Calliditas Therapeutics AB (CALT) 2022 Q1 法說會逐字稿

Hello, and welcome to the Calliditas Therapeutics Audiocast with Teleconference Q1 2022. (Operator Instructions) And afterwards, there will be a question-answer session. I will now hand the call over to Renee Aguiar-Lucander, CEO. Please begin your meeting.

Thank you very much, and welcome to this Q1 2022 report from Calliditas Therapeutics. If you turn to Page 2 of the presentation, I would like to draw your attention to the disclaimer page related to forward-looking statements and refer you to the company's reports and other filings, including those which contain risk factor and other relevant sections of our public filings.

On this call today, I am joined by Andrew Udell, President North America; and Fredrik Johansson, Chief Financial Officer.

So if you turn to Page 3. So as you are all aware, it's the last quarter, Calliditas Therapeutics Q4, I would say, achieved a historic milestone in our history. We had our first commercial product approved in the U.S., and it was the first time that the cardiorenal division of the FDA gave an accelerated approval in a renal indication based on a target marker of reduction of proteinuria. And also this became the first approved product for this rare indication. And I would say due to excellent internal collaboration, commercial product was available very quickly. And we were in a position to ship commercial products already in late January, taking into account that we had obviously Christmas and New Year holidays in-between.

And so the results from the first 2 months of commercial activity is $1.9 million of net sales in terms of TARPEYO, and we believe that this reflects an excellent start to our commercial launch. And we are very encouraged by the strong level of interest and engagement that we're seeing. And Andy will provide you with some more details regarding this later on in the presentation.

If you turn to Page 4. So just a reminder of some of the backdrop of the IgA nephropathy market. As I mentioned, this is a rare disease with around 50% of those patients diagnosed continuing to be at risk of progressing towards end-stage renal disease, which means dialysis and transplantation, despite receiving optimized supportive care. In terms of the prevalence of this rare disease, we've estimated to be about 130,000 to 150,000 patients in the U.S. And therefore, this result is in kind of this core market of 65,000 to 75,000 patients taking this progression rate or risk rate into account.

It is an extremely well-established supportive care paradigm. And according to Spherix research, about 50% of patients are already on RAS blockade, that means blood pressure lowering agents, so this is the supportive care by the time that they get to a nephrologist. And these specialists then ensure that these patients are on optimized care by providing individual dose titration based on the specific patient characteristics and needs. We also know that there is a clear correlation between higher levels of proteinuria in this patient population and the rate of disease progression.

And so we do know that patients with higher levels of UPCR have a worse prognosis and outlook, and we therefore believe that physicians might be especially focused on these patients, which then might have seen a decline in eGFR already and may be experiencing more rapid disease progression. And again, finally, obviously, this has never been -- nothing has ever been approved in this indication previously. There is no CD-10 (sic) [ICD-10] code available, and so obviously, this is a market that is in development.

So we turn to Page 5. Other things that happened in this quarter, We also saw the expansion of the in-licensing agreement we have with Everest Medicines to include South Korea. This resulted in a $3 million upfront payment. We're also very excited about the upcoming regulatory filing in China in the second half of this year with a potential approval of commercialization taking place therefore already next year, obviously subject to [probable] approval. We also in this quarter saw the first patient dosed and the pivotal PBC trial, TRANSFORM, which [were first seen] at the end of last year. And we're looking to enroll 99 patients in total in this global trial across up to 150 sites and plan to conduct a futility study in 2023 when the 99th patient has received 24 weeks of treatment.

We turn to Page 6, some of the post-period events. So in the publicly available CHMP agenda for May, Calliditas is listed is up for an opinion for conditional approval of Nefecon in Europe. And so we expect to receive notification of the outcome of the CHMP discussions after the conclusion of this session, subject to receiving a positive opinion and approval and issuance of marketing authorization, which then would be taken by the European Commission, we would expect to then see that in Q3. As for previous communications, STADA is our European commercial partner, and as such, is responsible for the commercial launch and related activities in Europe.

As previously mentioned, obviously, we continue post kind of period to see positive trends in development from our U.S. commercial activities as well as the continuation of P&T committee meetings, and we have a positive outlook on the continued commercial success of TARPEYO in the U.S., but we're still obviously at a very early stage of our launch.

Regarding setanaxib, we also announced yesterday that we now have also dosed the first patient in our Phase II proof-of-concept trial in head and neck cancer, and we look forward to continuing enrollment with the target of providing biomarker data on interim basis before the end of this year. And just to remind you, this is a placebo-controlled Phase II trial, which is targeted to read out next year. And related to this, we're actually excited that research articles related to setanaxib's effect of CAF, of cancer-associated fibroblasts, was part of the illustrious group of most-cited articles from the American Association for Cancer Research journals in '21 and '22.

And with that summary, I'm going to hand over to Andrew Udell, our President, North America, who will take you through some more details regarding our commercial activities this quarter.

Thanks, Renee. So on Slide 7, I'm excited to share with you our progress on the U.S. commercialization and launch of TARPEYO.

So let's go to the next slide, Slide 8. As a reminder, the U.S. represents a large market with a substantial unmet medical need. Disease prevalence for IgA nephropathy is estimated between 130,000 and 150,000 with over 50% of the patients progressing to end-stage renal disease. Prior to the launch of TARPEYO, a large survey of nephrologists estimated 65% of their IgA nephropathy patients are likely to progress to dialysis. And as Renee stated earlier, we estimate our core market to be between 65,000 and 75,000 patients. In addition to the size of the market, end-stage renal disease, which includes dialysis and transportation, is extremely debilitating and costly, costing hundreds of thousands of dollars per patient per year. As a result, -- you can imagine, prior to the launch of TARPEYO, in a survey of 188 nephrologists, the majority indicated the feeling that no or few treatment options were effective for these patients.

Next slide, please. Calliditas has been preparing for the approval and launch of TARPEYO for a few years. We were ready to hit the ground running once gaining FDA approval in December. Our commercial leadership team has extensive relevant and successful launch experience. In addition to our in-house team, we have partnered with the industry's top companies, consultants and agencies to ensure robust, efficient and impactful launch for our first-in-class product. Our sales force was onboarded, trained and deployed prior to the end of January, just 5 weeks after approval. And not only did these representatives come to us as veterans of rare disease and specialty sales, but the majority joined us with nephrology market relationships and experience. In addition, our market access team of national account managers were in the field prior to our approval, and as you'll hear in a bit, have done an outstanding job working with the largest payers.

Slide -- next slide, Slide 10, please. At approval, we launched our White Glove full-service patient and provider support program called TARPEYO Touchpoints. The full-time dedicated care navigators and designated Rare Pod Team has been essential and successful with patient communication and navigation of benefits investigation and verification process. In addition, the integrated hub and specialty pharmacy model at Biologics has been able to ensure that all appropriate financial assistance programs are applied for the appropriate patients.

Next slide, please. So as a reminder, we were FDA-approved on December 15 and announced our first sale and prescription filled near the end of January. After only 2 full months into our launch, independent from our marketing and digital programs, our sales force has directly contacted or reached over 4,000 nephrologists. At the end of March, we had attained 134 unique patient enrollments, and the patient enrollment includes a physician-written prescription and an enrollment form to our hub, and these came from 111 unique prescribers. And as Renee stated earlier, our net sales for Q1 was USD 1.9 million.

As we are now in mid-May, I can say that our enrollment and number of unique prescribers continue to grow at an accelerated rate. And I should note that all of this has occurred prior to the very recent initiation of a branded promotional campaign, which required preapproval by the FDA prior to launching. Market research and early feedback for this campaign -- of this promotional campaign and program has us very encouraged on the impact this will have.

Next slide, please. So how have we done on the market access front? As is common for most all launches, health plans take on average around 6 to 9 months to review a new product for coverage and formulary replacement. As of our first 4 months, we are pleased to report that several key targeted large accounts, including Cigna, Express Script and Humana, began covering TARPEYO on their predominant formularies.

In addition, TARPEYO is covered by Medicare Part D and Medicaid patients with the mandatory coverage date of April 1. We estimate at the end of April, over 50% of all U.S. lives have coverage for TARPEYO. We are -- while we are certainly pleased with our progress, I need to stress that prior to payers establishing coverage policies, the medical exception process still enables appropriately deemed patients' access to TARPEYO. And as mentioned, our patient services program, TARPEYO Touchpoints, helps navigate the process for patients and physicians. And really impressive as a result to date, only 1 enrolled patient in a program has canceled due to a payer and coverage issue.

Next slide, please. Since our launch, we remain impressed and encouraged with the inbound inquiries, patient awareness and enthusiasm that has been expressed on social media and through the patient advocacy groups. This is an extremely motivated and dialed-in patient audience that has thirsted for a treatment specifically designed for this rare disease.

Next slide, please. So in summary, during this initial period, we remain extremely pleased with our results and progress. I am confident we have the right team of launch experts in place that have and will continue to execute our plan. the positive trajectory and trends, coupled with the recent launch of our branding campaign, has us enthusiastic and encouraged.

I would now like to turn it over to Fredrik to review our financials beginning on Slide 15.

Thank you, Andy, and good afternoon and good morning, everyone. I will now present to you the financial overview for the first quarter of 2022, and all numbers presented to you are in million SEK.

To start with, we present SEK 49.7 million in net revenues for the period. For the same period last year, we did not report any revenues. This is the first quarter we report net product sales following the TARPEYO FDA accelerated approval in December last year. And out of the SEK 49.7 million in net revenue, we are proud to present that net product sales from TARPEYO in the quarter amounted to SEK 18.0 million. During the quarter, we also received an upfront fee from Everest of SEK 28.8 million, which is approximately $3 million, for the extension of the Everest license contract to South Korea.

Our total operating expenses for the period amounted to SEK 257.5 million compared to SEK 150.8 million for the same period last year. Out of the total operating expenses, marketing and selling expenses increased by SEK 74.5 million to SEK 93.9 million compared to SEK 19.4 million for the same period last year. Increase in marketing and selling expenses originates from us having a full commercial team in place from the start of Q1 this year, including our sales force compared to the same period last year when we were early in our journey picking up for commercial capabilities.

The cost for research and development increased by SEK 23.2 million to SEK 113.3 million compared to SEK 90.1 million for the same period previous year. The increase in R&D expenses originates primarily from the preparations for setanaxib and ongoing operations, I should say, for setanaxib trials, where we just randomized the first patients in the head and neck trial earlier this week. And now we have the 2 setanaxib trials fully up and running. The administration expenses amounted to SEK 48.5 million for the period to be compared with SEK 39.4 million for the same period last year. The increase of SEK 9.1 million between the periods was primarily related to a general cost increase for administration due to the organization growth and increased complexity, being a company in commercial stage. This leaves us with an operating loss of SEK 208.4 million for this period compared to operating loss of SEK 150.8 million for the same period last year.

The cash flow used in operating activities for the period amounted to SEK 191.4 million compared to SEK 134.2 million for the same period last year. The cash flow from financing activities for the period was SEK 60.1 million, and this is mainly related to the exercise of the Board program 2018-2020 at the end of the quarter. As of March 31, we continue to report a strong cash position of SEK 825.4 million, down from SEK [955.5] million at the end of December. In addition to our cash, we have $50 million remaining unused in the Kreos credit facility for the second tranche of $25 million can be draw down until -- up until June this year and additional $25 million up until December this year.

This successful start out of the gate of the commercial launch of TARPEYO continue to support our view that based on our current operational plan, our current cash position and the amounts available under our loan facility, we believe we have sufficient strength for our plant operations and capital expenditures until we become cash flow positive, which currently is projected for the first half of 2023, subject to continued successful commercialization of TARPEYO.

That was all for me. And now back to you, Renee.

Thank you very much. So we're excited, as you can hear about the start of our commercial launch and believe that we're very well positioned to see continued approvals and commercial success, complemented by exciting data from our pipeline over the next 12 months as we continue to execute on our plan, which we have consistently done over the years. And so with that, let's open it up for any questions from anyone online.

Our first question comes from the line of Yigal Nochomovitz from Citi.

This is Carly on for Yigal. We have 2. First, can you help characterize the initial patients where TARPEYO is being used? Should we assume nephrologists are largely adhering to the 1.5 UPCR cutoff suggested in the label? And any other criteria docs are using to determine whether to try TARPEYO in a particular patient. And then the second question is on the competitive landscape. I guess, can you talk about how you intend to position TARPEYO relative to sparsentan, given that drug could be entering the market potentially by the end of this year.

Thanks. So I guess just a clarification, I will have Andy cover me, but it's -- there is actually not a cutoff of 1.5 in the label. It actually says generally. And so I think there is actually -- it's left up to really the physician to kind of look at what's rapidly progressing at risk [relative] ratings might mean. But Andy, why don't you take the answer to that first question? And I will address the second one.

Sure. I really can't give you specifics other than, as Renee said, there's a guide -- there's an indication, and the physicians have patients that they see that they feel are immediately appropriate. I don't have the specific lab data for these patients. But I can tell you that, once again, the uptake has been quick for many, many different physicians, nephrologists that have these patients in mind when they see them, and they are getting enrolled. And as I said earlier, they're not being kicked out or canceling due to payer restrictions by any means. So that's all that I can really say about these initial patients.

And so with regards to your second question, with regards to sparsentan, I think in order to kind of -- in any intelligent way answer that question, I think we would need to see some data from that trial. Obviously, that would include some eGFR data. It would include, obviously, what concomitant medications were given because, obviously, immunosuppression was allowed in that trial. Also, I think this is obviously a drug that has a fixed kind of combination of kind of RAS blockade. And so again, it would actually kind of mean that physicians would have to really change the way that they are doing things today.

And so I think that we really need all of those things to get a better understanding of how that would impact the market. But again, personally, this is a market that really has had no kind of approved drugs for a very long period of time. My assumption is that there was never anyone who thought that there would only be one drug that would be approved in this indication forever. And I think that there is a lot of room, again, depending on the profile, the label, the data, on what actual kind of patient population may or may not be approved under approval -- accelerated approval.

But taking all of that into account, I certainly think that there's -- as we've seen in many other rare indications, that there's certainly room for 2 and even 3 different approaches. And again, ours is more kind of targeted and local at the actual origin of disease, other ones might be more systemic. So there might be benefits and drawbacks, combinations that will be very valuable for physicians to use. But again, before we actually have some idea of some of these things, it's difficult to be any more specific than that.

And the next question comes from the line of Maury Raycroft from Jefferies.

Congrats on the progress. Just wondering if you're providing any specifics on sales or launch expectations for the rest of 2022? And what can you say about what you're seeing in April and early May so far on the backdrop of COVID dynamics?

So in terms of kind of guidance, I think, actually, I mean, we -- this is not really sufficient. We don't really have enough data because, again, we can't really rely on other products out there or CD-10 (sic) [ICD-10] codes or anything else to really predict. So I think what we want to do is we want to be pragmatic and we want to give some guidance that actually kind of would make some sense. And so from that perspective, it's hard to do, but Fredrik, please go ahead and give you a view on what we kind of can't do from a guidance perspective.

Yes. I think we need to make sure, as Renee was saying, that our guidance is useful. And therefore, I think we need additional months under the belt seeing the trends. So hopefully, we may be possible to give guidance after the second quarter, subject to we see a clear trend. But we have to take that as we go.

Got it. Makes sense. And just a quick question for the -- well, I guess following up on that COVID dynamics, what kind of an impact is that having on the launch so far?

Sure. Andy, do you want to take that?

Sure, sure. I mean we launched in the beginning part of this year. So we -- the environment has been generally stable and consistent since we launched. But I think, as we've discussed before -- and obviously, the results are the results, we feel that we're doing very well. But as we've discussed before, we hired a very experienced sales force and a lot of them have already been in this nephrology space, the majority of them. And so we really have gotten access. There's a lot of interest and the uptake, as you could see by so many unique prescribers, they understand the concept. It's not a long process for them to understand the benefits of the product. So we really haven't -- it's hard to comment exactly on the future. But so far to date, we're very pleased with how it's gone.

Got it. Okay. Maybe just a quick question for the 134 patients enrolled. Do these include any patients who have completed Part B of the Phase III study? I guess in those patients leave the study and then go on to commercial drug?

Actually, I don't -- I actually don't -- I don't -- we wouldn't have that information because we wouldn't actually know who the patients are that were part of the trial. We don't have access to that information. So actually, we're not in a position to know that.

The next question comes from the line of Annabel Samimy from Stifel.

Congratulations on the good start. Just curious to know how physicians right now are responding to any of the PA requirements? Are you finding that the steps being put in place are particularly onerous, especially for those payers that you haven't contracted with yet? And I know that you mentioned that physicians aren't necessarily seeing the 1.5 UPCR as a cutoff, but are payers using that as any kind of, I don't know, restriction for any of these patients for coverage?

Andy, do you want to take that?

Sure. So I just want to comment on one thing you said, plans that we haven't contracted with yet. We're not rebating. So we're not contracting really with any plans, so it's just making a P&T decision. But look, TARPEYO is being managed by commercial payers in a similar way to other specialty medicines. And this is as expected. They include -- their management includes typically, it has to be written by a specialist, on-label use, quantity limits and sometimes prior concomitant treatments. So we haven't seen any real surprises there, number one.

Number two is, yes, some are going to require the limits of eGFR proteinuria. They base it on Phase III trial criteria and things of that nature as well. But the easiest thing to say to folks is that people enroll in our program and the physicians are held with this white glove service with our hub. They are the liaise, these case managers between the patient, the physician and the payer. So they can get them through this process. And we haven't been receiving any negative feedback or people dropping out of the program due to payer management. So, so far, we've been very encouraged, and it's all been kind of expected. And that is typical for all products, all specialty products, I should say.

Okay. Got it. And if I could just follow up with some of the feedback that you're getting from the field. Are the -- I know it's too early to say whether patients are responding to the drug. But have you been hearing anything from the field or whether patients are finding the drug to be more tolerable, tolerable than what they've had in the past? So is TARPEYO behaving from a tolerability perspective as we would have hoped for? Do you have any feedback from that perspective?

Yes. Andy?

Yes, the answer is no, no feedback. I mean, once again, it's really early. And everything's been encouraging and positive. We listen on social media and we haven't heard anything negative as far as that's concerned. So, so far, so good.

Okay. And then if I can ask one more question. You mentioned that there's only been one rejection so far. Do you have a sense of what the timing is for most patients to be ushered through the process? How is TARPEYO Touchpoints compressing that time? And is it happening more rapidly than you would have expected?

So I can answer that. We monitor every single thing, and the answer is yes. It's been improving and will improve, and we have metrics and things that we shoot for. I think it's as expected -- remember how this disease is not -- it's not so -- oftentimes, it's very variable. And so the patients as long as there's good communication between patients and physicians, they're in the queue and they will get their prescription. Some -- it's just so -- it can be variable at this beginning stage, especially for the plans and how they're managing this. And so until you get your stride and understand exactly how each specific plan manages it -- the time just only gets shorter, but until you learn to those management sectors.

The next question comes from the line of Rami Katkhuda from LifeSci Capital.

Two quick ones for me. I know it's early, but given that TARPEYO is kind of the first approved therapy for IgAN, do you expect the bolus patients early on or a more consistent growth of enrollment forms over time?

Andy, do you want to take that?

Yes. I think the answer is there's really been no bolus. I think we're judging it as -- remember, these patients go to see their physician 3x, 4x a year. And it's at that point that they're being assessed on their progress, their decline in kidney function, their eGFR and proteinuria. And it's at this point that they make changes to their prescriptions and their treatment. And so I think that the biggest takeaway that you should get from this is that there's so many unique prescribers that the adoption is quick, okay? It's not that they have -- it's not like that they're calling up everyone in their database and their practice and getting them to run in for a prescription. It's during the cycle, they've immediately adopted and understand where this product fits and how it benefits the patients.

Got it. And then since IgAN patients are generally younger, do you guys have any estimates on what percent of the patient population is covered, excuse me, under commercial plans versus Medicare?

The only thing I could say to that is the market, that it's too early to give any real sense of anything. And we just know from overall market data -- syndicated data before we were available that it's in the 65 to low 70s as commercial. So I would assume that the trend would be the same since that's the overall population mix.

Next question comes from the line of Dan Akschuti from Pareto Securities.

Congratulations for the impressive start. Just one small question, it's on the FTEs you have currently on the sales force. And if you plan to expand that and if we should look forward to any specific marketing campaigns, promotions that you have planned?

Andy, can you take that?

So -- yes. So look, it's early. We've always said before we launched, we had as much data as we possibly could being first to this space without an ICD-10 code and a lot of real granular information since everything was treated with generic blood pressure lowering medicines and those kind of things. It's hard to -- it was hard to really size this perfectly. I still believe that we have sized it correctly. And certainly, we monitor everything during a launch.

We were very close to every single measurement. And so we have certain triggers that if it makes sense and it's going to be -- and optimizing our sales force would be to increase it, then we would consider that? Absolutely. We're just, once again, when you have a product and an accelerated approval, the FDA requires that your promotional campaigns are submitted and reviewed prior to your use. And we're very, very excited that we're just launching an actual promotional campaign, which means the branding and everything right now. This is just going out now. So we're excited to see the impact of that. And we -- once again, it's 9 weeks of sales force being -- calling on physicians so far. So we're -- it's too early to really give definitive answers on anything like that.

Okay. And just one follow-up question. It's -- did you -- you mentioned in the slide, you see that the acceleration after Q1. Do you continue to see that now in May as well?

I think that, that was to date. So once again, we're pleased. We're just trying to give you the trends since the end of the quarter because it was early. So I think that was -- that covers the quarter to today.

If I may, one last question. Did any of the patients that have been given the drug stop the treatment?

I'm not sure that we even have that kind of a -- I mean, it's so early. I'm not sure that we've actually seen that at all. But I don't think -- not as far as I'm aware, actually. I mean, I can go and dig into that. But I mean, I don't think that we've gotten to the point yet where that would actually kind of be the case.

And we have one more question from the line of Johan Unnerus from RedEye.

Congratulations. It's a good start. And also, it's sensible to not provide a guide at this stage, perhaps, than after Q2. Interesting then with the clarification of the patient profile. It seems to be rather open. Is there any indication that it's been used, how to put this, surprisingly preventative at this stage? Or is it too early?

Preventative, so I think that -- so I think, obviously, in terms of the trial that we ran, this was really 4 patients that are considered to be at risk, and that would kind of follow the inclusion/exclusion criteria of the trial. And so obviously, that is the kind of patient population that is the basis of the approval and the discussion. So I think that it's really within that kind of patient population. And so I think all of those patients would probably be deemed per definition to be at risk.

Yes. And given the early take-up, the prescriber seems to be rather proactive.

Yes. I mean, again, I think we're delighted by the fact that this is, as Andy just mentioned, it is broad kind of prescriber base. We can say that this early kind of in the process, and so it does kind of talk to the rate of adoption here, which I think very encouraging.

It's clearly a lot about covering commercial part of the market. I think you alluded to 65%, 70% of the patient population is likely be from the commercial side, and you have already made good progress. What to expect, this towards the end of the year or midyear in terms of covering commercial life?

So Andy, I don't know if you want to take that, but I think it's difficult to judge. But go ahead, Andy.

No, it's difficult to judge. This is typical. And what's typical is 6 to 9 months post approval and launch to see the majority of them make their P&T decisions. So we're pleased with some -- the speed at some of the larger plans. And I think that we're on target for that time line to have most of the decisions made for coverage. But once again, I think it's real important to understand that just because they haven't made a decision yet doesn't mean that a patient does not have access. There is the medical exception process. And patients with plans that haven't made final decisions yet are still eligible and able to get the product.

Excellent. And finally, sort of a more of a technical point. When do you actually record the sales?

Fredrik?

Yes. We have recorded a sales when the ownership is transferred to a specialty pharmacy.

And as there are no further questions, I'll hand it back to the speakers.

So thank you very much to everybody who tuned into this Q1 presentation from Calliditas Therapeutics, and we look forward to presenting the Q2 numbers to you in August of this year. Thank you very much.

This concludes our conference call. Thank you all for attending. You may now disconnect your lines.