Horizon Pharma's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Horizon Pharma, Inc. (HZNP)

Q2 2012 Earnings Conference Call

August 10, 2012, 08:00 a.m. ET

Executives

Robert De Vaere - EVP and CFO

Tim Walbert - Chairman, President and CEO

Todd Smith - EVP and CCO

Analysts

Annabel Samimy - Stifel Nicolaus

Charles Duncan - JMP Securities

Edward Nash - Cowen and Company

Presentation

Operator

Good morning everyone and welcome to the Horizon Pharma Second Quarter 2012 Financial Results Conference Call. This call is being recorded. At this time for opening remarks and introduction, I’d like to turn the call over to Horizon Pharma’s Chief Financial Officer, Robert De Vaere. Mr. De Vaere, Please go ahead sir.

Robert De Vaere

Good morning, and welcome to Horizon Pharma’s second quarter earnings call. This morning we issued a press release that provides the details of the company’s financial results for the second quarter ended June 30, 2012, as well as an update on DUEXIS and RAYOS and other recent business highlights. This press release is available on our website at www.HorizonPharma.com.

Leading the call today will be Tim Walbert, Chairman, President and Chief Executive Officer of Horizon Pharma. Tim will provide a corporate update. Todd Smith, Executive Vice President and Chief Commercial Officer will provide an overview on the commercial launch of DUEXIS and I will provide an overview of the financial highlights from the second quarter 2012 before turning the call back over to Tim for closing remarks.

As a reminder during today’s call, we will be making certain forward-looking statements. These statements may include statements regarding our financial outlook, our regulatory and sales and marketing plans, potential growth of our business plans to enter into future commercial agreement and anticipated timing of product approvals. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are described in our filings made with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent quarterly reports on Form-10-Q. You are cautioned not to place undue reliance on these forward-looking statements and Horizon disclaims any obligations to update such statements. Further we may also discuss non-GAAP financial measures during this call to help you understand our underlying business performance. The GAAP reconciliations are provided in our press release which was posted on our website www.HorizonPharma.com.

I will now turn the call over to Tim.

Tim Walbert

Thanks Bob. Good morning everyone and thank you for joining the call to discuss our second quarter 2012 results. I will begin this quarter’s conference call by discussing our results and the progress of our ongoing commercial launch of DUEXIS in the United States. And also I will discuss the recent U.S. FDA approval of RAYOS, where we are extremely pleased with the broad indications we received and the inclusion of rheumatoid arthritis data in the approved product prescribing information.

First, results we present today for DUEXIS show continued progress in prescription demand. We reported increase for DUEXIS of 91% gross revenues compared to the first quarter of 2012. We also reported an increase in total prescriptions for DUEXIS of 81% versus the first quarter of 2012. Bob will provide you more detail on DUEXIS revenue later on in this call.

To further our focus to driving sales growth to DUEXIS in the U.S. we are now focused on finalizing the expansion of our initial 80 person sales force to 150 sales representatives. In addition, we recently announced the co-promotion agreement with Mallinckrodt which is a pharmaceutical business of Covidien. We believe Mallinckrodt expertise in the distribution of pain therapeutic along with their experienced sales force in the osteoarthritis and rheumatoid arthritis market is well suited to successfully help us market DUEXIS to their exclusive target.

Our sales force expansion along with this co-promotion will enable us to significantly expand our reach and frequency against key high value prescribing physicians to treat patients with osteoarthritis and rheumatoid arthritis. We believe the combination of our additional Horizon sales representatives along with the substantial promotional efforts of Mallinckrodt will increase our [call on] position target to five-fold from 10,000 physicians to 50,000 physicians beginning in the fourth quarter. Todd Smith will comment further on this in his remarks.

At this point I’d like to turn the call over to Todd who will discuss our commercial highlights for this quarter.

Todd Smith

Thank you, Tim. Good morning everyone and thank you for joining us today. It's a pleasure to discuss with you our second quarter 2012 commercial performance. From Wolters Kluwer market data we know that there were approximately 97.7 million (inaudible) scripts written in 2011 with approximately 31 million of those scripts written for ibuprofen for more than 30%. Further this demand for ibuprofen other generic NSAID has created an increased risk in NSAID cause GI toxicity with over 85% patients not being protected, thereby creating a substantial opportunity for DUEXIS to address unmet medical need for osteoarthritis and rheumatoid arthritis patients.

We also know that the NSAID market is a promotional and sample sensitive market and as Tim indicated earlier on the call, our strategy with the combined Horizon and Mallinckrodt sales force is to increase our called on target physicians from 10,000 to 50,000 high prescribing physicians. The Horizon and Mallinckrodt sales effort was designed to be complimentary with no overlap among the two sales teams. Our sales efforts that will target 25,000 high prescribers that will continue with the relationship they have already established with physician, while Mallinckrodt sales specialist will focus on an additional 25,000 high value prescribers. As a combined effort this breaks down to approximately 40,000 partner and care physician, 4,000 rheumatologists and 6,000 additional physicians such as orthopedic surgeons.

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