Helen Torley: Super. I’ll ask Nicole to address that.
Nicole LaBrosse: Yes, thanks for that. So, we had included in our forecast the expected step down related to O-U.S. sales for DARZALEX SC. So, that is part of our plan. It’s the driver for our forecast, which demonstrates that we expect Q1 and Q2 royalties to be relatively flat with where we exited 2023. So, that’s why you see that phenomenon in our expectations for 2024 is that Q1 and Q2 will be flat. But because the brand is expected to grow, that will offset that royalty rate reduction, and as well as continued growth with Phesgo, our other Wave 2 product. And as you mentioned, contribution from our Wave 3 launch products, and that’s what gives us the confidence to project sequential growth in the third quarter and the fourth quarter of 2024, allowing us to achieve our total royalty projections for the full-year of $500 million to $525 million.
Mitchell Kapoor: Okay, great. And separately, could you just provide any update on progress towards a next generation ENHANZE technology, or is that something that’s a little further away?
Helen Torley: Yes, we, a couple of years ago had talked about having a more room temperature stable in ENHANZE, that we have been talking to different current partners and potential partners about. It’s a different structure than ENHANZE, and it has slightly more extended into IP to 2032 in Europe, and 2034 in the United States. And because the majority of products we continue to work on, Mitchell, are products that need to be refrigerated, such as antibodies and bispecifics, we have found that there, so far, is limited interest to a new ENHANZE. Our current ENHANZE does everything people it to do. And importantly, it’s coming with an 800,000 patient database now establishing the safety, and the very strong regulatory track record of success around the world with multiple approvals in up to 100 countries.
And so, I would say that because ENHANZE does everything people need and the products have to be refrigerated anyway, we haven’t seen traction with it. I do think, in the future, if we had a small molecule where the goal was that the patient would be able to carry and often get around with them, that might be the type of product that the partners would want to use the additional ENHANZE for, but that’s a very limited opportunity. And so, far, while we’re in discussions, we haven’t advanced those discussions.
Mitchell Kapoor: Okay, great, that’s super helpful. Thank you, Helen. And thank you, Nicole. Really appreciate it.
Helen Torley: Thanks, Mitch.
Operator: Your next question comes from the line of David Risinger with Leerink Partners. Please go ahead.
David Risinger: Yes, thanks very much, and thank you as well from my side on the updates. So, my questions have been asked. I just have one more which is, the company spent $19 million on R&D in the first quarter. Is that basically the run rate that we should be expecting going forward, so maybe $75 million-plus a year? And could you just provide some more color, I think that is primarily on ENHANZE, but I’m not sure. Could you just help us understand that spending, whether it’s for internal activities of innovation, whether it is spending to help partners develop their products, just any more color on that would be helpful?
Helen Torley: Yes, Nicole will address that.
Nicole LaBrosse: Yes, happy to, David. So, your first question on the run rate, I will say that the oomph you saw in the first quarter are expected to grow for the remainder quarters of the year as we make investments in our product development, and so, that I would advise you to build that into your models as well, growth from the amounts that you saw in the first quarter. And where we spend our R&D dollars is on the ENHANZE side, as well as the HVAI development. We’re making investments in the development of the high-volume auto-injector this year. And so, that is another driver of the expenses that we see in this year.
David Risinger: Thank you. And could you just add a little more color, since ENHANZE is going off patent in 2027, what is the product development that you’re doing in the R&D line?
Nicole LaBrosse: Yes, one example, and we’ve talked about the higher yield API that we’re making investments in that are expected to be available to our partners in 2026. That is a good example of the investments we’re making that will benefit our partners, and in particular their cost in buying the API from us.
Helen Torley: And, David, I’ll just mention, while the U.S. patent is expiring in 2027, that’s basically the composition of matter patent. As we have shown, we expect, based on co-formulation patents, that we’re going to continue to receive royalties on all of our royalty streams until 2030 for many of them, beyond 2030 for a number of them, and beyond 2040 for another. And so, we have got very durable revenues. And so, it does make sense for us to invest to have the best and lowest cost API because we have got 20 years still ahead of us, or plus that, for our product, ENHANZE. And so, it’s a very wise investment given the durability and length and long stream of royalties we are expecting.
David Risinger: Got it, thank you.
Operator: And our next question comes from the line of Joe Catanzaro with Piper Sandler. Please go ahead.
Joe Catanzaro: Hi. Yes, thanks for taking my question. I had maybe a quick that maybe goes back to the discussion around Tecentriq Opdivo subcu, as it relates to the early days of Tecentriq subcu in the EU, wondering if you have any early data points there on conversion rates, where you’re seeing news, I guess, within indications and settings and then, maybe stepping back more generally. Is it fair to assume what we see around the Tecentriq subcu trajectory will be comparable to maybe what we will ultimately see for Opdivo subcu in the 2025 timeframe? Thanks.
Helen Torley: Yes. Roche has not provided a lot of details. They did on their fourth quarter call, talked about the fact that after one quarter in the U.K. they’d seen 18% conversion, which I think is a very strong performance for such a short period of time. But since the European launch in January, they haven’t talked about the conversion, and we call for Europe, we are going to see countries rolling out over the course of the year as reimbursement is obtained. So, we look forward to Roche providing some updates on that. With regard to comparing the uptake for Opdivo, Tecentriq is going to have a different cadence of the timing of approval, but I think you have to factor in as you’re thinking about that, because Tecentriq obviously is going to have Europe going first, U.S. coming nine months later.
I would have an expectation that we still have to see based on what Bristol says about the Opdivo European file acceptance, and launch timing. That will be closer together. Apart from that, I think their factors are probably going to be pretty similar in terms of strong value proposition, where patients get the opportunity for treatment in just five minutes approximately instead of up to 60 minutes. And strong patient preference for Tecentriq that we can talk about, where 71% of patients preferred subcutaneous Tecentriq really exciting, less time in clinic, the administration of the subcutaneous was much more comfortable for them, and the treatment was less emotionally distressing for them. And so, all of those are good factors, but I think the launch cadence might be one of the factors that would make these launches more identical, but strong value proposition for both.
Joe Catanzaro: Okay, great. That’s helpful. Thanks for taking the question.
Operator: Thank you. And we have reached the end of our Q&A session. Thank you, presenters. And ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
