Biohaven Ltd (BHVN) 2020 Q4 法說會逐字稿

Good morning. Welcome to Biohaven Pharmaceuticals Fourth Quarter 2020 and Full Year Results Call. (Operator Instructions) Please be advised that today's conference call may be recorded.

I would now like to turn -- hand the conference over to Biohaven's Chief Operating Officer, Clifford Bechtold. Thank you, and you may now begin.

Good morning, and thank you, and welcome to the Biohaven's Fourth Quarter 2020 Earnings Call.

Speaking on today's call are Dr. Vlad Coric, our Chief Executive Officer; Jim Engelhart, Chief Financial Officer; BJ Jones, Chief Commercial Officer; and Dr. Elyse Stock, our Chief Medical Officer.

Earlier this morning, we issued a press release announcing the fourth quarter 2020 highlights and a summary of our year-end results. A copy of this press release can be found on our website at biohavenpharma.com and will be on file with the 10-Q later filed today.

Before we begin, let me remind everybody that today's discussion contains forward-looking statements based on the environment as we currently see it and includes risks and uncertainties. A list and description of the risks and uncertainties associated with an investment in Biohaven can be found in the company's filings with the U.S. Securities and Exchange Commission.

Please be aware that you should not place undue reliance on the forward-looking statements we make today. For this call, we will focus on non-GAAP financial measures with detailed description of GAAP and non-GAAP analysis in our filings.

An archive of today's call will be posted on the Biohaven's website in the Investors section.

With that, I'll turn the call over to our CEO, Dr. Vlad Coric.

Thank you, Cliff. Good morning to our investors, and thank you for joining the fourth quarter earnings call, representing our third full quarter of earnings since the launch of NURTEC ODT.

I'm pleased to report the company continues to excel in delivering a paradigm-shifting treatment for migraine and more broadly, achieving our strategic goals across multiple areas to grow value for patients and investors in years to come. Our 2020 performance was simply stealth, and we exceeded expectations across multiple fronts. NURTEC ODT was approved approximately 1 year ago today. And despite facing what was perhaps the greatest challenge of any new drug launch with the emergence of the pandemic, the Biohaven team effectively and safely delivered our new migraine medication to patients.

To date, we have achieved over 450,000 prescriptions of NURTEC, and access for patients is broad with greater than 89% commercial coverage. The progress of NURTEC has been exceptional with fourth quarter net revenues of approximately $35 million, representing an increase of over 98% from the third quarter. Certainly, a testament to our strong commercial team and the entire organization that fulfilled our responsibility to patients to ensure the drug supply chain remains strong during the pandemic, and together, we relieve suffering by delivering this novel migraine therapy to patients.

I'm also pleased to report this morning that our NURTEC regulatory submission in Europe was recently accepted for review by the European Medicines Agency and is currently under review. We are excited about the potential of bringing NURTEC to patients around the globe, and the European filing leverages the acute and prevention data packages from our FDA filings. The EMA package is the first European filing for a dual-acting migraine therapy for both acute and preventative treatment in 1 regulatory submission.

We believe that Biohaven has the most broad and differentiated CGRP-antagonist platform in the pharmaceutical industry. Our strategic goals are straightforward. First, maximize patient and shareholder value by continuing to execute on our NURTEC launch; migraine as a common and disabling disorder, we must efficiently deliver this new drug to patients and its differentiated profile to help them better treat their illness.

We believe that our 1 dose efficacy, returning patients to normal by 60 minutes and long-lasting efficacy for 2 days after a single dose will ultimately win the oral CGRP class. Third, we will grow the market in acute, but we will also expand this important drug to patients with other indications through a disciplined life cycle management, including the pursuit of indications such as prevention of migraine, pediatric migraine, posttraumatic headache and other pain-related disorders. Finally, we are leading the way by establishing new treatment paradigms and approaches. This starts with our strategy to establish NURTEC as the first and only dual-acting migraine therapy for both acute and preventive therapy in 1 pill. Never before has migraine been treated with 1 medication across its spectrum of acute to prevention. Additionally, we're following the science of CGRP antagonism by expanding into several non-migraine indications, including psoriasis and asthma.

NURTEC is certainly the tip of the arrow when it comes to the Biohaven CGRP franchise, and we wanted to update you regarding its market growth on this slide. We continue to see robust and linear growth in the launch of NURTEC. Although we were second to market by a couple of months, our differentiated profile continues to drive demand from patients, and the new-to-brand Rx market share continues to almost be evenly split between the 2 approved oral CGRP antagonists. I'd like to thank our entire commercial organization for their dedication and delivering such strong market performance in 2020.

For much of 2020, we heard directly from patients that their experience on NURTEC was quite different than past experiences with other standard of care medications. We believe that NURTEC has the potential to become the first-line standard of care therapy for migraine given its efficacy and safe profile. This slide shows that we are just at the very beginning of our market penetration compared to the triptans. Over the last year, there were approximately 16 million prescriptions for triptans, and this slide shows that the oral CGRPs are steadily making progress by increasing market share compared to the triptans and this is mainly due to our differentiated profile. This slide does not include the separate large population of patients who can't take triptans due to contraindications or patients who failed triptans. We believe that there is significant growth ahead for the oral CGRPs as the leading class of drugs for migraine.

When we look at the CGRP targeting agents as a whole, it remains evident that oral CGRP antagonists have driven the lion's share of the overall CGRP market growth in 2020. This slide suggests that more effective acute therapy results in a diminished need for injectable preventative agents. We believe oral CGRP antagonist for the acute treatment of migraine will ultimately grow into a $4 billion to $5 billion annual market in the U.S. alone, and that's for the acute indication only. Given the projected size of the overall market, we remain focused on investing in the long-term success of NURTEC and growing the overall CGRP margin.

As we look to the future of our CGRP franchise, one of the biggest limitations of migraine therapy to date has been the bifurcated treatment paradigm. Since no single migraine therapy could previously treat acute episodes and also prevent the next attacks, patients have had to historically use one medication to treat acute episodes and a separate medication to prevent migraines. This has resulted in polypharmacy, which, of course, is complicated by different side effect profiles of each additional therapy, drug interactions and added costs for payers and patients. We hope to bring an end to this treatment chasm.

As we look towards our upcoming sNDA with prevention in the U.S. and our recently submitted dual-therapy filing in Europe, we want to empower patients and doctors to treat migraine across its spectrum. We want to get rid of these 2 different categories of acute and prevention and think of one. We believe that future state can be a single drug that treats acute episodes and that same drug at that same dose can simply be used more frequently to prevent migraines. If approved for prevention in 2021, NURTEC will represent a great advancement for millions of patients as we bring forward the first dual-therapy oral CGRP antagonist for both the acute and preventative management of migraine. Patients deserve a unified treatment of migraine across its entire disease spectrum and Biohaven hopes to deliver on that vision this next year.

Think about the value proposition and simplicity that this will bring to patients suffering from migraine. The one treatment that acts fast, lasts and prevents future migraines. One drug, one dose, the patient and physician simply change the frequency of use to meet each individual patients need. Our vision is that NURTEC will become the one treatment that can deliver relief across the migraine spectrum from acute to prevention.

Now NURTEC is going to continue to be a key growth driver for our company this next year and beyond, but we have many other value inflection points for 2021 and future years. While the commercial organization continues to focus on driving sales of NURTEC, the rest of the organization will be equally focused on driving new value inflection milestones in the future. This slide summarizes the breadth of our pipeline and life cycle management opportunities at Biohaven. Outside of the U.S., we expect to see global approvals of NURTEC beginning in 2021 and have already established distributor agreements in certain geographic regions. While we await our EMA approval for dual-acting, we will advance discussions regarding ex U.S. partnering of NURTEC in Europe and other major markets.

In addition to our life cycle management of NURTEC, we expect to have top line data from intranasal zavegepant by the end of the year. And if positive, will be ready to file zavegepant as the first intranasal CGRP antagonist for the ultra-rapid treatment of migraine. An oral version of zavegepant is also set to begin clinical testing shortly in both migraine and non-migraine indications.

Outside of the CGRP-antagonist franchise, we also have an important Phase III study readouts in our myeloperoxidase inhibitor and glutamate-modulating platforms. Verdiperstat, a drug thought to decrease brain inflammatory pathways, is expected to have top line results in both MSA and ALS later this year. Troriluzole, our glutamate modulator, is expected to have top line data in SCA by the end of the year or early next year. We are also excited that our wholly owned Asia-Pacific subsidiary, BioShin, is driving to file a public offering in either the Hong Kong or Shanghai Exchange by the end of the year. NURTEC will be an important new treatment the over 80 million Chinese suffering from migraine.

Biohaven's robust pipeline is poised to continue to deliver value for patients and investors for the long term. Our R&D team has delivered on past milestones and has an exciting late-stage portfolio that we believe will continue to create value over the next year and beyond.

To summarize, we have a strong portfolio of product opportunities that will deliver value for patients. Our goal is to continue to work hard to improve the lives of patients suffering from neurologic and neuropsychiatric disorders and continue to deliver best-in-class therapies from our promising pipeline for patients. With the establishment of the new bispecific platform in Biohaven Labs, you will hear a lot more about our antibody enhancers and extracellular degraders in future years that will enable us to branch out further beyond neuroscience, build additional partnerships and deliver more medicines across multiple areas of serious unmet need.

I will now turn it over to Jim Engelhart, our CFO, to review the detailed results of our financial performance in the fourth quarter and the year end. Jim?

Thank you, Vlad. Good morning, everyone, and thank you all for joining today.

NURTEC ODT sales achieved sales of $35 million, demonstrating another strong performance versus prior quarter, increasing 98% to $35 million versus Q3 2020, driven by strong prescription volumes. As we previously communicated, these results were not impacted by changes in inventory levels.

Looking ahead to 2021, while we will not be providing guidance regarding sales, spending or earnings, we do expect our first quarter sales to be impacted by the seasonality of patient deductibles and prescription reauthorizations typically experienced in our business.

Continuing down the P&L. For SG&A, SG&A expense in the quarter on a non-GAAP basis was $114 million compared to $66.8 million over the prior year quarter, an increase of $47.2 million. Most of our SG&A costs reflect our commercial investment in NURTEC ODT, and the increase represents the investment in the launch of NURTEC this year. SG&A also includes general and administrative costs, including finance and legal as well as other administrative functions. R&D investment in the quarter on a non-GAAP basis was $57.8 million, which was flat to the prior year quarter.

On EPS, we reported non-GAAP adjusted net loss for the 3 months ended December 31, 2020, of $161.7 million or $2.69 per share loss compared to $124.4 million or $2.38 per share loss for the same period in 2019.

Turning to our balance sheet. We continue to be well capitalized with $357.4 million in cash, marketable securities and restricted cash as of December 31, 2020. In addition, we have immediate access to $225 million from our debt facility as Sixth Street agreed to eliminate the minimum sales threshold clause in our prior agreement as a result of our strong fourth quarter 2020 sales performance. Finally, we anticipate $300 million of additional capital from our Series B preferred and zavegepant development funding financing with Royalty Pharma last year.

With that, let me turn it over to BJ Jones, our Chief Commercial Officer. BJ?

Thank you, Jim. Good morning, all. 2020 has been a defining year for Biohaven in many ways. As we completed the build-out of our commercial organization in Q1 last year, we quickly and effectively launched NURTEC ODT upon approval. We are fully aware of the market forces arrayed against us, but feel confident in our ability to succeed because of NURTEC's differentiated profile and unique set of benefits for patients with high unmet need.

As you look back at 2020 full year results, which reflects approximately 9 months in market, we're ecstatic with the success of NURTEC ODT to date and the significant impact we've had in the lives of so many patients with migraine and their loved ones. We anticipated that NURTEC was going to launch in a highly competitive market, battling against large and well-established pharma companies with long histories in Neuroscience and Migraine. What we didn't anticipate, of course, was executing the company's first launch in the global pandemic.

At the end of our Q4 milestone, the NURTEC story continues to strengthen in the marketplace. The oral CGRP class is growing rapidly through tremendous unmet need amongst patients with migraine, fueled by 2 successful oral CGRP launches in 2020. And NURTEC ODT is poised for differential growth and market leadership in what will become a very large market.

Our fourth quarter results were strong as NURTEC's net sales increased by 98% over prior quarter, with week-over-week volume growth through year-end, discounting holiday variability. We continue to perform well across all launch metrics as prescriber and patient trial and advocacy steadily grow. We are encouraged by growth trends in longitudinal research to signal the significant potential of this market, which is aligned to our stated objectives to win the CGRP class and grow the acute market.

This slide reflects results from the latest Spherix syndicated market research study in migraine which shows increasing trends for neurologists self-reported and projected oral CGRP share over time with corresponding declines in triptan share. We intend to invest wisely to capture the lion's share of impending growth as we anticipate oral CGRPs will become the preferred acute migraine therapy in the mid- to long-term.

Another cut of these data suggests approximately 96% of neurologists perceived NURTEC ODT to be in advance over triptans, and importantly, close to half of these specialists anticipate using NURTEC as their preferred acute migraine therapy versus other oral agents. Although these data reflect specialist feedback, we expect NURTEC preferential share to translate directly to the broad primary care audience as well. Analogs of this specialist to PCP cascade dynamic are plentiful in varying disease states from CV metabolic and anticoagulation to neuroscience and major depressive disorder. We credit our success in NURTEC's differential perception to our revolutionary product profile, yes, but also excellence in execution.

As an emerging company, launching our first approved product, we place a high premium on working smarter and harder than the other guys. Constant reinforcement of our clear and compelling strategy leads to efficient brand promotion through an optimal blend of both innovative and traditional channels. We've been prudent with our resources to ensure we're investing not only where the greatest volume is today but with clinical influencers that will shape the larger primary care market of tomorrow. The concept is a novel, but requires extraordinary discipline during global pandemic, where face-to-face engagements have been at a premium.

Since May, when physician offices began to open, Biohaven has been effective in matching AbbVie's share of voice with these customers and with far fewer sales representatives, less than 60% of our competitors' field force. And one share of promotional activity is critical to success, but impact is a result of engaging the right customers, the right number of times with the right message. In a challenging year for physician access, our sales specialist partnered with over 27,000 prescribers to experience NURTEC ODT with over 450,000 prescriptions to date. We're slowly but surely closing the gap in total prescribers per our competitors' 2-month non-COVID head start at launch. You'll also notice that NURTEC prescribers are more productive, writing more TRxs per doctor than the UBRELVY prescribers.

We dutifully execute against a similar strategy with our DTC investments as our highly targeted and efficient media plan has yielded leading competitive share of voice while spending close to half the budget of our competitor. With continuous monitoring of closed-loop consumer engagement and feedback, we refine and optimize evolving engagement platforms to activate and enroll patients. And perhaps the most compelling metric is that of the voice of people with migraine. With greater brand exposure and trials since launch, we've witnessed a growing variance in patient satisfaction between NURTEC and UBRELVY.

This substantive trend, not dissimilar from neurologists growing preference over time, is compelling reason to believe that NURTEC will achieve market leadership in this rapidly evolving growth market, prime to eventually unseat triptan as a standard of care for the acute therapy of migraine. Our collective passion and commitment are rooted in our patients and their very real unmet need. 1,000-plus social mentions NURTEC ODT receives per week and a powerful testimonials shared never get old. We're also blown away that approximately 80% of NURTEC's social mentions are categorized as a positive emotional response. And where else does that happen? Online.

So what's next? Vlad mentioned upfront that we anticipate an FDA decision on approval of our preventive indication by the end of Q2. We have now filed our dual-therapy regulatory package in Europe as we turn our eye for the globalization of our CGRP-antagonist franchise. As such, we're preparing to transform the treatment of migraine with a first-in-class paradigm shifting to a solution that address the patients' needs across the migraine continuum with a single pill and same dose, proven safe and effective for both acute and preventive migraine therapy.

So in closing, we remain enthusiastic about the short- and long-term opportunity for NURTEC ODT in this rapidly expanding oral CGRP market. We're hopeful that as COVID infection rates, hospitalizations and deaths continue to decrease, physician access will return and stabilize in the summer months, significantly improving patient access to innovative medicines. If we can put up numbers like we did in the fourth quarter in the midst of a pandemic, imagine what we can do in an unconstrained environment. In the meantime, we remain committed to invest in novel partnerships with our customers to identify innovative solutions to satisfy their patients' needs.

And with that, I'd like to pass the mic over to my partner, Elyse Stock.

Thank you, BJ. Again, this quarter, I'm happy to highlight the significant advances made across our research and development organization to bring multiple novel therapies to patients. We continue to make impressive progress across our programs, including our CGRP franchise, our growing myeloperoxidase inhibitor platform, our glutamate modulating agents and continued work on other novel targets that will one day bring treatments to so many who suffer from debilitating neurologic disorders.

We're delighted to have been able to further expand our CGRP platform in 2020. NURTEC ODT remains our cornerstone marketed product indicated for the acute treatment of migraine, with the prevention indication being evaluated by the FDA. Zavegepant is following closely behind with an intranasal formulation in the clinic and an oral formulation about to go into clinical studies. We've expanded this portfolio with additional new next-generation CGRP-antagonist molecules brought in by our collaboration with Sosei Heptares. This morning, I'll be highlighting some of our most important progress to date.

Our portfolio of small molecule CGRP affords us great flexibility and has the potential for multiple blockbusters. The impressive commercial success of NURTEC in the United States has been touched upon by both Vlad and BJ. The R&D team completed our sNDA filing of NURTEC ODT for the prevention of migraine and recently completed our regulatory filing for a dual-acting indication in Europe. The simplicity of using one medicinal product to treat migraine is poised to simplify the treatment paradigm and improve the lives of many living with migraine.

We've been actively engaged in a disciplined approach to life cycle management to expand further NURTEC indications and bring this important drug to other regions of the world. Life cycle expansion beyond geographic regions and the dual-acting indications is also of critical importance to Biohaven as it will help define the scope of important information for patients, providers and payers. We expect to study NURTEC in several migraine adjacent areas. With regard to non-migraine indications, we've begun a preliminary study in plaque psoriasis and have a study in asthma plan for this year. We will continue to advance other previously undisclosed indications this next year and look to expand our trials across multiple of our CGRP antagonists.

Our zavegepant program includes both intranasal and oral formulations. An acute treatment Phase III study with intranasal zavegepant began in October of last year and followed a positive Phase II study. zavegepant has the potential for an even more rapid onset of effect. An oral formulation has been developed, and will be poised to be evaluated in a Phase III study to start in the first half of this year. We also plan to study zavegepant in a variety of migraine and non-migraine areas which are yet undisclosed.

Newest in our portfolio of CGRP antagonist small molecules are those assets brought in by our recently announced collaboration with Sosei Heptares. These new molecules open many more possibilities for us to expand our CGRP platform and afford us the ability to customize the unique attributes of each of these structurally unique compounds. We have deep experience in this mechanism of action and now have multiple assets to optimize for different indications.

CGRP represents an important pathway in the nexus between the immune and central nervous system. As you can see, we're quite busy with the CGRP franchise, and we will follow the science into multiple non-migraine indications for this franchise over the next year and years to come. Biohaven's pipeline has both low-risk opportunities in the life cycle management of our CGRP platform and higher-risk, high-reward investments at our glutamate and myeloperoxidase inhibitor platforms. Our glutamate modulating platform is just one of those high-risk, high-reward areas.

Troriluzole recently completed enrollment in a Phase III study in spinocerebellar ataxia, and we'll read out top line results between the fourth quarter of 2021 and the first quarter of next year. A Phase III program in OCD started at the end of last year with enrollment in the first of 2 planned studies, the second study began earlier this quarter. As previously mentioned, both studies are based on critical signaling that emerge from earlier proof-of-concept OCD studies we conducted. Glutamate is the most abundant excitatory transmitter in the brain, and we believe troriluzole has and will provide important advances in the field across many of these areas which may then be expanded.

With regard to our MPO platform, our myeloperoxidase inhibitor trial in multiple system atrophy, a rare and rapidly progressing disease with FDA fast-track designation will read out top line data at the end of this year. The Mass General's HEALEY study that is testing this agent in ALS is also ongoing and expected to read out by year's end.

Biohaven's efforts across our glutamate and myeloperoxidase platforms allows us to target 3 rare and devastating diseases: Multiple system atrophy, amyotrophic lateral sclerosis and spinocerebellar ataxia. We anticipate 2 Phase III readouts by the end of this year and the potential for 3 global orphan drug approvals by 2023.

Earlier this year, we acquired a series of novel assets and informed Biohaven Labs to advance our translational discovery platform. Our early pipeline is extremely robust. It now includes antibody recruiter molecules, multimodal antibody therapy enhancers, also known as MATEs; and the molecular degraders of extracellular proteins. Our degrader platform harnesses the body's own machinery to eliminate certain circulating protein pathogens that are implicated in a variety of diseases. We plan on advancing 2 of our lead assets from Biohaven Labs to IND later this year.

I'll highlight just one of the numerous near-to-clinic opportunities we have in Biohaven Labs. Our COVID-19 program is an exciting program that was accelerated in development with funding from Bill and Melinda Gates Foundation. The MATE technology uses a peptide that covalently binds to IVIg and targets the COVID-19's spike protein to do 3 things: one, neutralize the virus; two, induce immune cell mediated viral clearance; and three, provide long-term vaccination effect.

Our preclinical studies have already demonstrated that in-vitro our asset is able to bind to viral material, lead to antibody-induced cellular clearance of viral material, similar to convalescent sera and has the ability to produce viral inhibition. And we look forward to progressing this program in vivo. You are going to hear a lot about these next-generation bispecific platforms in the coming years, and we expect our early pipeline to bring us exciting compounds in numerous areas over future years. We're excited by the immense opportunity across these platforms, and we'll continue to make strategic decisions across the portfolio with both external partnerships and internal programs.

Our pipeline is really exciting, and we continue to drive these robust platforms and programs forward. We're very busy, and we remain committed to follow the science and to keeping the patient at the center of all we do. It is really a pleasure to be able to share all of this with you, and I'll now turn the call back to Vlad. Thank you.

Thank you, Elyse, BJ and Jim. In closing, Biohaven has demonstrated robust growth in terms of the commercialization of NURTEC, an important maturation of our late-stage neuro innovation pipeline. We expect continued market expansion of NURTEC in migraine and anticipate at least 4 pivotal trial readouts over the next year. We have the potential for multiple NDAs over the next couple of years, an important growth as a company ahead.

Before opening up to Q&A, I'd like to end by thanking the entire Biohaven team for their relentless commitment and value creation for patients and investors. I'd also like to thank all the patients, their family members and investigators who participate in our clinical trials and help advance clinical care in the area of neuroscience. We must continue to work hard to bring novel treatments to patients suffering from diseases. Finally, thank you to our visionary investors who have helped fund our studies and bring NURTEC to patients.

We'd now like to open it up to questions. Operator?

(Operator Instructions) And our first question is from the line of Charles Duncan with Cantor Fitzgerald.

Okay. Vlad and team, congratulations on a very good year of execution. I had a quick question regarding the current situation with NURTEC in terms of persistence. On Slide 25, you share some data on patient satisfaction. And I guess I'm wondering if you can provide any color on the current persistency that you see in terms of patients and perhaps provide a little bit more information on what that slide tells us.

Yes. Thanks, Charles. Appreciate the question. If you recall back to that open-label 1 year study we did in 1,800 patients that looked at frequency of use and it's exactly what we expected. That was a very large study. And it basically showed that the use of NURTEC mirrored the number of migraines you had per month and up to a certain point that if you had more than 14, you didn't need NURTEC more than every other day, and that was the genesis of our prevention strategy as well as our 8 packs, right, that we know that 8 pills will cover the vast majority of patients' acute needs. And that's exactly what we're seeing and our refill rates reflect that.

So if you have 4 migraines per month, you typically need 4 pills and an 8 pack will last you more than a month. If you have 8, you typically need 8 and that's a month supply. And so without getting into the particulars, we don't disclose the exact refill rate, it's right in line with what we thought, Charles.

Okay. That's helpful. And then regarding the sNDA for prevention and recent filing to the EMEA, I guess, I'm wondering, is there any color you can provide on the interactions with the agency regarding that sNDA or any new observations or trigger points that cause you to file the EMEA for the dual filing or dual use recently?

Yes. What I can say is just like we were in a similar spot last year with our acute, we're in the same kind of spot in prevention. We're past our mid-cycle review and have not received any comments past mid-cycle. So we'll take that as a very encouraging sign. And the U.S. package really formed the whole basis of the European dual acting. In Europe, we wanted a new special indication, and we were waiting for the prevention data and the U.S. filing to be complete and then submitted that in Europe, where we think the dual-acting is going to be very important to differentiation. So right after that there, we would like to come out with the first dual-acting in Europe. And by then, hopefully, we will have that indication in the U.S. as well.

Our next question is from the line of Paul Choi with Goldman Sachs.

And let me also offer my congratulations, not all beyond the quarter, but a great 2020 as well. I want to maybe start with 1 commercial question. And just can you maybe just comment on recent trends and what the sales force is hearing on the field -- out on the field, is the reopening increasing the level of engagements or is the authorizations and co-pay is still deductible still so sort of normal trend here.

Yes. Thanks, Paul. I'm going to turn it over to BJ to answer that question.

Yes, Paul, thank you for the question, and it's a good one. Obviously, we know there's been kind of this impact from what was the COVID surge, there's a general Q1 seasonality. But at this point, because of the decline, frankly, in numbers, offices are opening up, clinicians are starting to see certainly more patients and we're actually very bullish about that. The hope, obviously, it accelerates. That's what we're pushing to see. But what we like the trend we're seeing currently and don't expect to really see anything go sideways in the coming weeks.

Yes. And I just want to add to that, that when you look at last year's performance, which really was remarkable for any launch year, that was done in this very difficult environment. And so the team had demonstrated that we can launch and do well in the most difficult environment. As BJ said, we're seeing things finally start to open up with rates decreasing with COVID, and we think that's going to only increase our outlook. When we were back in early fall, I think we actually expected even a higher net revenues by fourth quarter, but we really -- the country got hit hard by a surge in COVID late fall, early winter and that did decrease access to physicians offices. Despite the fact we did very well, we think we would have done better if it wasn't for COVID. And now as we're loosening up from COVID, we're seeing the increase in access again. So I think those are all really exciting and optimistic signs that we should continue to do well as COVID relents.

Okay. Great. That's very helpful color. And then as my follow-up, I want to ask a regulatory question on the MAA filing. Specifically with how you guys are thinking about sort of book ending the stop and starts and just what sort of the review cycle length might be with the EMA? And then if they have questions on one of the indications -- one of the U.S. indications versus the other, does that put the other one at risk if it's -- potentially even if it's clean?

Yes. Great question, Paul. Appreciate it. So we had previous discussions with EMA before submission. So we had an ability to assess the dual-acting indication and that's where we landed on. So we're confident that, that package is independent of the U.S., if I understand your question correctly. So they'll view it according to the regulatory guidance and our interactions with them, independent of what happens in the U.S.

And time lines, we're not going to go into specifics. Obviously, there's a competitive nature to others knowing exactly when we might launch in Europe. I think today, we disclosed for the first time that we have been through the validation process, our filing has been accepted and we can't give specific guidance on approval dates just yet, but thanks.

The next question is from the line of Tyler Van Buren with Piper Sandler.

Congratulations on all the progress. I just wanted to ask about a couple of topics. The first one is just a follow-up on Jim's comments with respect to patient deductibles and prescription reauthorizations in Q1, which could potentially affect the gross net quarter-over-quarter. Is that pretty standard impacts that you see with other drugs or is there anything specific to NURTEC, maybe perhaps with respect to the reauthorizations?

And then the second topic is on, once prevention becomes available, hopefully, with an approval here relatively soon, how does the sales message change? And does winning contracts become that much easier now that you guys are approved for 2 indications relative to UBRELVY?

Thanks, Tyler. I'm going to turn it over to Jim for the first part of the question and then I'll handle the second. Jim?

Tyler, and thanks for the question. So as it relates to gross to net in the first quarter, so as we said, it's -- it really is just the nature of our business, and these are -- things like deductibles, patient deductibles and prior authorizations is really a reset. When you start out the new year, deductible start over and the prior auths have to be collected again, and that's really what's driving that impact this quarter.

Thanks, Jim. And so, Tyler, on the messaging around the dual-acting and prevention, I think you saw the first glimpse of that in some of the slides today. Look, we're trying to be disruptive here and we have for years with this strategy and having this in mind, we don't want to talk about acute and prevention and a post prevention approval. We want to talk about finally the treatment of migraine, period, right? That's what's disruptive. That's what -- that's what nobody else has in their strategy. And even if others pivot to that strategy, which I think in future years they're going to try to do that, we're going to have a significant lead in that area.

And Tyler, look, you've written about your own migraine and your own experience with and I think even from a patient perspective, the simplicity of one pill that can treat your migraine that you can be in control of the frequency of use, you need it for acute therapy. If you have infrequent migraine, you'd only need it a couple of times or a few times a month. If you have very frequent migraine, then you just increase the frequency. But just think about the simplicity for patients and the empowerment of one drug that does both, and there are significant payer advantages there, too. You're not paying for multiple drugs, and that's going to be our focus.

With regard to the payer and the managed market landscape, we do think there's an advantage to already being approved in acute. And look, we show that in the slide with the mAbs, right, more effective acute treatment, we believe decreases quantification of migraine. So we think, an important part of an approval in prevention, A, is making sure people first appropriately treat their acute episodes and only those who really need it more frequently should be using it in the every-other-day paradigm. So we're excited about disrupting the current status quo, both in how you think of the treatment migraine across the spectrum, but also, how do we make this first-line therapy, and it should be. When you talk to patients, listen to their experience on triptans, listen to their experience on CGRPs. It's night and day. These patients don't talk about there being a slight difference. The 1,000 social media communications we receive every single week now, these talk about changes in patient lives, not subtle differences. This is a paradigm shift, and I think people are finally realizing. Thanks, Tyler.

Our next question comes from the line of Laura Chico with Wedbush.

I just -- 1 question we keep getting is with respect to the 1Q trends. And just out of curiosity, could you talk a little bit about perhaps your current sampling efforts? And I know you've mentioned a couple of broader dynamics that could be potentially impacting gross net in the first quarter, but kind of curious how you might have been shifting your strategy in recent weeks?

And then a second clarification question, just on the term loan with Sixth Street. You mentioned the revenue provision was dropped. Any additional color you can provide there? I think you mentioned the 4Q trends, but curious if there was anything about the first quarter that's being observed that contributed there?

Yes. Thanks so much, Laura. Just on that second piece right after that. Due to the strong fourth quarter performance, Sixth Street believe we were already in our trajectory to hit the revenue requirement and so it was a pretty straightforward discussion to get it removed. And so we'd like to thank Sixth Street for being proactive and working with us to remove that. So that was accomplished pretty easily. Jim, do you want to add anything to that?

No, I think you summed it up. They saw it as we did in derisking the situation and we move forward with them on that.

Yes. So look at the first quarter, as we've kind of told folks previously, look, you can expect some turbulence around these GTNs, but overall, you're going to see improvement over time, right? And first quarter, no stranger to headwinds of every single launch, and every single company talks about this, right? First quarter projections are always take a little bit of a hit because of the need to start the calendar year over with new deductibles, new prior offs and there are programs that we institute to make sure access continues despite those headwinds and then that typically lets up the rest of the year. There's nothing more than a normal dynamic around that, that we expect for this year. BJ, anything else to add to that?

No. The other thing I'd say is just to support that as the sampling strategy is the same, Laura. We've continued to make samples available to our primary customers. And we also see a bit, right -- especially in the last couple of weeks, a bit of a hit to overall prescriptions, not just within our own area but across the industry as a whole because of holiday and severe weather, right? There's just an impact there. We expect that to bounce back, frankly, this coming May.

And so that's a good point. Whether it's COVID or if it's severe weather in Texas, closing out big markets, access will always impact your RXs, and we see that across therapeutic areas. And again, I think looking forward to the coming weeks and quarters, as those things relent, we should see a nice spike up in scripts. So thanks, Laura.

Our next question comes from the line of Marc Goodman with SVB Leerink.

Jim, I know you don't want to give spending guidance, but can you just give us a sense of how we should be thinking about spending this year? Just any comments you can make? And then, Vlad, the life cycle extension indications for NURTEC, I was curious if you could help us understand a few of these and how big they are, like pediatrics, which I would think would be pretty interesting just given there's no pediatric with triptans, at least, I don't think there is. And -- but also a couple of the others just help size them and how fast do these ramp up? And are we seeing off-label on them now? Or are they really that much additive?

Thanks, Marc. Jim?

Yes. Yes. Thanks, Marc. Yes. So as it relates to spending, you're right, as we don't give guidance, I can't go into any type of detail here. But I think as we've said before, our commercial organization that we have in place is fully staffed. And as far as our overall commercial spending, we will continue to invest in the brand as we move through 2021. You've seen the success that we've had and the success of the programs that we've been running. So we'll continue to invest, but we can't go into details on the level.

And Marc, we're particularly excited about the life cycle management of NURTEC, and we have an amazing team here at Biohaven that's done this with other large brands. And what's really important in this life cycle management is you have some very low-risk ventures that should quickly lead to sNDAs and approvals and expansion and then some higher risks, which give you even further upside. And that's important as an organization because as you know, that most analysts and investors have focused just on acute in the U.S. That kind of total $4 billion to $5 billion in projected sales just on acute, does not even layer in these other indications, right? And so you can very substantially increase our upsized revenue by just expanding your label. And in a very disciplined way, we've started with the low-risk ventures that are kind of migraine related and then go into some non-migraine indications that provide even more significant upside. Some might say it could be even bigger upside than migraine itself, right? And none of that's been factored into, I think, our valuation.

So prevention is one aspect of life cycle management and unifying the treatment of migraine and then already begun and well underway in enrollment is this pediatric effort. We get called by so many individuals in the pediatric age range who want access. And as you pointed out, triptans haven't been successful in this area and the side effects and the profile for adolescents who are school age really important that they're not burdened by that. So that's another major priority in a very important life cycle expansion for patient need but also future revenue.

And then just an idea of some of the pain-related disorders, I mean things like post-traumatic headache and when you think of mild concussions in this country and the number of individuals who suffer headache in ensuing weeks and time period, that will be a very large and important indication to pursue. There's other pain disorders, including things like TMJ pain, there's cluster headache, there's trigeminal neuralgia, there's a whole host of them. And many of them have either begun or about to begin, and we think will substantially increase the upside of NURTEC.

And then outside of migraine, following the science of CGRP, very robust science about this mechanism and it crosses over into non-migraine indications where the immune system and the nervous system interact with one another, and psoriasis is one example of that. And I think everyone of this mind is familiar with how large of an indication that could represent, and we've already started our proof-of-concept with the leading psoriasis research ever now and the study is underway. And this year, we're looking at a study in asthma, right, another large market indication, and there's others that we're not going to disclose. I think we're comfortable disclosing those 2 because we're well underway in their initial studies. And so we already have a competitive lead there and being in those indications. But there are several others that I think likewise, people will be happy with the size of the market.

So when you look at our life cycle management, we're going to deliver. So BJ and team can call on all these other indications and really grow the size of this market. So thanks, Marc.

Our next question is from the line of Vamil Divan with Mizuho.

Following up on a couple of those. The one question we get is just around this prevention approval here in the U.S. and is there any sort of off-label use that you sense from that or -- and I guess, maybe on the other side, potential approval, do you see a big sort of catalyst to prescription trends based on that approval? Or is it something that's going to take a little bit more time to kind of really come through in the prescription data?

And then on the spending side, and, Jim, I appreciate you can't give into too much detail, but I'm just trying to maybe better understand just how this past year went because of COVID and not having as much of the in-person interaction. So I guess, was there a lot that you sort of saved in 2020 that we should now assume you're going to be spending as you go into more in-person sort of activity in 2021? Or did you pretty much spend where you thought you would have been, so you're kind of already on the normal sort of trajectory we should forecast going forward?

Thanks so much, Vamil. Really appreciate the questions. So on the prevention front, I think when we talk about positions, they are appropriately conservative saying that, look, many of them are staying where they're waiting for the formal indication. We don't see a lot of off-label use. And any off-label use, we think, is pretty minimal at this point. Look, from the slides of the triptans, this is a huge common disease market in acute. You're just seeing the very beginning of the acute story here. And no, we don't think there's much in prevention right now.

So upon approval, there's 2 dynamics that I think as we get rid of these 2 categories, we like to see acute grow in prevention because people with more effective acute treatment should have less need for preventative agents and then those who need to increase the frequency or those that we already know have such a high frequency they need every other day, obviously, in the label, we'll be able to compete for those patients. So we think there'll be twofold increase post prevention, one in acute market share and then one in going head-to-head for the prevention patients. So really excited about that approval. That's coming up. And Jim, I'll let you comment on second half.

Yes, sure. Vamil. Yes, the way I would answer that is the COVID impact did not result in us cutting back on program spending. It's just really a reallocation of programs. We didn't have the in-persons as we had hoped, but we reinvested those funds in other programs that gave us visibility and access.

Thanks, Vamil.

Our next question is from the line of Tim Lugo with William Blair.

You mentioned a potential European partner for NURTEC. And obviously, with your filing now in place, it seems like you would want to sign one this year. Is that a goal for the team? What does your ideal partner look like? And is there a chance you do launch in the region yourself?

Yes. Thanks. So look, region ourselves, other than areas where we have distributors that can easily do that, it would be more ideal to have a partner. We don't want to have the increased infrastructure spend globally. We think it's better suit in the efficiency that with the right partner. We can't disclose too much about that other than there's 2 sets of partners that we've seen. One is strong people in a particular region and others are global multinationals that you would have one partner with. Look, we have to do what's best for our investors there and so we'll appropriately assess those 2 types of different partners. Basically for efficiencies, having one global partner would have some advantages, but there are some regional partners that are very strong in Europe and other areas. So we'll balance those 2. Thanks, Tim. Appreciate it.

Our next question comes from the line of Sumant Kulkarni with Canaccord.

Nice to see all the progress at the company. I have a couple of questions. First, as the company prepares to blur the lines between prevention and acute treatment of migraine, how should we think about the potential of the sales per prescription metric to stabilize? At what point the discretionary contribution to the gross to net difference might go away? And second, conceptually, what is the company thinking about the potential to use Kleo's antibody tweaking strategies to have applications and studying monoclonal antibodies across the blood-brain barrier in a more efficient way? I'm asking this because of what opportunities and valuation potential might get unlocked, especially relative to neurodegenerative diseases?

Thanks, Sumant, I really appreciate that. BJ, do you want to...

So I'll start, if I can, Sumant. So we're -- again, we're very excited as it relates to the opportunity with what will be the preventive indication and this dual strategy that we talked about. And I'll start with generally kind of a coverage perspective, and then maybe Jim can speak to the gross to net side. But we're confident that, that dual-therapy strategy will facilitate broad access for patients with the indication, and we expect to continue to maintain what is the excellent coverage that we secure it for acute. And our strategy will make sure that we're aligned from a gross to this kind of goal standpoint, if you will. The method is proprietary at this time, but we'll certainly execute against that.

Yes. And I think on GTNs, we expect them to improve throughout the year. We're not going to provide additional granularity that Biohaven Labs is extremely excited about this platform. And Sumant, it's not just about getting it into the brain and yes, there are certain ways you can do that. We are also this signifies our appetite for other indications that are not CNS based. And so there's a number of ways you can bioengineer antibodies across therapeutic indications to optimize them. So when you think of biosimilars, think of this as a biosuperior approach. You could take existing antibodies bioengineer then make them better, right? That are meaning more efficacious or less the side effects. And then the degrader technology. Anytime you have an extracellular protein that's causing disease is technology in a very unique way gets your body to use the liver to degrade those proteins. And there are a number of degrader technologies out there that are intracellular, this is an extracellular that could be complementary. So thank you, and I think we have 1 last question, and then we'll have to end.

Last question is coming from Douglas Tsao with H.C. Wainwright.

Appreciate you sneaking me in. So just, Vlad, on the CGRP program, obviously, you have a lot of sort of life cycle management or programs and developments. I'm just curious in terms of the profile that you're looking to get with the oral formulation of zavegepant, do you think that could be faster than the intranasal or what would sort of be the targeted for that? And then also with the Heptares program, I'm just curious if you can provide us any color in terms of what you're looking to do with that program as well? Just obviously, a lot of -- it's a great target -- CGRP is a great target, but you've got a lot of sort of irons in the fire.

Thanks a lot, Doug. Really appreciate the question. So the whole CGRP franchise represents multiple assets with different PK profiles that could suit these different disorders. So zavegepant will be important from a lot of the non-migraine indications because there where you're not treating -- like when you think about acute migraine, speed of onset is important, but you'd want a different perhaps profile for other indications. So think of asthma that's more chronically treated or even psoriasis, right? So your profile would be different. So there it would allow us to have a separate CGRP for those indications that optimize for those versus people with migraine, we're going to want the ODT, the quick onset, the durability in those aspects and so zavegepant just gives us maximum flexibility.

And then the Heptares. As such, we brought in and partner with Heptares on, look, we know this mechanism really well. And there are certain indications that we haven't disclosed yet, where we're going to want alternate formulations and the Heptares molecule is unique and has some attributes that zavegepant and NURTEC don't have. So without disclosing those, this morning, we ever eyes set on some other indications for that compound. And what you're going to see is following the science across all these different disorders and we're one of the few companies that has so many of these late-stage CGRP assets that we can use different ones for different indications and optimize its use there.

So thank you, Doug. And thank you, everyone, for joining us today. We deeply appreciate the support of our employees and investors as we move forward to deliver life-changing therapies to patients. And I can't wait to speak to you soon in the next quarterly report. Have a good day, everyone.

This concludes today's conference. Thank you for your participation.