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Edited Transcript of KERX earnings conference call or presentation 10-May-18 12:00pm GMT

Thomson Reuters StreetEvents

Q1 2018 Keryx Biopharmaceuticals Inc Earnings Call

New York May 15, 2018 (Thomson StreetEvents) -- Edited Transcript of Keryx Biopharmaceuticals Inc earnings conference call or presentation Thursday, May 10, 2018 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Amy B. Sullivan

Keryx Biopharmaceuticals, Inc. - SVP of Corporate Affairs

* Douglas Jermasek

Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy

* Jodie Pope Morrison

Keryx Biopharmaceuticals, Inc. - Interim CEO & Director

* Scott A. Holmes

Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer

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Conference Call Participants

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* Eric William Joseph

JP Morgan Chase & Co, Research Division - Analyst

* Reni John Benjamin

Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst

* Yigal Dov Nochomovitz

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Good morning. My name is Beth, and I will be your conference operator today. At this time, I would like to welcome everyone to the Keryx Biopharmaceuticals Conference Call. (Operator Instructions) Thank you.

Amy Sullivan, Senior Vice President, Corporate Affairs, you may begin your conference.

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Amy B. Sullivan, Keryx Biopharmaceuticals, Inc. - SVP of Corporate Affairs [2]

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Thank you, Beth. This is Amy Sullivan. Good morning, and thank you for joining us on today's call to discuss our first quarter 2018 financial results.

The agenda for our call will be as follows: Jodie Morrison, our Interim Chief Executive Officer, will open with a brief introduction; Scott Holmes, our CFO, will review our business highlights and our financial results for the quarter; Doug Jermasek, our VP of Marketing and Strategy, will discuss our commercial progress; and then Jodie will return to deliver closing remarks. After the prepared remarks, we'll open the call for Q&A.

We issued a press release a short while ago reporting our consolidated financial results, recent commercial progress and other business updates. We're using slides today to support our call that can be accessed through the Investors section of our website.

Before beginning the call, please be advised that various remarks we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Keryx cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated. We encourage you to review all of the risk factors associated with our business in our 2017 10-K and other 10-Qs and SEC filings as well as the Forward-Looking Statements section in our press release issued this morning.

This call will be archived via webcast and available on Keryx's website, keryx.com, for at least the next 15 days. (Operator Instructions)

I'll now turn the call over to Jodie.

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Jodie Pope Morrison, Keryx Biopharmaceuticals, Inc. - Interim CEO & Director [3]

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Thank you, Amy, and good morning to all of you who have joined us for this call. I've been in this position for less than 2 weeks, and this is the first time I'm getting to speak to most of you. By way of introduction, I've been a member of our Board of Directors for the past 2 years, serving on both the Audit Committee and the R&D Committee.

Since starting my role as Interim CEO in April 30, I've been digging into the operations of our company, learning the day-to-day activities that are behind our results. I've been impressed with the commitment of the full team to Auryxia and to the patients who we serve. Although it's early in the launch for iron deficiency anemia and CKD patients, we've made strategic investments of time in the first quarter, discussing our new indication with nephrologists. As Scott and Doug will share in their comments, we believe we are beginning to see those investments pay off.

There is such energy and enthusiasm for our medicine among the field team and in our home office employees. And I intend to drive our organization on its path to realize the full potential of Auryxia, accelerating growth and creating shareholder value.

With that brief introduction, I'll turn the call over to Scott.

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [4]

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Thank you, Jodie. I'm pleased to report results of the first quarter and to also touch upon the momentum we are seeing for Auryxia in the early part of Q2. I'll start by quickly hitting some highlights of the quarter and then dive a bit deeper into each of these items on the following slides.

First and foremost, we are making good commercial progress with 118% increase in prescription volume versus the first quarter of last year and a 96% increase in Auryxia net sales. The IDA launch is off to a good start. We know the nephrology community quite well, and one thing that we know for sure is that they are tempered when it comes to the adoption of new medicines.

It's important to realize that the approval of Auryxia for iron deficiency anemia gives Keryx the first new treatment to be approved for this indication in nearly a decade and, as such, positions and established habits when it comes to treating anemia.

We have an advantage with our second indication for Auryxia in that physicians have awareness and clinical familiarity with the medicine related to its indication for the treatment of hyperphosphatemia. An additional advantage is that in this promotionally sensitive market, our share of voice will be high as very few companies promote a medicine for the treatment of anemia to the nephrology community. Since approval late last year, our field forces have invested significant time and effort in the IDA launch. And we believe we are beginning to see that investment pay off.

On the finance side, today, we announced that we have exchanged our convertible debt with Baupost and that they also made an additional investment of $10 million. Under the new convert, we now have the flexibility to pursue an asset-based revolving line of credit for up to $40 million in additional non-dilutive financing.

I'll now dive deeper into the first quarter results. Today, we reported 34,600 prescriptions in the first quarter, which translated into $20.6 million in Auryxia sales. It's important to note that all other medicines in the hyperphosphatemia market declined in absolute prescription count in the first quarter, while Auryxia continued to grow.

Our gross-to-net adjustment for the quarter came in at 50% or 8 points greater than the 42% we saw in the first quarter of 2017. This 50% gross-to-net adjustment is 4 points lower than the 54% we reported in the fourth quarter of 2017. This change in our gross-to-net adjustment is primarily a result of changes in our mix of business coming from Medicare Part D and commercial payers and, to some degree, the mix of business among the various payers in those segments. We expect our full year 2018 gross-to-net adjustment to be in the low to mid-50% range.

While we're not in a position to provide a detailed breakdown of prescriptions attributable to IDA or hyperphosphatemia today, as we had pointed out during the launch, there are a few indicators of IDA uptake worth tracking, and we will note those here.

First, as noted previously, we expect the majority of IDA prescriptions to come via the IMS channel and, therefore, IMS should become a larger portion of our business over time. In the first quarter of 2018, our mix of business has shifted to 59% IMS, 41% specialty. This compares to our historical mix of 55% IMS and 45% specialty.

The second indicator of uptake in IDA that we have highlighted at launch was that average tablets per prescription should come down over time, given the different daily dosing schedules between hyperphosphatemia and IDA and as more IDA prescriptions are written. In the first quarter of 2018, average tablets per prescription came in at 199 tablets compared to an average during 2017 of approximately 212 tablets. We believe that both of these metrics are positive indicators of uptake in IDA.

Since it is early in the launch of IDA and given some of the market dynamics that occur throughout the year, we thought it would be helpful to show both monthly prescriptions and tablet demand data for Auryxia. To ground you in the chart, the pink bars represent the Auryxia prescriptions in a given month, and the blue line represents the correlating tablet volumes. You can see on this chart that the prescriptions in the first 4 months of 2018 are more than double the corresponding months of 2017.

Tablet volume is growing at a slightly slower pace, but still showing strong growth at the end of the first quarter and the beginning of the second, as you can see in the March and April data on the far right of the graph. Overall, versus the quarter from a year ago, demand for Auryxia is up significantly, an increase which, to date, is being driven by hyperphosphatemia. And we know that the IDA indication is contributing to this growth as well.

Also obvious from this slide is that the first 2 months of 2018 were relatively flat to December of 2017 in terms of prescription growth, with tablet growth being slightly lower. Importantly, we saw a nice uptick in growth in both prescriptions and tablets in March, which continued even further through April as well.

We ended the first quarter of 2018 with $60 million in cash, having utilized $24 million in operations in Q1 and an additional $9 million related to milestones and other fees associated with expanding our manufacturing capacity. This morning, we announced the exchange of our 2015 convertible debt. Let me touch on why we did this and what it means for the company.

At this stage of the company's evolution, we wanted to be able to establish a non-dilutive source of financing and leverage our growing asset base, principally accounts receivable and inventory. The October 2015 convertible note did not allow for the company to incur secured debt, therefore, establishing an asset-based revolving line would require amendment or exchange of the October 2015 notes.

Our discussions with the 2015 note holder, Baupost, in an effort to increase -- or to create, sorry, the required debt incurrence flexibility, resulted in the note exchange that we are reporting today. The key points of the exchange are as follows: one, as part of the exchange, Baupost invested an additional $10 million in Keryx; two, the majority of the new notes is set to October 2021, 12 months later than the original notes; third, the new notes allow for up to a $40 million asset-based revolving credit facility. I want to point out on this that we have a commitment letter in hand for up to $40 million facility that we expect to close in the coming weeks. This non-dilutive financing instrument will provide further financial flexibility to our company as we continue increased demand for Auryxia in both indications.

And finally, the new face value of the note is $164.7 million, and the note converts into 35.6 million shares of Keryx stock. As for the mechanics, I thought it would be best to put the details around the numbers into the slide so that you have it post call. For the mechanics of the exchange, you can refer to the right-hand side of this slide.

With regards to the company's cash position moving forward, based on discussions and factoring in the additional Baupost investment made with the note exchange, we believe that the $60 million on our balance sheet as of March 31, the additional $10 million invested as part of the note exchange and the potential to borrow up to an additional $40 million from the committed asset-based revolving credit facility all give us financial flexibility moving forward as we continue to grow the business.

With that, I'll now turn the call over to Doug.

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Douglas Jermasek, Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy [5]

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Thank you, Scott. Good morning to all of you on the call. Throughout 2017, our sales force had 2 primary objectives: to increase the breadth and depth of prescribing for Auryxia. When we look at the first quarter of 2018 and compare it to the first quarter of 2017, we've made progress on both of these fonts.

Let's first talk about breadth of prescribing. Looking back to a year ago, it was imperative that we get more physicians writing Auryxia. We knew that we needed to broaden our prescriber base to continue to grow in hyperphosphatemia and to establish a solid base of physicians with clinical experience as we launch in iron deficiency anemia. Our field team took that directive to heart, and were successful in significantly broadening our prescriber base over the course of the year. I'm pleased to report that in the first quarter of 2018, we have more than 2,000 new physicians prescribing Auryxia than we did in the first quarter of 2017.

Depth of prescribing is also a very important driver of growth. Looking at this metric, we had a 34% increase in the average number of prescriptions per writer when you compare the first quarter of 2018 to the first quarter of 2017. As Scott mentioned, it takes time to move the Nephrology prescribing community along the proverbial adoption curve. But based on these data, I believe we're making progress on this front as well, and my next slide will dive into that a bit further.

Let me start by grounding you on the chart on this slide. The x-axis is the percent of our top decile physicians, those who account for half of the total Auryxia prescriptions. The colors represent market share levels for Auryxia with those physicians' practices; and the blue on the bottom are the physicians with more than 20% market share; the pink, between 15% and 20%; the light purple, between 10% and 15%; and so on. You can see on this chart that we've been successful in continually moving physicians along the adoption curve. This pattern of growth clearly doesn't happen all at once. In fact, this graphic suggests that adoption is actually accelerating among the highest Auryxia prescribers.

In the first quarter of this year, we had greater than 15% market share with nearly 70% of these physicians. And obviously, as our prescriber base has grown, the number of these higher prescribing physicians has also grown significantly.

Our sales representatives are doing a great job ensuring that they're in dialogue with target physicians on a regular basis. They're communicating with them about Auryxia's ability to potentially help even more of their patients, those with IDA and those with elevated serum phosphorus levels. Based on physicians' experience with Auryxia, the availability of samples at launch and our broad formulary status, we expect that we will be able to continue to accelerate the movement of physicians along this adoption curve with the iron deficiency anemia indication.

We've learned a great deal from a hyperphosphatemia experience with the Nephrology community. Two key learnings are: we know that it takes time for nephrologists to adopt a new medicine, and we know that they need to hear a compelling differentiated story and need regular reminders to keep the new medicine top of mind. We applied these learnings when we developed our launch plan for the iron deficiency anemia indication. We built our launch strategy to ensure that we had increased frequency of contact with nephrologists and a presence in their office, even when our reps weren't physically there.

Samples are a big part of that. We know that samples are a leading indicator of prescribing behavior. Physicians with samples are more likely to write an Auryxia prescription. In fact, more than 75% of physicians who were sampled in the fourth quarter of 2017 wrote a prescription in the first quarter of 2018. Additionally, prescribers with samples write Auryxia for a larger percent of their patients. As you can see on the graph on this slide, our market share with physicians who were sampled is more than double that of physicians who were not. So we know that the contact rates of the sales representatives and the Auryxia presence that samples provide when our reps cannot be in the position at the office, help drive increased adoption.

With the iron deficiency anemia launch, we're sampling more, with a 30% increase in physicians who were sampled in the first quarter of this year versus the fourth quarter of last. Additionally, we've asked our sales force to spend more time with their highest potential prescribers. And we believe that these efforts will lead to increased growth in prescriptions over time.

So where are we commercially with Auryxia? We're still early in the -- in early days of the launch for IDA, and we've done an immense amount of work executing against our launch objectives to lay the foundation for future growth. Our objectives for this launch were to: first, drive rapid awareness of new the indication; second, to differentiate Auryxia from existing treatment options; and third, to communicate the favorable insurance access to Auryxia that prescribers and patients can expect to see.

On the first objection -- objective, we've done a great job raising awareness of our new indication with approximately 90% of nephrologists surveyed in syndicated market research reporting that they're aware of the new indication.

On a second objective, differentiation were also making great progress. Of those who have tried Auryxia for the treatment of iron deficiency anemia, the majority report that they're satisfied with the medicine. This high level of satisfaction is due to the differentiation they experienced clinically, trying it and seeing for themselves the benefits that Auryxia can bring to their IDA patients. In fact, majority of physicians surveyed who had tried Auryxia for the treatment of iron deficiency anemia and CKD patients rate it better than traditional oral iron on efficacy and tolerability metrics.

On the third objective of communicating the favorable access and reimbursement that we have established with Auryxia, this is something that takes sustained focus. As such, we continue to communicate the broad formulary coverage that is in place for Auryxia. We're continuing to work diligently to ensure that we drive additional growth in hyperphosphatemia, while we continue to gain traction in IDA.

And with that, I'll turn the call back to Jodie.

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Jodie Pope Morrison, Keryx Biopharmaceuticals, Inc. - Interim CEO & Director [6]

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Thanks, Doug. Let's recap what we presented today. We've made good progress commercially with expanded depth and breadth of prescribing. We've applied key learnings from our hyperphosphatemia experience to our launch in IDA and are seeing positive results. The note exchange and committed asset-based revolving credit facility provide us financial flexibility moving forward.

We have a great medicine in Auryxia, and I believe that we can build on the current momentum to accelerate growth across the 2 indications, helping patients living with CKD and creating shareholder value.

With that, I'll open the call for Q&A. Operator, are there any questions?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Ren Benjamin, Raymond James.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [2]

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Just very quickly, can you talk -- just maybe provide a little bit more color on these early adopters for IDA, about how many physicians are we talking about? I know that you had provided a little bit of feedback, but can you talk a little bit more about refill rates? And is there anything new that you are learning from these patients in how they're taking the drug in this initial phase of the launch?

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Douglas Jermasek, Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy [3]

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Yes, Ren, Doug here. I guess the first thing that we should probably underscore is that it's very different -- it's difficult to differentiate between IDA and hyperphosphatemia prescriptions, but of course, we are doing everything we can to understand that. I think what we're learning in the early days is that adopters of Auryxia for hyperphosphatemia tend to be the first ones because they have clinical experience that are using it in iron deficiency anemia. So I guess one way to simply summarize that is our best customers are our earliest adopters with the new indication. They try -- tend to try it on a couple of patients and see how it works out. And then like I said earlier in my prepared comments, the feedback has been very, very good. People are satisfied with the results and see that as an advance for them compared to other therapies. And so we expect to see them continue to increase their use. But once again, it's early days, and we're encouraged about what we're seeing.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [4]

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Okay. And then just maybe some color regarding the sampling program for IDA versus kind of what you had in place for CKD. And are these all new physicians who are getting the samples? Or are the old physicians as well getting samples for Auryxia and IDA?

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Douglas Jermasek, Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy [5]

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Yes, short answer is it's both old and new. We -- it's probably worth mentioning that we had provided 50-count sample bottles for the hyperphosphatemia indication, and we changed that to 25-count bottle, because we think is more appropriate given the lower dose in IDA. And like I said, we -- there are new people who weren't really historically high prescribers for the hyperphosphatemia indication who are enthusiastic about the new indication, and that represents kind of net new growth. But as I said before, the best users of Auryxia for hyperphosphatemia, I think, we found have been the earliest and say, best users or best adopters of Auryxia for the new indication.

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Reni John Benjamin, Raymond James & Associates, Inc., Research Division - Senior Biotechnology Analyst [6]

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Okay. And just one final one from me, and I'll jump back in the queue. Can you talk a little bit more about the use of proceeds from the additional capital? I know Greg used to always say basic blocking and tackling, but it really seems like there might be new initiatives that are being planned. I don't know if it's more advertising, a bigger sales force. But how do you plan on really ramping up this year, this continued uptake in trajectory?

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [7]

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Sure, Ren, this is Scott. So I think the influx of new capital today via both the $10 million under the exchange convert as well as the eventual ability to borrow up to $40 million under the asset-based revolver, it's really designed to continue to put the business in the best position as we continue to grow. So there will be working capital needs if the business continues to grow, and I think that asset-based revolver will address those needs for us. Importantly, though, there's no real change to strategy here. So we -- the plans that we've laid out before on 2018 and beyond with regard to expense structure, the spend within the business and where we see that spend coming from to promote and grow Auryxia is all still the same. Those -- of course, we have tweaks from time to time internally as to where we allocate our resources, but there's really no significant change in that regard.

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Operator [8]

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Your next question comes from the line of Yigal Nochomovitz from Citigroup.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [9]

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So on the IDA launch, I believe you gave some metrics with respect to increased representation of IMS in the 59% versus 55% historically. So would it be the wrong conclusion that, that 5% delta sort of maps to revenues that you could attribute to IDA, meaning, about 5% of your revenue base is now IDA? Is that a fair assumption? Or is that not correct?

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [10]

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It's certainly -- hey, Yigal, this is Scott. It's certainly one way to try to determine the amount of the business that's coming from IDA versus hyperphosphatemia. But as we've discussed before, I think we need to triangulate around this. And certainly, the IMS specialty mix as well as the pill count mix, those are components to that triangulation, of trying to determine exactly how many scripts are coming from IDA versus hyperphosphatemia. I think for us, importantly, as a brand, we're seeing continued breadth and depth of prescribing, and that's the most important thing right now given the stage of our launch. And candidly, both in hyperphosphatemia and in iron deficiency anemia is that we get more physicians using the product and using it more broadly in their patient population, both pre-dialysis and in dialysis. So I think that's the really important thing for us. But the approach that you laid out is certainly one kind of very 30,000-foot way of potentially coming up with what the contribution of IDA might be.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [11]

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Okay. And I know you haven't really talked about peak sales for either dialysis or IDA, as far as I recall. But is it your expectation that just broadly speaking, that IDA could become a comparable revenue generator relative to dialysis? Or is the view that dialysis will maintain sort of the lead share in terms of overall revenues for you guys?

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [12]

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Sure. So you're correct, and we haven't really talked about specific breakdown for the product in the near term or the long term. We have talked about the overall market potential and the number of patients within the hyperphosphatemia market and that we believe the potential in terms of number of patients in the iron deficiency anemia market are, and I think given that those patient sizes and the different script sizes or dosing of the 2 indications, it's a reasonable conclusion to come to. But we haven't given that long-term guidance per se.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [13]

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Okay. And I'm not sure if I saw this in the slides, but what percent of the prescriber base actually got samples? Because you're saying that you're doing very well with market share in the prescribers that got samples. So is there something that's stopping you from being more aggressive there? It seems to be a pretty good strategy.

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Douglas Jermasek, Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy [14]

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Yes. I think the short answer is, it's about half of the physicians got samples. We think there's about 22 -- slightly over 2,200 physicians were sampled in the first quarter of 2018, and that's compared to about 1,800 in the fourth quarter of 2017. So we're sampling more, as I said before.

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Yigal Dov Nochomovitz, Citigroup Inc, Research Division - Director [15]

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And then finally, just in terms of business expansion. We haven't heard much about Europe. I'm assuming that that's not a priority for the company in terms of developing the sales force in Europe for Auryxia, if you could just comment on that. And then beyond Auryxia, is there any effort with respect to in-licensing of additional assets to grow the business long term?

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [16]

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Sure, Yigal. This is Scott. I'll start with Europe and then I'll go into the BD side. So we're not currently marketing Fexeric, which is the approved name in the EU. And as we said it before, we don't intend to commercialize that in the EU on our own. We have run a partnering process, and we have not been successful in finding a suitable commercial partner for Fexeric in the EU. So therefore, we can't obviously assume that we're going to find a suitable commercial partner at this point to help us create any value in Europe. If we don't begin to market, I think in the EC, there's certainly a deadline coming up upon us that, I'm sure folks are aware of, which is the end of September, later this year, which is the deadline to have marketed Fexeric in the EU by that point. But given the efforts to date, we do not expect to be in a position to do that. I'll pass it to Jodie with regards to the BD and expansion opportunities.

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Jodie Pope Morrison, Keryx Biopharmaceuticals, Inc. - Interim CEO & Director [17]

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Yes. Obviously, we're going to be evaluating the business and thinking about the right approach for BD efforts moving forward and thinking about being opportunistic for long-term growth of the organization.

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Operator [18]

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Your next question comes from Eric Joseph, JPMorgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [19]

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I just wanted to get a better sense of how the sales force is sort of relatively prioritizing, growing the existing prescriber base versus concentrating more on those high-volume prescribers, just on kind of how you see returns on effort there. And in thinking about sort of the lower half of providers, that contribute to overall Auryxia volumes, just what can you say about the rate of repeat prescriptions there? And then I have a follow-up.

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Douglas Jermasek, Keryx Biopharmaceuticals, Inc. - VP of Marketing & Strategy [20]

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All right. Let me talk about the targeting and kind of how we prioritize the opportunity, is, you know, as we try to say, we really see significant value in both of these indications. And the beauty of our product is that the same customers are responsible for the vast majority of prescribing for both these indications in nephrology. And so what we do know is that for each physician, there isn't kind of a one-size-fits-all approach. Some physicians tend to be more enthusiastic about one indication or of the other, and some are enthusiastic about both and some are frankly enthusiastic about neither. So the trick here is to know the customer and to bring the right message to them that can drive growth. And our sales organization has been working very carefully to do that correctly and to really try to maximize the opportunity with highest potential physicians. And sorry, your follow-up question?

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Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [21]

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The follow-up question, Scott, you provided some guidance in how to think about gross to net for the full year. Longer term, I just wanted to get a sense from you on how you think about headroom for potential price increases. Where we should think about sort of net price going as you are further expanding with deeper penetrations of the IDA segment?

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Scott A. Holmes, Keryx Biopharmaceuticals, Inc. - CFO, Senior VP & Treasurer [22]

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Sure, happy to, Eric. Thanks for the question. So I think with regards to gross to net, as I said in my prepared remarks, we expect -- previously, we have said mid-50s. Obviously, the first quarter coming in at 50%. We've kind of taken that to the low to mid-50s at this point, given that first quarter result on that. Long term, we don't -- and historically, we haven't and we won't comment on potential price increases that we may or may not take in the future. I think from a gross-to-net perspective, as we've talked about in the past, in this business, given the gross to net, if you do happen to take price increases, then your gross to net will typically go up because you've given a portion of it back via price protection. But that's -- price increases are not something in our strategy around, and that's not something we'll talk about probably.

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Operator [23]

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(Operator Instructions) There are no further questions. I will turn the call back to Amy Sullivan.

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Amy B. Sullivan, Keryx Biopharmaceuticals, Inc. - SVP of Corporate Affairs [24]

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Thank you, Beth, and thank you to everyone for joining us today. We look forward to keeping you updated on our progress and to meeting with many of you at investor conferences throughout the year. Have a good day.

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Operator [25]

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This concludes today's conference call. You may now disconnect. Thank you.