Travere Therapeutics, Inc. (NASDAQ:TVTX) Q4 2023 Earnings Call Transcript
Travere Therapeutics, Inc. (NASDAQ:TVTX) Q4 2023 Earnings Call Transcript February 16, 2024
Travere Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and welcome to the Travere Therapeutics Fourth Quarter and Full Year 2023 Financial Results and Corporate Update Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference call over to Anne Crotteau. Please go ahead, ma'am.
Anne Crotteau: Thanks, Jenny. Good afternoon and welcome to Travere Therapeutics fourth quarter and full year 2023 financial results and corporate update call. Thank you all for joining. Today's call will be led by our President and 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 up for the Q&A session. Before we begin, I'd 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 statement. 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, February 15, 2024 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, Anne and welcome, everyone. 2023 was a year of many great achievements for Travere as we work towards our goal of breaking down barriers and treating rare diseases with historically little innovation. At the start of 2023, we gained the first approval from our pipeline, delivering sparsentan or FILSPARI, as the first and only non-immunosuppressive treatment option for people living with IgA nephropathy or IgAN. For decades, people living with IgAN, most of whom are diagnosed in their 20s and 30s and on average face kidney failure in 10 years had limited treatment options. We are proud to help lead the growing evolution of the treatment paradigm that we believe will ultimately see patients get diagnosed and initiate treatment earlier and where physicians will ultimately utilize FILSPARI as a foundational treatment with its superior proteinuria reduction and accrual of kidney preservation benefit.
Following the grant of accelerated approval, our team quickly initiated our comprehensive commercial launch plan and worked throughout the year to lay a strong foundation for FILSPARI uptake. I am very pleased with our results. We continue to make substantial progress in physician demand, payer coverage and revenue, the key aspects of the launch. Of note, FILSPARI is the only recent launch in the rare kidney space that has seen consistent growth in demand each quarter in its first year and we saw a meaningful inflection in net product sales to close out 2023. Last year, we encountered a challenge in our pursuit of a better outlook for the FSGS community. Specifically, the DUPLEX study of sparsentan in FSGS did not achieve the results we had hoped.
And following our FDA engagement, it was clear we would not be in a position to submit an sNDA at that time based on the DUPLEX results alone. I am incredibly grateful and proud of how our colleagues at Travere learn and quickly adjusted. We moved quickly to align our investment in this program, implement a strategic restructuring of our organization to focus our resources and concentrate our efforts to collaborate with regulators with the goal of identifying a potential regulatory path forward in the future. As for pegtibatinase development program for classical homocystinuria, or HCU, we achieved important milestones in 2023. Globally, we believe there are 7,000 to 10,000 patients diagnosed with HCU who are not in full control of their homocystine levels.
With better diagnosis and a future where an effective treatment is available, we believe this may grow by 50% or more over time. Last year, we generated additional exciting data from our Phase I/II COMPOSE study which further demonstrates the potential for pegtibatinase to become the only disease-modifying therapy for HCU. With these data, we worked closely with regulators to align on a Phase III program, utilizing total homocysteine reduction as a primary endpoint and initiated that study before year-end. All of our efforts last year positioned us to start 2024 with focus and a plan for execution across the board. Strong launch performance in FILSPARI remains our top priority for 2024 and we expect the momentum in our launch from the second half of 2023 will continue into the New Year.
We are also executing on three additional priorities aimed at broadening access to FILSPARI. Of note, we are on track to submit our sNDA this quarter to support conversion at FILSPARI from accelerated approval to full approval for IgAN in the U.S., together with our partner, CSL Vifor, we expect an opinion on conditional approval of FILSPARI in Europe from CHMP later this quarter. We're optimistic that this will be positive. And with our recent agreement with Renalys, we are looking forward to aiding their development plans to ultimately enable access to FILSPARI in Japan and other regions in Asia, where IgAN is an even more prevalent disease and leading cause of kidney failure. And importantly, we are excited about the opportunity we have with pegtibatinase, our novel investigational enzyme replacement therapy being evaluated for the treatment of classical homocystinuria, or HCU.
In 2024, our focus will be on enrolling our Phase III HARMONY trial and raising awareness of the need for innovative treatments for this rare disorder. Let me now turn the call over to Jula for a clinical update. Jula?
Jula Inrig: Thank you, Eric and good afternoon. I'm very pleased with the progress made on our clinical and medical affairs initiatives in 2023. With our achievements last year, we are well positioned to ultimately deliver two new treatment standards in rare diseases with limited options available. As for FILSPARI, we completed the 2-year double-blind dosing periods for our studies in FSGS and IgAN. It's important to highlight that our studies are the only ones in the space that use a maximally optimized active comparator, setting the bar highest in the field. The results which clearly demonstrated robust proteinuria reduction and preservation of kidney function in IgAN were simultaneously presented as late-breaker presentations at ASN and published in world-renowned medical journal, the Lancet and New England Journal of Medicine.
Following those data presentations, we have received positive feedback from nephrologists about the foundational role that FILSPARI can play in long-term kidney function preservation for patients with IgA nephropathy. What is resonated with nephrologists is that FILSPARI is the only approved non-immunosuppressive treatment for IgAN and it's the only molecule that works by simultaneously blocking the 2 key pathogenic pathways in the kidney. Endothelin-I and angiotensin II, that both work together to drive damage and kidney function loss. FILSPARI dual mechanism of action is critical to inhibiting the damaging pathways in the kidney in order to achieve sustained proteinuria reduction and long-term kidney function preservation that accrues over time.
Unlike intermittent therapies which may have short-term benefits on kidney function, FILSPARI demonstrated a long-term accrual of benefit on eGFR. In the PROTECT study at 1 year, there was a 1.7 mill per minute favorable effect on absolute eGFR with FILSPARI compared to maximize titrate irbesartan. And that benefit increased to 3.7 mill per minute greater eGFR at 2 years. Importantly, the rate of loss of kidney function in year 2 compared to year 1 was significantly slower for FILSPARI-treated patients, suggesting a potential additive benefit with longer-term treatment. This year-over-year accrual of benefit is important for a patient who has ongoing kidney injury over their lifetime and may otherwise be facing kidney failure less than 10 years from diagnosis.
Our 2-year data from the PROTECT Study in IgAN shows that FILSPARI is superior to historical RAS inhibitors and is safe for chronic use which is critical in treating patients for life. Community and academic nephrologists are continuously highlighting to us the early clinical experience with FILSPARI, where they see significant reductions in proteinuria and the ability to safely use FILSPARI with their patients chronically. We believe this cements the role that FILSPARI can play by replacing RAS inhibitors as foundational care for those at risk of rapid disease progression due to uncontrolled proteinuria. Following the positive results from PROTECT, we successfully completed a pre-NDA meeting with FDA to discuss our plans to submit an sNDA to convert FILSPARI from accelerated approval to full approval for IgAN.
Importantly, we aligned with the FDA on the data analysis to support our submission and to support potential broader labeling. I'm pleased to report that we remain on track to submit the sNDA this quarter. We are at an exciting juncture in the evolution of the IgAN treatment paradigm. We believe that nephrologists are focused on treating the damage in the kidney and then preventing further damage systemically. Our goal is to ultimately have FILSPARI used as the foundational care in IgAN essentially replacing the historical role of RAS inhibitors and then other medicines can be added as needed. As this evolution continues, there are a number of factors that we expect will help FILSPARI achieve this goal. With a full approval from FDA, we would expect a broader label that reflects the full study population and the results.
This would provide nephrologists and patients with greater flexibility to choose FILSPARI when seeking treatment options that can provide long-term kidney function preservation. Additionally, we believe FILSPARI likely inclusion in the soon to be released KDIGO guidelines should further standardize use of FILSPARI with a nephrology community and potentially result in earlier treatment. As positions in up-to-date and recent peer-reviewed IgAN treatment articles, we anticipate FILSPARI will be described as a foundational treatment in the KDIGO guidelines. We also believe that the proteinuria target for treating IgAN overall will be lowered which would support earlier diagnosis, more aggressive treatment to avoid long-term damage as well as combination treatment in the future.
Furthermore, later this year, we expect to generate longer-term data from our ongoing [indiscernible] and SPARTAN studies which are designed to show FILSPARI can be safely used in combination with other medicines, such as SGLT2 inhibitors and that patients may benefit from earlier use of FILSPARI. Such data will further support the progress towards FILSPARI achieving foundational care. Beyond the U.S., we have continued to work closely with our partners at CSL Vifor on the conditional marketing authorization application that is currently under evaluation in the U.S. EU. Following a procedural clock stop to review the 2-year data, we believe that we are well positioned for a positive CHMP opinion this quarter and an approval decision next quarter.
Beyond the CSL Vifor territories, our recent agreement with Renalys provides FILSPARI with a regulatory pathway that has the potential to deliver FILSPARI across a number of Asian countries in the coming years. Overall, we are very pleased with the important groundwork laid in 2023 and we see a clear road map for increased utilization of FILSPARI for IgAN in 2024 and beyond. Turning briefly to FSGS; with no approved therapies for tens of thousands of patients with this condition and the high rate of progression to kidney failure; we are committed to trying to find a path forward for sparsentan and FSGS. We are taking a measured approach to evaluating our data sets and working with the community to reengage the FDA later this year towards the goal of ultimately being able to submit to have an FSGS indication added to the FILSPARI label.
We anticipate being able to provide an update on this work late in the year. As Eric highlighted earlier, our enthusiasm and pegtibatinase continues to grow. We were pleased to achieve alignment with regulators on the design of our Phase III program and to reach our goal of initiating the Phase III HARMONY study before year-end. This study employs an innovative design with measurements very similar to our highly successful Phase I/II study which we believe provides a high probability of success as a registration-enabling study. The Phase III HARMONY study is designed to recruit up to 70 patients with HCU and evaluate change in total homocysteine from baseline to week 6 to 12 as the primary endpoint. This is the measurement for which we saw a 67% reduction in the highest dose cohort in the COMPOSE study.
Patients will be followed in the double-blind period for 24 weeks in total to establish durability of effect and a robust safety database. Masimo's [ph] consistency there is a 10-week screening and diet stabilization period prior to randomization in HARMONY. And patients who complete the full double-blind period will be eligible to enroll into an open-label study called ENSEMBLE [ph], where there is a protocolized diet liberalization substudy for eligible patients who have well-controlled total homocystine. This portion of the study is designed to generate data throughout the life of the program and we believe it will ultimately be able to help patients understand how they may be able to increase protein intake by taking pegtibatinase, a key area of need for patients living with HCU.
As we move through 2024, we will be focused on ramping up enrollment in the HARMONY study and scaling our pegtibatinase manufacturing activities to support the full program and future commercialization. We look forward to top line data in 2026 with a potential approval in 2027. I'll now turn the call over to Peter for the commercial update. Peter?
Peter Heerma: Thank you, Jula. Looking back on 2023, we made robust progress on what we have outlined during our launch call in February last year. [Indiscernible] as the future foundational care for patients at risk of rapid progression through educating our nephrology targets, securing broad access and ensuring a positive initial FILSPARI experience for patients and physicians. And I'm really proud on the progress our commercial team has made in the past year, especially while adapting to the initial promotional restrictions that come with accelerated approval and an unexpected advance program for liver monitoring. By the end of 2023, we reached 5,700 nephrologists with our sales team in regular face-to-face educational interactions that is 95% of our target base of 6,000 nephrologists that we believe treat about 85% of the addressable IgAN patients in the U.S. These efforts resulted in strong and steadily increasing demand with increasing breadth and depths of prescribing nephrologists.
In particular, in the fourth quarter, we built strong momentum for FILSPARI demand and I couldn't be more pleased with how we ended the year. It was encouraging to see further growth in new patient start forms or PSFs after ASN Kidney Week, where the confirmatory PROTECT study results were presented and published. Importantly, we also received further validation of the FILSPARI profile from [indiscernible] leaders which was evidenced by an increase in key opinion leader prescribers. We ended the fourth quarter with 459 new PSFs which demonstrated quarter-over-quarter growth for each period in 2023. In fact, this is the first recent rare nephrology product that has shown a continuation of growth in demand during each period of the first -- in the first year of launch.
In total, we received more than 1,450 patient start forms in 2023 which clearly indicates FILSPARI is helping fill a significant need for the nephrology community. On the payer front, we established a strong base allowing broad patient access. By the end of the year, coverage reached about 70% of U.S. lives. In the fourth quarter, we added about 180 new FILSPARI specific formularies. And overall, more than 1,000 formularies have included FILSPARI with authorization criteria that are generally consistent to the FILSPARI label. And if we account for plans that didn't yet include FILSPARI, would have a clear pathway for [indiscernible], that total is about 89% of the U.S. lives. Following our team's quick adjustments to improve patient education and provide further support for the liver monitoring REMS in the second half of the year.
We saw continued progress in our lead measures of REMS certifications in the first 14 days after receiving patient start form. This also led to a growing number of reimbursed patients initiating therapy during the quarter. And we are hearing almost on a daily base on patients and physicians how impressed they are with the results that they achieved with FILSPARI. These results are consistent to what was observed in the PROTECT trial with rapid and sustained proteinuria reductions versus safety profile similar to ACE inhibitors and ARBs. This is encouraging for patients that started using FILSPARI and likely why we are seeing high compliance rates so far in the loans [ph]. All these accomplishments resulted in a significant increase in net FILSPARI sales.
In the fourth quarter, we reported approximately $15 million in net product sales which resulted in nearly $30 million for the year. [Indiscernible] also remained steady, contributing approximately $25 million in net product sales in the fourth quarter. We recently learned of an approval of a generic trial that we see was a narrower labeled and we will continue to monitor what impact that may have throughout the year. Overall, we ended 2023 with solid execution and this provides us with a robust foundation for strong performance in 2024. In fact, in the first 6 weeks of the New Year, I'm pleased to see our strong FILSPARI performance continue. Our team is ready to show the true potential of FILSPARI in this New Year and we have multiple inflection points throughout 2024 that provides confidence in continuing growth.
Let me highlight the four areas that I am particularly excited about in the coming year. First, if we achieve full approval as targeted for later this year, we anticipate that an updated and potentially broader label will provide greater support for physicians to prescribe FILSPARI to more of their patients. Second, as Jula mentioned earlier, we anticipate that FILSPARI will be included in the global KDIGO guidelines, scheduled to be updated this year. This will potentially provide uniform guidance for physicians to choose FILSPARI as an early treatment for their patients. Third, additionally, if the guideline revision emphasizes earlier intervention by lowering the proteinuria targets, it would likely amplify the urgency to diagnose and treat patients earlier.
We believe this would increase the number of patients that would be eligible for FILSPARI and importantly, a broader label together with a potentially lower target to treat earlier in the guidelines, would allow us to establish FILSPARI as a foundational treatment in a larger addressable patient population. And fourth, we expect the additional clinical evidence Jula highlighted earlier will ultimately provide additional support for physicians to treat earlier with FILSPARI and use it in combination with other available medicines for patients that may need more aggressive treatments. With all of this in mind, I could not be more excited about FILSPARI's prospects in this New Year and we feel strongly that we are well positioned for significant growth in 2024.
Let me now turn the call over to Chris for the financial update. Chris?
Chris Cline: Thank you, Peter and good afternoon, everyone. Following our fourth quarter results, we are in a strong financial position. From an operational perspective, we continue to grow revenues and we have focused our investments on the ongoing launch of FILSPARI and IgA nephropathy and the advancement of our Phase III pegtibatinase program. For the fourth quarter of 2023, net product sales were $39.9 million compared to $25.8 million for the same period in 2022. The increase is attributable to growth in net product sales from the ongoing launch of FILSPARI and IgA nephropathy. During the quarter, we also recognized $5.1 million of license and collaboration revenue which results in $45.1 million in total revenue reported for the period compared to $29.3 million in the same period in 2022.
Research and development expenses for the fourth quarter of 2023 were $59.7 million compared to $58.1 million for the same period in 2022. The difference is largely attributable to the continued advancement of our pegtibatinase clinical program, partially offset by reduced investment in our FILSPARI Phase III programs following the readouts from the 2-year endpoints. On a non-GAAP adjusted basis, R&D expenses were $55.3 million for the fourth quarter of 2023 compared to $52 million for the same period in 2022. Selling, general and administrative expenses for the fourth quarter of 2023 were $63.6 million compared to $57.1 million for the same period in 2022. The difference is largely attributable to the commercial launch-related activities following the accelerated approval of FILSPARI in February of 2023.
On a non-GAAP adjusted basis, SG&A expenses were $49.7 million for the fourth quarter of 2023 compared to $44.3 million for the same period in 2022. During the fourth quarter, we recognized $11.4 million in restructuring fees related to this strategic reorganization that was announced in December. Total charges related to the reorganization are expected to amount to between $12 million and $14 million. Total other income net for the fourth quarter of 2023 was $5.7 million compared to $1.1 million in the same period in 2022. The difference is largely attributable to an increase in interest income during the period. Net loss, including from discontinued operations for the fourth quarter of 2023 was $90.2 million or $1.18 per basic share compared to a net loss of $65.8 million or $1.03 per basic share for the same period in 2022.
On a non-GAAP adjusted basis, net loss, including from discontinued operations for the fourth quarter of 2023 was $71.8 million or $0.94 per basic share compared to a net loss of $46.9 million or $0.73 per basic share for the same period of 2022. As of December 31, 2023, the company cash, cash equivalents and marketable securities of $566.9 million. Looking ahead, we expect meaningful growth in net product sales of FILSPARI in 2024 and we look to achieve non-GAAP operating expenses below $400 million for the year. We also anticipate meeting milestones for both FILSPARI and pegtibatinase that will result in us making expected net payments of approximately $50 million during the year. With our strong balance sheet, expected growth in FILSPARI revenues and measured investments we currently expect that our cash balance can support operations into 2028.
I'll now turn it back over to Eric for his closing comments. Eric?
Eric Dube: Thanks, Chris. We are entering a new phase of growth for Travere. Our organization is well positioned with a strong financial foundation to continue advancing FILSPARI and pegtibatinase as potential future treatment standards for their respective rare kidney and metabolic disorders. Moreover, these global markets collectively are projected to exceed $10 billion in the coming years. Our unrelenting drive is based on our desire to deliver life-changing therapies to people affected by IgAN, HCU and potentially FSGS, who historically have had little to no innovation for their condition. We see near-term and long-term growth through the following: the continued strong execution of our FILSPARI launch, the expected conditional approval of sparsentan in the EU and full approval of FILSPARI for IgAN in the U.S. with potential broader labeling, updated IgAN treatment guidelines and further data generation to reach the growing number of patients in need of a better therapy.
Finally, I'm particularly excited about the advancement of our development program for pegdibatenase as the only potential disease-modifying therapy in a market that is expected to grow meaningfully over time. This year, we look forward to raising awareness of HCU and enrolling the Phase III HARMONY study with a goal of achieving top line data in 2026. Let me now turn the call over to Anne to open up the lines for Q&A. Anne?
Anne Crotteau: Thank you, Eric. We can now open the line-up for Q&A. Jenny.
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