was -- that success was in spite of the market wide event related to reimbursement for government patients in Q1. And in Q4, we've seen less of an impact as the patients out-of-pocket responsibility almost half. The strength of leading indicators have continued into this year and we've had a strong Q1, up 8% on prior year and we exit Q1 '24 on track to achieve the revenue guidance, which, as previously discussed, is seemed to be low to mid single digit growth for RUCONEST. If you go to the Joenja slide, please. As you know, we were strong out the gate with the launch of Joenja, with patients fully reimbursed within days. And that momentum built through year one and it continues into 2024. So, we now have 83 patients fully reimbursed with five more in process being processed, with 15 newly diagnosed patients in the quarter taken us past 220, close to half the number of patients the literature suggests are out there, although we believe there are more. And we have over 50 more diagnosed patients whose doctors -- who were working with their physicians to enroll into our program. Plus, of course, 50-plus pediatric patients who were rediagnosed and could potentially go in Joenja treatment when the pediatric label expansion is approved. So, all this means we exit Q1 just over $10 million in sales and 21% up on prior quarter. As we discussed in March, on our 2023 full year call, as we convert the caseload identified at launch, our focus moving forward remains finding new patients. And given APDS is not the sole dominant condition, this means testing families to uncover additional patients with this progressive disease, so they too can benefit from management and treatment. And we're also working to resolve VUSs. for the many patients who have these results, which Anurag will discuss further. And as with RUCONEST, the results for the quarter are in line with our financial guidance for the year. Can you go to the next slide, please? So, our U.S. teams continue their patient finding education and genetic testing efforts to build the APDS patient base. At the same time, we remain laser-focused on RUCONEST execution. And while at different stages in the commercial cycle, both RUCONEST and Joenja are critical to our growth. I've already covered the U.S. here, you see on the first pillar. For ex-U.S., alongside the U.S. launch, we continue to build our capabilities in preparation for launches in EU, U.K., Japan and Australia and other Asia-Pacific countries. Our ex-U.S. teams are focused on both educating for any potential patients, testing and diagnosing and continue to build that patient funnel, all in readiness for the study flow of launches that we have in the coming years. And so far, we've identified over 800 patients in those key launch markets. And we also seen multiple years of growth ahead for Joenja, with initiatives such as family testing and VUS validation that should contribute modest additions to patient numbers in 2024. We expect those initiatives to have a more significant impact in 2025 when we see a potential for a few hundred patients to be on Joenja. Altogether, the APDS opportunity, as you know, is at least 1.5 million patients -- 1.5, sorry, patients per million or approximately 2,000 patients in these key markets, of which we've already found a large number. And while the ex-U.S. prices are expected to be lower than those in the U.S., the overall APDS opportunity is still significant. So, much of our organization is focused on APDS -- on Joenja for APDS, we're also seeing the final column focus on developing lines for additional indications. So, this is a good moment to hand over to our Chief Medical Officer, Anurag.

Thanks, Steve. Next slide, please. And then, if we can go to the U.S. launch of Joenja slide. Next slide. Thank you. And as you mentioned, Steve, we've had a strong launch of Joenja in the U.S. This reflects both the unmet need and the clinical experience with Joenja. And to review, Joenja is approved for the treatment of APDS in adult and pediatric patients 12 years of age and older. And this approval was based on data from a randomized placebo-controlled study that showed Joenja met both primary endpoints with significant benefits also seen in the secondary and other exploratory endpoints. Importantly, what we've seen across the development program is that Joenja has been generally safe and well-tolerated. And this data has been seen not only in the randomized study, but also in the ongoing long-term open-label extension study. In that study, we also saw benefits with patients being able to reduce or discontinue their use of immunoglobulin replacement therapy, and we also saw reductions in infection rates over time. We continue to share this data on the long-term use of Joenja from these studies as well as from post-marketing experiences. Next slide. And as with many of our diseases, patients have a long journey to reach a diagnosis. We have several efforts now ongoing to help patients get a correct diagnosis quickly. The first center is around medical education to raise awareness of APDS and share data on leniolisib. For example, recently, we've shared information about the seriousness of APDS by publishing data on early mortality and the frequency of lymphoma in these patients. We've also been discussing, for example, the frequency of bronchiectasis, a lung complication that is often seen in these patients at a young age to help doctors be able to recognize the types of symptoms that APDS patients may have and to be able to perform a genetic test, which is actually the only way to make a diagnosis. Now to make that diagnosis, we've made that genetic testing available through a sponsored no-cost testing program. We also have assistance from genetic counselors to be able to help patients and physicians interpret results. And we're working closely with these patients and their doctors to also help perform family testing, because as inherited disease, we know that these -- there are more patients than the patients that we've uncovered so far. We found, in fact, that most patients have not had proper family testing such as testing of parents or siblings to ensure that all of those members of their family can also receive a correct diagnosis. And we have several programs now in place to help assist with that type of effort. And as you've heard us talk about several times now, getting a genetic is important for these patients, but also interpreting the result is critical. And unfortunately, many patients can -- after they get a genetic test can get a result called a variant of uncertain significance. What this means is that these patients have a variant or a mutation that hasn't been previously described. And what we found is that there's a significant number of patients who have actually already received a VUS test results. Just in the U.S. 1,100 such patients. We're working closely now with a number of groups to help curate all of this data and put that into a single central database. And on top of that, what we need to do is perform further testing to determine whether that variant is disease causing or not. Recently, we've been able to start a functional testing program whereby patients can get access to a functional test that can help them determine if they have APDS and we are seeing already the results of those in the first quarter where patients who had a VUS result, got a functional test and then eventually got a diagnosis of APDS, some of whom are already on Joenja now. And to address this problem more firmly and more complete, we also have a large study called a MAVE study, which will allow us to determine the all possible variants and we're hoping that this reads out by the end of the fourth quarter. I should say we're expecting that this is going to readout by the end of the fourth quarter to be able to eventually answer the question of which patients who have VUS actually have APDS. Next slide. In addition to the work that we're doing with Joenja in the U.S., we have several projects to bring Joenja to patients in other countries and to younger patients. We have an application under review, for example, in Europe, and we are awaiting now CHMP opinion. We anticipate being on the May agenda for a CHMP opinion. So that would be later this month. We also have completed enrollment in our Japanese clinical study, and we're working with the regulatory authority there to determine the filing strategy following the completion of the clinical trials that are ongoing. And then we have two pediatric studies. The first is on children ages 4 to 11 and enrollment is completed there. And then we have an ongoing study that you see on the right for children ages 1 to 6-year-old using granules, and we have the first patient dosed last year and enrollment is continuing there. Considering all of these clinical trials as well as the expanded access and named patient programs, we have 138 patients receiving Joenja through these various programs. And as you heard from Sijmen, we also received recently the marketing authorization in Israel. We have a number of reviews ongoing, including in the U.K., Canada and Australia. And we're expecting regulatory action on those reviews in the course of 2024 and 2025. And then, we're very excited also about the possibility of using leniolisib outside of APDS, and I'll be talking a little bit more about that now. In the next slide, you can begin to see through our work in APDS, we have a better understanding of a broader PID landscape. Next slide, please. And what we see is that there are a large number of PIDs. Obviously, these PIDs have an increased risk of infection, but we also see there's a subgroup of PIDs that have not only this phenotype of increased risk of infection, but also have this immune dysregulation phenotype. And what I'm referring to here is, this concept where there's abnormal lymphoproliferation and frequently autoimmunity. APDS, of course, is an example of such a primary immune deficiency with immune dysregulation. In the next slide, I'll talk a little bit about this first program, but we're already moving forward on a second non-APDS PID indication again, with encouragement from experts across the world that suggesting that we should study leniolisib in these populations. Next slide, please. And what these experts are telling us is that there are many patients with clinical features similar to APDS that have similar disordered PI3K selling, but don't necessarily have the PI3K genetic abnormalities that we see in APDS. And that signaling, not surprisingly, leads to the clinical manifestations that you see on the right. And you see that these are very similar to the types of things that we see with APDS. Mainly, we see abnormal lymphoproliferation, so large lymph nodes, large spleen. We see this also in gut. On top of that, there's a problem of autoimmunity, again, signaling the abnormal dysregulation in these patients' immune system. We see GI disease, lung disease, the frequent infections, of course. And unfortunately, these patients also have a [indiscernible] developing early lymphoma. So, there's clearly a high unmet need here. And not surprisingly, given that there is abnormal signaling and that the symptoms you see there on the right are similar to APDS. The treatments that are being applied for these patients such as rapamycin, an mTOR inhibitor or other immunosuppressive agents have been also applied as population. So overall, we see that there's a strong basis to study leniolisib in this group of patients. And you see some of the genetic abnormalities that are mentioned there, including the condition called ALPS by an abnormality in the FAS gene, CTLA4 and PTEN. And on the next slide, you can see a little bit about the work that we're doing to advance this program. And we're working closely with the team at the NIH, and this includes Dr. Rao, who led the APDS clinical trial program at the NIH; and Dr. Uzel, who actually was part of the team that led to the discovery of APDS 10 years ago. Now we're starting this Phase II proof-of-concept dose finding study. We're starting at doses that we use in the leniolisib development program for APDS also so starting at the 10-milligram dose. And as I mentioned, we're using patients that have a number of abnormalities, including those listed there. The primary goal, of course, is to look at safety and tolerability and we're also going to be looking at pharmacokinetic measures and various efficacy measures. And patients will receive doses for a number of weeks and then escalate as they progress through the program. And the goal is to be able to pick the best dose regimen for the Phase III study. As we go to the next slide, we can see some of the populations that have already been characterized with these various genetic abnormalities. And you can see here several large cohorts with each of these different genetic forms of primary immune deficiency. And these large cohorts together tell us that there's a treatable population of approximately five patients per million across the world here. So, we're -- when we put all of this together, you can see we're very enthusiastic about the potential of Joenja in APDS, as well as beyond APDS in these various abnormalities that have clinical features that are similar to APDS. And with that, I will turn it over to my colleague, Jeroen, to talk about our financials.

Thank you very much, Anurag. Next slide, please. So, in the first quarter of 2024, the revenues increased by 31% to US$55.6 million and that's in comparison to first quarter of last year. And this is driven by both the U.S. commercial launch of Joenja and revenue growth of RUCONEST. RUCONEST revenues increased by 8% to $46 million compared to first quarter last year. And Joenja or leniolisib revenues were $9.6 million, and that's a 21% increase compared to the fourth quarter of last year. So, overall, we are well on track for 2024 to hit our total revenue guidance, which is between US$280 million and US$295 million or 14% to 20% revenue growth. Looking at gross profit. It increased in line with the sales increase. Gross margin dropped slightly, and that was because of a non-recurring inventory impairment of just over $2 million. Looking at OpEx, went up compared to last year's first quarter, but went down if I compare it to Q4 last year as we already indicated at the time. So, this increase versus last year was planned, and we are increasing the OpEx to support the launch of Joenja in the U.S., but also preparation for the outside of the U.S. The operating loss because of the increase in OpEx, increased from US$13.7 million to US$16.3 million in the quarter. And the net profit remains fairly stable, increased by $0.2 million and that is compared to the operating loss is due to better net finance results in the quarter. Our overall cash and marketable securities position went from $215 million to $203.5 million. So, a reduction of $11.5 million and that is on the back of mainly negative net cash flow from operating activities of $7.6 million. On the next slide, we see revenue breakdown by product and geographic segment. Just focusing on Joenja for the first quarter, we saw a $8.5 million revenue in the U.S. from $7.9 million Q4 last year. We see $1.1 million outside of the U.S., and that was $0.3 million in the fourth quarter last year, and this is sales from named patient progress. And if you look at the overall part of Joenja in the total revenues at $9.6 million, that's now 17% of total sales. And obviously, last year was nothing. And we expect that share to go up going forward. Next slide. Some more perspective on the OpEx. As I said, the OpEx went down from the quarter by around $10 million. And the OpEx really reflects the continued investment in Joenja in the U.S. and the loss preparation ex-U.S. We also increased investments to expand the leniolisib franchise. So, think about the pediatric trial and new indications that we are working on and that Anurag mentioned, and we also increased payroll costs that is because of a general business growth. With that, I would like to hand over to Sijmen for the outlook for the remainder of the year.

Thanks, Jeroen. And yes, I'm happy to present you with the next slide. The outlook for '24. As you heard in the beginning, we gave guidance and we continue to give guidance between $280 million and $295 million for revenues for this year, which means between 14% and 20% growth with, of course, quarterly fluctuations as expected. Joenja, you heard about the continued progress in finding the additional APDS patients in the U.S. market. The patients that are already identified, of course, but also is supported by the family testing, the systematic family testing that we have embarked upon and the first results of the VUS validation efforts and of course, subsequently converting those patients to paid therapy. Albeit you also heard from, of course, from Anurag that the MAVE experiment, which will provide the definitive answer of the full definition of APDS, we'll report at the end of this year. So, in other words, we expect a significant inflow of patients in the U.S. from that experiment that will overdose more than 1,100 patients with the VUS. Then you heard about the ex-U.S. increasing revenues from the commercial availability through the named patient program, which we expect to continue to increase during the remainder of this year, the clinical trials, the pediatric trial. And of course, the Japan trial continue. We also expect regulatory action you heard this year from the various jurisdictions where we have regulatory files that are under review. We're very excited, of course, and expect in the very near future to be able to announce that the Phase II proof-of-concept clinical trial in PID with immune dysregulation is actually -- will be started to significantly expand our commercial potential of leniolisib, but you heard Anurag outlining the details about. And then last not least, we have an active business development group that looks for primarily in-licensing opportunities, but also we look at acquiring opportunities that are in clinical stage of development or later in those areas that I mentioned here on the slide, immunology, hematology respiratory and gastroenterology preferably. So, in other words, we have a very busy remainder of the year ahead of us, and we look forward, of course, to updating you on that later on. But let's switch over now to the operator first, because there may be some questions that we happily answer. Over to you, operator.

Thank you. [Operator Instructions] We will now take the first question from the line of Christian Glennie from Stifel. Please go ahead.

Thank you and thanks, guys for taking the question. Three questions, please. The first one would be on Joenja in the U.S. Just to understand a bit better the sort of potential moving parts here in terms of patient numbers. You talked about 83 being on treated therapy as of 31st March, but that compares to 81 at the end of December. So just a net two additional, but maybe there's some additional patients that have come on, but then some have dropped off and then maybe some come in around the duration of treatment that you've seen so far, given that you will now have some patients potentially you've been on this since they've launched 12 months ago. So, just a better understanding of the patient dynamics there, and what to expect through the rest of the year?

Steve, would you be so kind?

Sure. Thanks, Christian. Good morning. So yeah, the -- so we actually with 81, and we added four group patients in the quarter. There were two now that dropped out. One was post-transplant. Unfortunately, that patient passed away unrelated to Joenja. And then secondarily, a patient with an unknown adverse event. So, the net of that is 83. We also diagnosed or have diagnosed 15 more patients during that quarter, and those are currently being processed, obviously, and will be additive to the current patient load. So, as things stand right now, our outlook as much as same as Sijmen said we are on track to get to where we need to by year-end.

I think you refer to that -- thanks, Steve, for that. I think as with all these sort of ultra-rare therapies, you will see, of course -- especially in the beginning, you'll see some lumpiness in the sales, right, that -- that's why we say quarterly fluctuations, Christian.

Yeah. Okay. Thank you. And then have you got -- I mean, is the working assumption that the majority of patients continue to be on therapy or if you've got an average duration of treatment that you can quote at the moment?

I think you're right. I mean, people stopping therapies are as far a few -- between what we see, right? Anurag, do you want to say something on that?

Yeah. Thanks, Sijmen. Hi, Christian. We see continued very high compliance with the product. We've seen that throughout the clinical development program and we see infrequent discontinuation.

Okay. Thank you. And then, the second one would be on lenoi, Joenja in Europe, flagging ongoing review with the AMA and obviously expecting a CHMP. Just wanted to try and understand a little bit as much as you can tell what some of these issues could be or relate to? Do you have any outstanding issues there? And when you say you expect to be on the agenda for May is that's not necessarily the same thing as being up for an opinion in May. I just want to clarify what your expectation is for the May Committee?

Anurag, would you be happy to answer that question?

Sure. So, we do expect to be on the CHMP agenda that for their meeting at the end of May on the MAA. So that's our expectation. Of course, we'll wait for the CHMP feedback to confirm that.

Okay. So, we should be expecting Joenja -- that's your expectation, Joenja will be up for an opinion in May?

That's correct.

And then, just finally on the named patient rollout, obviously, 1.1 million. You said that will continue to grow. Can you give us a sense for the growth there through the rest of the year? And also, kind of the number of patients and the sort of that the prices that you're getting for these patients? Thank you.

Steve, would you like to comment on that?

So, the prices are generally in line with the U.S. price, sometimes with a slight discount to that, so generally in a ballpark way. In terms of numbers, we don't necessarily forecast NPP out just because that's driven obviously by the doctor and their discussions with both the patient and local authorities in the country. But we would expect to see as the product is -- becomes better known and the effect that it has a positive effect on patients becomes more widely understood that as we await approvals, more patients do benefit from that. But there is no specific target as such as very much doctor driven, Christian.

Okay. Thank you.

Thank you. We will now take the next question from the line of Sushila Hernandez from Van Lanschot Kempen. Please go ahead.

Yes. Thank you for taking my question. Also one on Joenja and patient findings. You see that there are 15 diagnosed patients in Q1. So, how many of these patients do you expect to be converted to paid patients? And also on operating expenses, are these the levels that we can expect throughout the year? Or are you foreseeing any increases or decreases compared to this quarter? Thank you.

Okay. So, may I suggest, Stephen, you answered the first one. Is that all right?

Yeah, absolutely. So, thanks for the question. We expect the majority of those patients if not all of them to be converted on to paid therapy. We have not as yet had a rejection. So, I would expect to -- and the course of business of all those patients come online.

Would you like to comment on the operating expenses, Jeroen, what do we expect for that?

As I said last year on the OpEx, where it was in the Q4 was $73 million that we expected it to go down. It has gone down now. And I would expect it to be slightly up in the next quarters, because we keep investing in Joenja, both in the U.S. and ex-U.S. And so, I don't expect a sharp drop or anything in OpEx in the next few quarters.

Does that answer your question, Sushila?

Yes. Thank you.

My pleasure.

Thank you. We will now take the next question from the line of Joe Pantginis with H.C. Wainwright. Please go ahead.

Good morning and good afternoon, gentlemen. Thanks for taking the questions. So, a couple please. I just want to start at the end of your written comments today because more on curiosity. I mean, obviously, it's not impactful of your investment case. But you did disclose that OTL-105 with Orchard is being discontinued. So, just curious if -- two things. Is there anything technical or science that impacted the decision to discontinue for the program? And are there any payments either way for the termination? And will you be potentially looking for an additional or an alternative gene therapy approach for the future? Thanks.

All right, Joe. First, no significant payments. Secondly, yes, there was always a high hurdle, of course, involved in the high technical hurdle. And when you look at it, it's associated with the -- both the ability to generate sufficient C1 inhibitor protein by means of the blood organ and so on. And then, of course, the non-toxic conditioning regimen developments. So, those were the high hurdles. And then, of course, last but not least, but very importantly, we -- at the time, we did not have the opportunity to develop and that's the main reason -- to develop leniolisib. We were not expecting that to be able to develop leniolisib for two subsequent indications. So, we're now about to kick off that Phase II study for leniolisib for the next indication. You heard from Anurag is a very, very significant indication, which is fairly near by the market compared to also a product like OTL-105. Obviously, no competition around with a long exclusivity guaranteed for leniolisib. Secondly, we are looking at an even more and bigger PID indication going further forward. So, in other words, we have a lot of opportunities now that are more nearby, more derisked without any competitive threats here. So, we decided, given all the things together that it is the best way forward to focus ourselves now on this with regards to our internal portfolio, and of course, to continue to look for leveraging the infrastructure, the commercial infrastructure further. We are active in licensing/acquisition quest. So, I hope it's a bit long-winded, I hope I answered your question, Joe.

No, absolutely. Thank you. And then, on RUCONEST, sort of a two-pronged question. How would you describe sort of the first quarter impact with regard to insurance resets that are usually expected? How much did that impact at least just for the first quarter to be able to get back on trajectory? And secondly, how would you describe the balance, because obviously, it's very nice to see the continued addition of new physicians to the program and refill rates? Thanks a lot.

Yeah. Of course, it's always part of the lumpiness or the first quarter is always part and parcel of that renewals of the of the prior authorization. But let's just go to Steve, give a bit more insight in these things, right, Steve?

Yeah. Absolutely. Hi, Joe. So actually, the things went well, Joe. As you know, we've been doing this now for a number of years. So, we were able to prepare in Q4. And the prior authorizations in Q1 actually went pretty smoothly, and we have completed almost all of them by the end of February. Now what complicated last year was some issues, as you know, that were external which you've hit the market for government patients. We saw that impact decline quite significantly this year as patients out-of-pockets also came down in the Medicare space. And certainly, for us, it was a significant decline in impact. So, overall, I would say Q1, while you expect lumpiness in Q1, it was pretty successful reauthorization period for us.

Excellent. Thanks for all the details, guys.

Pleasure, Joe.

Thank you. We will now take the next question from the line of Hartaj Singh from Oppenheimer. Please go ahead.

Great. Thank you. And thanks for the questions. I just have a couple. Really nice launch going on with Joenja. But I just want to kind of go back to a previous question on the first quarter fluctuations. Two years in a row now, we've had them and they seem to be pretty extreme. I mean, is it other companies, they talk about payment into government programs, there's patient system programs, et cetera, et cetera. I mean, what exactly happened in the first quarter where you have this pretty large drop-off from the fourth quarter to the first quarter seems mostly sales? And then is that the expectation going forward? Is that the way we should model this going forward? In that in future first quarters, on a quarter-on-quarter sequential we should expect a pretty significant decrease in the sales and then that will pick up going on later. I mean, is it the way to think about it? So that's my first question. I just got a couple of others. Thank you.

Yeah. Hartaj, I think it's been the case, right, for all those years and was aggravated last year by this special situation there. But it seems to be the case, right? Do you want to comment any further on this, Stephen?

Sure. Morning, Hartaj. So, I think it's certainly the case that in most Q1s, you've seen over the years, RUCONEST sees a slight decline due to the reauthorization. Reauthorization of most of our patients in that period of time, and that does affect most companies. Last year was exacerbated by an impact to government patients. It was external. It was in an effect of the whole HA space. That came down significantly this year as patient out-of-pockets declined. So, we saw about half the impact that we saw last year. And next year, that stabilizes completely. I think with patient out-of-pocket is coming down to around $2,000. So, I think you can say by the time we get to next year, it's steady state. So yeah, perhaps we should expect a decline as we always have year-on-year, but I don't expect what's happened last year and this year to continue. That's the result of a very specific event affecting government patients.

Yeah. No, Stephen, that makes sense. And we've heard that from other companies also. I think the IRA, Inflation Reduction Act, has exacerbated this first quarter fluctuations. The other question I would just have is on OpEx, really like all the color there. But let me put the -- there's a question asked previously, let me put it in this way, which is that if you're expecting -- your guidance suggests a pretty significant increase in revenues this year. Is OpEx expected to grow at the same rate? I mean -- or can we hope for some operating leverage, which would mean OpEx growing at a slower rate than revenues? And I've got one last question after that.

Yeah, sure. No, I think Jeroen already commented on that, Hartaj, about the -- still to be expected a slight increase in the operating expenses for the coming quarters. Having said that, it's not the spectacular increase anymore before, because we did the U.S. launch, of course, but that is carrying capital intensive. On the other hand, we continue to invest in all those things in the U.S. market. And of course, we're preparing for, as Jeroen has already alluded to, all the preparations for the launch of Joenja outside of the U.S. And in addition to that, you also see that gradually, R&D costs will not spectacularly, but will continue to go up as well, because of the fact that we are starting the clinical trial programs for leniolisib in the subsequent indications. So, all in all, we're not at this point in time, of course, aiming for profitability per se in this year, because it's still a launch year, right, and it takes time. And you already heard that, for instance, did the leverage, I think the real leverage. If you look at the patient growth in APDS as you heard Stephen say there that conclusive VUS MAVE experiment that Anurag was talking about, will or should be bringing a very significant bolus of patients to the U.S. -- in the U.S. market towards becoming available for paid therapy next year. So, this is typically -- when you have a new disease that's not fully describes. It is typically when you are -- you're dealing in ultra-rare diseases that it takes time and it takes a lot of investment. But eventually, it will be a very, of course, profitable operation. I hope that answers your question a little bit, Hartaj.

Yeah. No, absolutely. And in line with what you've said before also previously, Sijmen, I just wanted to get more color on it. My last question is just on Phase II design. Anurag, you might have mentioned this already, but can you just kind of walk us through roughly how long would it take for you to sort get all the sites open, recruiting. When could we see -- essentially what I'm trying to get to is when could we see a sort of a readout -- would that be a 2025 event or 2026? And thank you for all the questions.

Thank you, Hartaj. Anurag, please.

Hi, Hartaj. So we -- this next Phase II dose finding study is being conducted at a single center, and that's at the NIH. So with that and the fact that they've -- we're anticipating 12 patients in this study, this is a center that has actually already identified, which patients they anticipate being able to enroll. We believe that they'll be able to enroll the study in a relatively rapid fashion once we get going, and we expect to be able to readout the results probably in the course of 2025.

Great. Thank you, all.

Thank you, Hartaj.

Thank you. We will now take the next question from the line of Alistair Campbell from Royal Bank of Canada. Please go ahead.

Thanks so much for taking the questions. I've got three, if that's okay. Just first of all, looking at Joenja. I mean, obviously, you've seen more diagnosis through Q1, but we haven't seen progression in terms of patients on therapy. I just want to ask, get a sense of that. I mean, just check, we're not seeing an underlying dynamic here or perhaps what you've done in the first instance is kind of hoovered [ph] up the most severe patients and maybe now we're moving into patients who are diagnosed, but don't have quite a severe disease and they're potentially harder to pick up. So maybe some commentary on that in terms of what's happening with severity in patients on drug? And then if I do some quick mathematics, I'm assuming you had about 80 patients on paid therapy through the quarter, that was sort of point me to U.S. number based on the WAC, a chunk higher than reported sales and sort of indicates something like a 25% gap in the system. Is that a good proxy for how much kind of discounting there might be from the WAC price in the system? And then finally, just on the PID trials. Is there any reason to think that PIDs need a different dose from APDS, and you may perhaps need stronger suppression of the pathway? Just any sort of feedback on that would be interesting. Thank you.

Okay. Let's maybe start with -- thanks, Alistair. Maybe start with two questions from Anurag about severity and the PID dosing. Anurag, would you like to comment on that?

Sure. So, I think, Alistair, the first comment is correct that the patients that we initially able to convert over to paid therapy. These were patients, of course, that were in the clinical trial program in the expanded access program. So, there was, of course, a bolus of those patients. And many of those patients were quite severely ill. Now APDS, in general, is a serious disease. So, there's -- there aren't a large number of, let's say, asymptomatic patients that were floating around out there, but all of these patients are sick. Most of these patients are on IG replacement therapy, for example. So, this is a serious disease and a progressive disease. So, I think it's just a matter of continuing to reach out to these doctors and educate them, as well as patients about their condition and the potential effects of Joenja. On to the question about the dosing in this study as well as any future studies, and I think that it's really an open question. We're starting with a lower dose than we have approved for Joenja currently. So, we're starting at the 10-milligram dose, which is the same dose that we used initially with APDS, and we'll progress these patients through. Based on everything that we know so far about the activation of the pathway in these patients and measurements that have been done about that activation relative to APDS patients, we feel like we're in the right dosing range. So, we don't believe that we're going to need a higher dose to so-called suppress the pathway, but really trying to normalize and sort of balance the pathway. I think that's probably a better way to think of.

Okay. Thanks. And then maybe, Jeroen, you want to comment on -- Alistair's question about the discounting or the absence of it in Joenja.

Yeah, absolutely. So basically, it's not just discounting like in other drugs. It's mainly because of the mix with the Medicaid, Medicare patients and mainly Medicare. And so, we did have, for that reason, a discount of around 12%.

Does that answer your question, Alistair?

Yes.

There is no other discount on that, Alistair.

Yeah, that's good. It's very clear. And is that broadly what you should be thinking about carrying on going forward, or do you think the mix will change over time?

Good growth.

It really depends on the patient mix. So, it's very difficult to say. But other than that, it's been relatively stable so far.

You should realize, Alistair, it's a relatively young population we're treating right here in this case.

Very good. Very clear. Thank you.

Thank you. [Operator Instructions] There are no further questions at this time. I would like now to turn the conference back to Sijmen de Vries for closing remarks. End of Q&A:

Thank you, Sandra. Yes. Thank you very much. Yes. So, you heard our total revenue guidance continues to be between $280 million and $295 million. You heard about the progress of finding the additional APDS patients in the U.S. and outside of the U.S., of course, and then bringing also relevant part of the revenues for Joenja. You heard about the expectations towards the big effort that's ongoing during the remainder of the year to clarify the full description of the disease by means of the MAVE experiment, so which will we expect deliver a significant new bolus of patients next year becoming available for therapy. Obviously, the clinical trials are ongoing, an especially here the pediatric label expansion trial progresses very well. At that trial with 4, 11-year-olds has the majority or the vast majority of the pediatric patients in it. And that, of course, will be delivering a significant bolus of patients in addition to that. You heard about the regulatory actions that are ongoing in the various territories outside the U.S. and where we expect to see some progress there continuing. And then, of course, last but not least, we are very excited about the start of our Phase II clinical trial, proof-of-concept trial in PID with immune dysregulation that will very significantly expands long-term commercial opportunity of leniolisib. And very lastly, we continue to look for in-licensing opportunities of clinical stage, rare disease opportunities to be either in-licensed preferably or acquired. So, with that, I would like to all thank you for being present at our conference, and we look forward to updating you on our next call, which will be our half year results in the beginning of August. Thank you very much, and goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.