Travere Therapeutics, Inc. (NASDAQ:TVTX) Q2 2023 Earnings Call Transcript

Travere Therapeutics, Inc. (NASDAQ:TVTX) Q2 2023 Earnings Call Transcript August 4, 2023

Operator: Good day, and welcome to the Travere Therapeutics Second Quarter 2023 Financial Results and Corporate Update Conference Call. Today’s conference call is being recorded. At this time, I would like to turn the conference call over to the Vice President of Investor Relations, Naomi Eichenbaum. Please go ahead, Naomi.

Naomi Eichenbaum: Thank you. Good afternoon, and welcome to Travere Therapeutics second quarter 2023 financial results and corporate update call. Thank you all for joining us. Today’s call will be led by our Chief Executive Officer, Dr. Eric Dube. Eric will be joined in the prepared remarks by Dr. Jula Inrig, our Chief Medical Officer; Peter Heerma, our Chief Commercial Officer; and Chris Cline, our Chief Financial Officer; Dr. Bill Rote, Senior Vice President of Research and Development will join us for the Q&A session. Before we begin, I would like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statements. Please see the forward-looking statement disclaimer on the company’s press release issued earlier today, as well as the Risk Factors section in our Form 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made August 3, 2023 and Travere specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, let me now turn the call over to Eric.

Eric?

Eric Dube: Thank you, Naomi, and good afternoon everyone. In the first half of 2023, we made significant progress on our corporate strategy of delivering new treatment standards from our pipeline of innovative medicines for people living with rare disease. Our progress has been led by the ongoing successful launch of FILSPARI or sparsentan. FILSPARI is the first and only nonimmunosuppressive therapy approved for the reduction of proteinuria in adults with IgA nephropathy or IgAN at risk of rapid disease progression. We believe that FILSPARI holds the potential to help 30,000 to 50,000 addressable IgAN patients and our field teams continue to hear from nephrologists that their experience with FILSPARI is reflective of an efficacy and safety profile demonstrated in the interim readout from the PROTECT study.

In fact, last week, I spent a day in the field with a FILSPARI sales representative visiting community nephrologists. One physician shared a compelling patient story about a young woman with IgAN at risk of rapid disease progression and struggling with proteinuria levels above two grams per day despite treatment with several therapies. After a few short weeks until on FILSPARI, the proteinuria level has significantly dropped below one gram per day. The physician noted that these types of results provide them with confidence to prescribe FILSPARI to a greater number of their addressable patients with IgAN. We are encouraged to hear this positive feedback from the field and the nephrologists are both represcribing and proactively identifying more eligible patients to use FILSPARI in their practices.

These insights on physician feedback and demand provide us with confidence in the potential of FILSPARI to ultimately become a new treatment standard for IgAN. In the second quarter of 2023, we executed on our FILSPARI launch strategy and are observing strong performance on the two most important indicators of success, demand reflected in the growth of patient start forms or PSFs and patient access, driven by increasing and broader payer coverage. In fact, we delivered the highest number of PSFs in the first quarter launch since launch amongst other rare renal launch benchmarks. Later this year, we expect to announce the complete results from the PROTECT study that we believe will have the potential to support traditional approval and the potential for a broader label of FILSPARI in IgAN.

The study is ahead of our initial guidance and we now expect a top line readout from PROTECT late in the third quarter or early in the fourth quarter. Looking beyond the US, we continue to work with our collaborator CSL Vifor. Regulatory reviews in Europe are underway for sparsentan in IgAN and we anticipate an opinion from the CHMP around the end of this year. Our top priority is ensuring a successful launch of FILSPARI and we believe that we are off to a strong start. In parallel, we have also continued to make progress on our other pipeline programs. We continue to believe that sparsentan may represent an important treatment option for patients with FSGS. In May, we reported top line results from the Phase three DUPLEX study of sparsentan in FSGS, in which sparsentan demonstrated significant and durable effects of proteinuria reduction, positive trends on eGFR and a well-tolerated safety profile over two years of treatment.

While the study did not achieve statistical significance on the eGFR endpoints, we are encouraged by the totality of data. We are scheduled to meet with the FDA to explore the potential for a future regulatory submission for sparsentan in FSGS and expect to provide an update on that discussion in the fall. Shifting to pegtibatinase. With the recent positive update from Cohort 6, we are even more confident that pegtibatinase represents a significant opportunity for us to help patients with HCU and for our company to accelerate our growth in the coming years. Based on our growing body of market research, we understand there to be a population of approximately 3,500 addressable HCU patients in the US, a similar number in Europe and a meaningful number of patients in additional geographies.

Importantly, over time, we see this addressable patient population potentially increased by 50% or more with the introduction of an innovative new therapy and advancements in diagnostics. This is why we are excited to continue focusing our efforts on this program and we are working towards initiating the pivotal study by year-end. Outside of our innovative pipeline, we recently announced that we have entered into an agreement for the sale of our bile acid product portfolio for up to $445 million, consisting of $210 million upfront and up to an additional $235 million in potential future sales-based milestone payments. This divestment, which is expected to close during the third quarter will meaningfully strengthen our balance sheet and most importantly has clear strategic benefits for our organization.

Strategically, it will enable us to focus even more clearly on the successful launch of FILSPARI and IgAN, pursuing a potential regulatory path for sparsentan in FSGS, the development of pegtibatinase for the treatment of HCU. We believe successfully developing — delivering on these priorities will position our medicines to become potential treatment standards each in markets with billion-dollar potential. Overall for the second quarter I am incredibly proud of our team’s performance. We continue to progress each of our strategic priorities and have made important advancements with our pipeline of innovative products. We have successfully delivered a strong first full quarter of the launch, laying the groundwork for our goal of enabling FILSPARI to ultimately become the foundational therapy in IgAN.

Let me now turn the call over to Jula for a clinical update. Jula?

Jula Inrig: Thank you, Eric, and good afternoon, everyone. I’d like to start by reflecting on the exciting development for FILSPARI in the first half of 2023 and touch upon the important updates to come later this year. While there have been meaningful developments in nephrology over the last decade IgAN remains one of the greatest unmet needs in rare kidney disease. IgAN patients are often uncontrolled and on average progress to kidney failure within approximately 11 years. Therefore, IgAN was a major focus at the recent European Renal Association or ERA Medical Congress where the Travere team showcased significant advancements in the field of rare kidney disease with nine posters and presentations. The analyses from the UK National Registry of Rare Renal Diseases or RaDaR demonstrated that most IgAN patients will face kidney failure within their lifetime, typically occurring in a patient’s late 40s.

Importantly, the RaDaR study confirmed the relationship between reductions in proteinuria at nine months, which is aligned to our 36-week PROTECT study interim analysis proteinuria time point and subsequent preservation of kidney function. The landmark analysis from RaDaR showed that a 50% reduction in proteinuria at nine months reduced the rate of eGFR decline and delayed time to kidney failure or death by 8.5 years. These results highlight that patients with IgAN need both early and effective treatment options capable of significant, chronic reduction of proteinuria to preserve kidney function. Currently there is only one approved nonimmunosuppressive therapy that has demonstrated such a rapid and sustained proteinuria reduction and early positive trends on kidney failure outcomes and that is FILSPARI.

At the interim analysis of the PROTECT study, which supported FILSPARI’s accelerated approval, we observed a 50% reduction of proteinuria from baseline compared to 15% with maximally titrated irbesartan. Additional data showed that greater proportions of patients on irbesartan as compared to FILSPARI reached a 40% decline in eGFR from baseline kidney failure or death. Furthermore new data from interim assessment of the PROTECT study presented at ERA show that a significantly greater proportion of patients on FILSPARI achieved complete and partial remission of proteinuria, which continued to accrue over the study period, demonstrating the rapid and durable effectiveness of FILSPARI. We head into the upcoming two-year top line readout from PROTECT with confidence.

Based on the magnitude of proteinuria reduction observed with sparsentan as compared to irbesartan and encouraging trends on kidney outcomes at the interim assessment in PROTECT, we believe the trial is well-powered to show a clinically meaningful and statistically significant treatment difference on eGFR at two years. This is well-supported by the robust clinical literature from precedent studies demonstrating the relationship between proteinuria reduction and long-term eGFR benefit in IgAN. Furthermore, as part of our NDA review, we provided the FDA with conditional power calculations based on trial level analyses and the available interim eGFR data. These eGFR trend analyses supported the accelerated approval of FILSPARI for patients with IgAN and further support our expectation of a statistically significant two-year benefit on eGFR.

We remain very pleased with the ongoing conduct of the PROTECT study. As Eric highlighted, we are now scheduled for our top line readout in the late third quarter or early fourth quarter of this year. These data are expected to support the submission for traditional approval, which we anticipate should include a label expansion to reflect the broader population and long-term benefits of FILSPARI, positioning it to become the foundational therapy in IgAN. Moving to FSGS. Since we reported the results from the DUPLEX study, our team has been actively engaging with rare kidney disease experts, practicing nephrologists and patient advocacy organizations. The overarching theme of these discussions is the high unmet need, the difficulty in studying a heterogeneous disease such as FSGS and strong support for the scientific rationale of sparsentan in FSGS.

This broad encouragement combined with the positive trends seen in the ongoing analysis of the DUPLEX data support our justification to seek a path forward with regulators. A meeting with the FDA is scheduled and we expect to be in a position to provide an update from the meeting in the fall. We also are planning on presenting a more comprehensive analysis of the DUPLEX study data at a scientific meeting later this year. Moving beyond sparsentan, I’ll briefly touch upon the advancement of pegtibatinase for the treatment of classical homocystinuria or HCU. In late May, we provided positive top line results from cohort six of the Phase 1/2 COMPOSE study. Specifically, treatment with pegtibatinase resulted in a consistent benefit across the patient population with a mean reduction in total homocysteine of 67.1% and achieved total homocysteine levels that according to physicians could support diet liberalization.

This is very important for patients that are typically on a highly restrictive low-protein diet. There have been no significant safety concerns reported to date with pegtibatinase. Mild injection site-related reactions were observed and managed with conservative treatment. With this emerging clinical profile, we believe that pegtibatinase can effectively replace the deficient CBS enzyme activity addressing the high unmet need in HCU and can ultimately become the first disease-modifying therapy for patients. Engagements with regulators are progressing well. We currently have alignment on the use of total homocysteine as the primary endpoint for the Phase 3 study and the focus of our ongoing regulatory engagement is to align on finalizing details of the Phase 3 program now with the Cohort 6 data in hand.

We look forward to providing an update on the details of the Phase 3 study later this fall with the expectation of initiating a pivotal study by year-end. With that I’ll turn it over to Peter for the commercial update. Peter?

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Peter Heerma: Thank you, Jula, and good afternoon, everyone. Our ambition is to make FILSPARI a new treatment standard for igAN patients at risk of rapid disease progression. And I’m really pleased how we have started in the first 4.5 months since launch to realize this ambition. We have made significant progress on our three strategic fundamentals that I outlined on the approval call in February. First, changing the treatment paradigm by educating physicians about FILSPARI’s novel mode of action and unprecedented efficacy and safety profile; second enabling broad access for eligible patients to increasing payer coverage; and third, ensuring a positive initial experience with FILSPARI for patients and nephrologists. Let me provide you with some further call on our three areas of focus for successful launch.

Starting with physicians. In for launch our dedicated field force has been able to engage with 4,500 nephrologists in face-to-face interactions. These engagements are having the intended impact. Nephrologists are increasingly understanding FILSPARI’s novel mechanism of action that provides rapid and sustained proteinuria reduction in IgAN patients including those at risk of rapid disease progression. We also see continuing increase in awareness of FILSPARI. Based on market research findings, the aided awareness is already at nearly 90% of those surveys and over two-thirds of the nephrologists know about FILSPARI without prompting. More importantly, 50% of these nephrologists report seeing FILSPARI as a substantial advance over other therapies and the intent to treat within the first year of approval remains high at 90%.

Now our field force can start using branded campaign materials consistent with FDA guidance for accelerate approved products, while also launching speaker programs we expect to further strengthen the awareness of FILSPARI. This positive momentum is also translating into behavioral changes as demonstrated by increasing demand. This has resulted in 417 new patient platforms in the second quarter. And in the first 4.5 months since approval, we have received a total of 563 patient start forms. As we have highlighted, since approval we view these patients start forms as the fundamental indicator for treatment demands. And it is the key metric contributing to our confidence in the successful launch. To put this into perspective, the new 417 patient start forms were received in our first full quarter.

When comparing these to other recent rare nephrology launches the demand for FILSPARI outperformed these benchmarks within the same period. Additionally, we continue to observe an increase in number of prescribers and repeat prescriptions by the same nephrologists, indicating that they are seeing the potential treatment benefit for their addressable IgAN patients and starting to change their treatment paradigm with FILSPARI. Let me now shift to the progress that we have been making on the payer access front. We are very pleased with the engagement we continue to have with payers and how they perceive the value that FILSPARI is bringing to patients. The investment we made early on in generating the health economic evidence and developing the FILSPARI value story has been important in helping payers understand the utility of FILSPARI.

We ended the second quarter with 54% of US lives covered in payer policies with about 50 formularies that have FILSPARI-specific policies. And we are really pleased with the quality of these specific formularies as most of these have prior authorization requirements that allow for access aligned with the FILSPARI line. Ensuring that patients get access to FILSPARI quickly after receiving a patient start form is a key priority for Travere TotalCare and our dedicated patient support services team. We are pleased with the support that Travere TotalCare is providing to patients and more importantly, how these services are being appreciated by patients. This includes personalized education and assistance with the ramps and reimbursement process.

Reimbursement claims undergo long and medium periods. Travere TotalCare can provide eligible patients with limited free products through the QuickStart program for up to 60 days. Our progress on these three before mentioned fundamentals resulted in net FILSPARI revenues of $3.5 million in the second quarter and a total of $6.5 million in net sales in the first four and a half months since launch, which is right in line with our expectations. As expected, revenue in the second quarter reflects a reduction in inventory from the initial stocking at the regional centers of our specialty pharmacies that was recruited in the first quarter. I’m pleased that our specialty pharmacies have since placed reorders. In looking at the overall launch through the second quarter we are really pleased.

We see the strongest demand for the second quarter of launch amongst recent launches in rare nephrology and have broadened our high-quality payer access. In the second half of the year, we expect to see patient start forms growing inclusive of any seasonality in the summer months as we have seen in other recent rare nephrology launches which could result in some variability from quarter-to-quarter. We also expect to see continued successful coverage decisions that will enable us to advance access to FILSPARI. With the strong demand and broadening reimbursement we expect meaningful revenue growth for FILSPARI in the third and fourth quarters. All of this is consistent with our planning and expectations that we set forth at approval. Our progress-to-date has created a very strong foundation.

And as a result we have great confidence that we will ultimately achieve our goal of FILSPARI becoming a new treatment standard for IgAN patients at risk of rapid progression and potentially meeting blockbuster sales in the future. Let me now turn the call over to Chris for the financial update. Chris?

Chris Cline: Thank you, Peter and good afternoon everyone. As the team has highlighted, we are very pleased with the progress that has been made over the first six months of the year and we’re looking forward to a strong second half still to come. Importantly, we’re well-positioned from a financial perspective to support our expected growth. For the second quarter of 2023, net product sales were $57 million compared to $51 million for the same period in 2022. The increase is primarily attributable to net product sales from the ongoing launch of FILSPARI. Our legacy products also continued to perform well in the second quarter with the bile acid portfolio contributing $27.5 million in net product sales and our products contributing $26.1 million in net product sales.

This growth was driven by organic patient demand. During the quarter, we also recognized $2.7 million of license and collaboration revenue, which translates to $59.7 million in total revenue for the period compared to $54.2 million for the same period of 2022. Research and development expenses for the second quarter of 2023 were $69.4 million compared to $59.7 million for the same period in 2022. The difference is largely attributable to the continued advancement of our pegtibatinase program including the ongoing COMPOSE study as well as start-up activities for the pivotal program in manufacturing. On a non-GAAP adjusted basis, R&D expenses were $62.4 million for the second quarter of 2023 compared to $54.4 million for the same period in 2022.

Selling general and administrative expenses for the second quarter of 2023 were $74 million compared to $53 million for the same period in 2022. The difference is largely attributable to the onboarding the FILSPARI field team and supporting staff as well as launch-related activities including promotional support and our REMS program following the approval of FILSPARI in the first quarter. On a non-GAAP adjusted basis, SG&A expenses were $55.6 million for the second quarter of 2023 compared to $37.5 million for the same period in 2022. Total other income net for the second quarter of 2023 was $2 million compared to total other expense net of $1.5 million in the same period in 2022. The difference is largely attributable to higher interest income earned in the period.

Net loss for the second quarter of 2023 was $85.6 million or $1.13 per basic share compared to a net loss of $67 million or $1.05 per basic share for the same period in 2022. On a non-GAAP adjusted basis, net loss for the second quarter of 2023 was $58.2 million or $0.77 per basic share compared to a net loss of $41.3 million or $0.65 per basic share for the same period in 2022. As of June 30th, 2023, the company had cash, cash equivalents and marketable securities of $491.3 million. As Eric highlighted earlier, we were pleased to recently enter into the agreement to sell our bile acid product portfolio to Mirum Pharmaceuticals for up to $445 million. This transaction is clear strategic and financial benefits for Travere. From a financial perspective, this transaction will bring forward several years of value from the products and meaningfully strengthen our balance sheet with an upfront payment of $210 million at close.

Furthermore, we will have the potential to realize up to $235 million in additional value from sales-based milestones as Cholbam and Chenodal continue to be important treatment options for patients in the future. For the second half of the year, we anticipate our operating expenses to remain at or modestly below the levels we reported for the first half of the year, with some variability quarter-to-quarter as we continue to advance our programs and complete the bile acid portfolio transaction which is expected to close in the third quarter. Importantly, with our reported cash balance at the end of the second quarter and the expected net proceeds from the bile acid portfolio transaction we expect that we can manage our balance sheet to support operations beyond 2025, and achieve the key goals from our programs with significant growth potential.

With that, I’ll now turn the call back over to Eric, for his closing comments. Eric?

Eric Dube: Thank you, Chris. I’m proud of the team’s accomplishments in the first half of 2023 and the significant progress we have made towards delivering innovative treatments for patients with rare disease. We’ve had an outstanding start to the launch of FILSPARI, which is performing to our high expectations and on track to potentially reach blockbuster status at peak. We remain encouraged by the profile of Sparsentan in FSGS and look forward to engaging with the FDA in the near-term. Pegtibatinase data from the Phase 1/2 COMPOSE study represent further evidence of its potential to become the only disease-modifying treatment in a potential multibillion-dollar market in the future. And by entering into the agreement, to divest, our bile acid portfolio our teams will be able to further concentrate their efforts on our exciting pipeline opportunities aligning with our goal of delivering significant value in the quarters and years ahead.

In the second half of the year, we look forward to providing important updates on our pipeline programs. These milestones hold the potential to make meaningful positive impacts on the lives of those impacted by rare disease and therefore, we will continue to execute with urgency. Let me now turn the call over to Naomi, for Q&A. Naomi?

Naomi Eichenbaum: Thank you, Eric. We can now open the line up for Q&A. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] We will now take the first question from the line of Anupam Rama from JPMorgan. Anupam Rama, your line is open.

Malcolm Kuno: Hi. Thank you for taking my question. This is actually Malcolm Kuno on for Anupam. Just one question, what does your market research suggest about prescribing habits under the various possible scenarios of eGFR benefit? Thank you.

Eric Dube: Malcolm thanks for the great question. And I will turn that one over to Peter.

Peter Heerma: Thanks Eric. Yeah, what I would say is, the way I would like you to think about this kind of it’s a rolling launch. We started promoting FILSPARI with the PI materials only consistent to the FDA guidance that are approved through accelerated approval. Now that we are past day 120, we have the ability to promote. And as in every launch, there’s an adoption curve with innovators and early adopters and this is what we plan for in our focused targeting efforts. To your question with more data we will further reinforce the FILSPARI profile and allows for new communication opportunities. And I think this will help us to further broaden the prescriber base.

Malcolm Kuno: Great. Thank you.

Eric Dube: Thank you, Malcolm.

Operator: We will take our next question from the line of Tyler Van Buren from TD Cowen. Tyler Van Buren, your line is open.

Tyler Van Buren: Thank you. Good afternoon. Thanks for taking my question. I understand that it could take up to 20 to 60 days for patients to receive coverage. But of the 563 cumulative patient start forms that you have received. Can you say approximately how many of these are covered and then also potentially how many of them are on drug?

Eric Dube: Thanks for the question, Tyler. And Peter, why don’t you take that one?

Peter Heerma: Yeah, happy to take that question Eric. I will say as you would expect in the beginning of the launch especially this early the metrics in the fulfillment process are highly variable. If I look at where we are, I would say our metrics are right in line with benchmark in rare disease launches. And to your question on the reported 553 patient start forms, I can say that most of these patients have received FILSPARI. And we see a positive trend of conversion to paid products, that we believe will continue with increasing payer coverage decisions to include FILSPARI in formularies.

Operator: We will take the next question from the line of Greg Harrison with Bank of America. Greg Harrison, your line is now open.

Greg Harrison: Hey. Good afternoon and congrats on all the progress. And thanks for taking the question. In the prepared remarks it was noted that, you now expect the FILSPARI label to be expanded along with full approval. What do you think would change in the label? And how would that impact the addressable patient population that could get the drug?

Eric Dube: Greg, thanks for the question. So what I would say is that, we would expect the label to reflect the full population that we studied in our Phase 3 PROTECT trial which did enroll patients one gram per day and above which is far broader than what we have in our indication statement now those patients that are at risk of rapid progression. Typically, those patients above 1.5 grams. And this was based on FDA’s assessment of approval through accelerated approval. So, we do believe that there will be an expansion to reflect again the broad efficacy that we have seen at least through the interim in our Phase 3 program. And I’ll have Peter talk about how that might impact the addressable population.