Travere Therapeutics, Inc. (NASDAQ:TVTX) Q3 2023 Earnings Call Transcript

Travere Therapeutics, Inc. (NASDAQ:TVTX) Q3 2023 Earnings Call Transcript November 7, 2023

Travere Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.17 EPS, expectations were $-1.09.

Operator: Good day, and welcome to the Travere Therapeutics Third 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 third quarter 2023 financial results and corporate update call. Thank you all for joining. 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 November 07, 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?

Dr. Eric Dube: Thank you, Naomi, and good afternoon everyone. During the third quarter, we executed our key corporate priorities to further strengthen our leadership position in the rare disease community. Notably, during the quarter, we made progress with our launch of FILSPARI, and IgAN, and reported two year data from the PROTECT study that we believe will position FILSPARI to play an important foundational role in the IgAN treatment landscape. Additionally, we completed a successful end of Phase 2 meeting for our pegtibatinase program, putting us on track for the Phase 3 study initiation of pegtibatinase by year end, and we completed the divestiture of the bile acid product portfolio, enabling us to further focus on our key priorities.

Regarding the ongoing launch of FILSPARI, we continued to execute our strategy for FILSPARI to become a new foundational treatment in IgAN. In the third quarter, we helped reach even more patients, and every week we hear stories from physicians and patients of how well FILSPARI is working for them. Over the course of the quarter, we identified that additional patient education and support could improve the performance of the launch, specifically in onboarding new patients after a patient’s start form has been submitted and we quickly adjusted. Notably, we are seeing early positive trends from these adjustments throughout October, and Peter will provide additional details shortly. Overall, we have built a solid foundation of physician demand with growth in new patient start forms and payer coverage, and together with the initial signs of a positive impact from our enhancements in the quarter.

We have confidence in the successful future of the FILSPARI launch. We are just returning from ASN Kidney Week, the largest nephrology congress of the year. It was truly exciting and humbling to have both of our Phase 3 studies of sparsentan and IgAN and FSGS presented as late breaker oral presentations and published simultaneously in the Lancet and New England Journal of Medicine, world renowned peer reviewed scientific journals. Key opinion leaders who were at the Congress spoke positively about these groundbreaking results and recognized the role of sparsentan in providing deep and durable reductions in proteinuria and kidney function preservation compared to an active comparator for patients with IgAN and FSGS. This in conjunction with the Lancet publication on the PROTECT study should further lay the groundwork for potential inclusion into KDIGO guidelines for IgAN and should enable FILSPARI to become a new foundational therapy for this disease.

Consistent with previous guidance regarding our U.S. regulatory engagements, we remain on track to provide updates for both FSGS and IgAN this quarter. In parallel, our team is compiling the supplemental new drug application or sNDA for IgAN, so that we’re in a position to submit in the first half of 2024 for full approval in the U.S. In Europe, the conditioning — conditional marketing authorization evaluation for sparsentan and IgAN is progressing. Together with our partners CSL Vifor, we continue to anticipate a review opinion around year end from the CHMP. Regarding our exciting pegtibatinase program, we are on track for an expected Phase 3 study initiation by year end. In late October, FDA hosted a patient-focused drug development panel on classical HCU.

We are grateful for the HCU patients and their caregivers for sharing their stories about living with HCU. The need for better therapies, the ability to improve diet and improve testing was incredibly clear, and we feel the sense of urgency to execute our Phase 3 program. Our confidence and the potential for pegtibatinase to become the first and only disease modifying therapy for people living with classical HCU continues to grow, and we’re looking forward to sharing additional updates on the program in the near term. Lastly, during the quarter, we completed the sale of the bile acid portfolio to Mirum Pharmaceuticals. This transaction further strengthens our balance sheet and our focus on our key priorities of achieving success with FILSPARI and advancing pegtibatinase into Phase 3.

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

Dr. Jula Inrig: Thank you, Eric, and good afternoon everyone. Before walking through our recent data presentations at ASN Kidney Week, I’d like to recognize and thank our internal teams and external collaborators. Their significant efforts led to us achieving an impactful ASN Kidney Week and world renowned peer reviewed publications of both DUPLEX and PROTECT in a very short period of time. This rapid dissemination of data will help educate nephrologists on the strong clinical profile of FILSPARI and expeditiously provide the published data required for inclusion in clinical practice guidelines such as an up-to-date in KDIGO. We are empowered by the data shared in the 11 ASN abstracts including two high impact late breaker oral presentations with simultaneous publications on the Phase 3 studies of sparsentan and IgAN and FSGS.

Dr. Rohan, a globally recognized rare kidney disease expert presented our late breaking Phase 3 PROTECT study data that demonstrated the significant effect of FILSPARI in slowing disease progression in IgAN nephropathy. These results were met with broad support by the nephrology community and provide us with increasing confidence in FILSPARI’s prospective position as a foundational treatment in IgAN nephropathy. Simultaneously published in the Lancet, these data demonstrate that long-term treatment with FILSPARI has the potential to preserve kidney function and thereby significantly delay the time to kidney failure, faced with limited, safe, effective, and approved therapies without significant side effects for IgAN patients. This represents a significant medical advance.

Let me highlight, select data from the presentation and publication. Treatment with FILSPARI provided patients with an absolute 3.7 mL per minute higher eGFR at two years versus irbesartan. This in conjunction with the minus 2.7 and minus 2.9 mL per minute per year chronic and total eGFR slope respectively tells us that treatment with FILSPARI can provide patients with meaningfully slower rates of kidney function decline, particularly when compared to historical or recent Phase 3 IgAN trials. Additionally, these treatment effects on eGFR slope were consistent across baseline eGFR and proteinuria supporting the potential for FILSPARI as a foundational treatment across different stages of kidney disease. Treatment with FILSPARI demonstrated lower rates of the composite kidney failure endpoint of 40% decline in eGFR kidney failure or death compared to irbesartan.

FILSPARI resulted in a significant reduction in proteinuria and higher rates of complete remission compared to irbesartan and the reduction in proteinuria with FILSPARI was durable over the two year study. The safety profile of irbesartan was consistent across all clinical trials conducted to-date and comparable to irbesartan. Importantly, with no drug induced liver injury and no safety concerns related to fluid overload. We also presented important new data at ASN that we believe help to further build understanding and confidence in the clinical profile of sparsentan. These include the SPARTAN Study, which is evaluating sparsentan in newly diagnosed RAS naive IgAN patients. Initial results to date indicate treatment with sparsentan was well tolerated, and we have seen an approximately 80% reduction in proteinuria over 36 weeks and with minimal to no change in kidney function.

In the ongoing PROTECT open label extension, when SGLT 2 inhibitors are added to stable FILSPARI treatment, the combination has been well tolerated with a consistent safety profile and showed incremental proteinuria reduction benefit. These data strengthen the growing body of evidence that sets FILSPARI apart from standard of care in IgAN, suggesting early initial treatment with FILSPARI therapy alone or in combination with other medications has the potential to preserve kidney function, with this benefit accruing over time in patients with IgAN. Looking to next steps in IgA nephropathy, we believe these data from PROTECT should support an sNDA for traditional approval, potentially with label expansion to reflect the broader population and long-term benefits of FILSPARI.

Also, at ASN, Dr. Rote, a leading rare kidney disease expert, presented the full Phase 3 DUPLEX study results in a late breaker oral session that was also simultaneously published in the New England Journal of Medicine. The broader results show a consistent and durable effect of sparsentan on reducing proteinuria, greater rates of complete remission, positive trends on eGFR including fewer sparsentan treated patients reaching the kidney composite endpoint including kidney failure as compared to irbesartan. While the DUPLEX study didn’t meet statistical significance on the eGFR endpoint, the totality of data continued to build on our previously announced clinically meaningful results and showed a consistent and a well-tolerated safety profile.

With no FDA approved medicines indicated for FSGS and a growing incident, the unmet need in FSGS is incredibly high. We remain on-track to provide an update on our regulatory discussions this quarter. Shifting to pegtibatinase for the treatment of classical homocystinuria or HCU, we made advancements on our clinical and regulatory objectives. At the leading International Metabolic Conference or SSIEM, we presented additional data from the Phase 1/2 COMPOSE study that showed that pegtibatinase provides a clinically meaningful reduction in total homocysteine of 67.1% and that the treatment effect was consistent across patients. One patient achieved normalization of total homocysteine to less than 15. This threshold allowed for increased dietary protein, which can significantly enhance quality of life for patients, who are otherwise on highly restrictive low protein diets.

Additionally, our teams have the opportunity to engage with global HCU thought leaders, who are eagerly anticipating the study initiation. We have recently completed a successful end of Phase 2 meeting with the FDA and final preparations are underway in anticipation of a pivotal Phase 3 study initiation by year end. At that point, we will also look forward to sharing the key study design elements. With that, I’ll turn the call over to Peter for the commercial update. Peter?

Peter Heerma: Thank you, Jula. Good afternoon everyone. We continue to make sound progress in establishing the commercial fundamentals such as sparsentan to achieve our ambition of making it a new foundational therapy for IgAN property patients at risk of rapid progression. Since the beginning of the launch in February, we have engaged with over 5,600 nephrologists who are becoming increasingly knowledgeable on the promising clinical profile FILSPARI. These face-to-face interactions have resulted in new prescribers and additional usage within practices. Physician demand continues to increase and in the third quarter we have 430 new patients start forms. This represents nearly a 100 patient start forms since the initiation of the launch.

it speaks to the confidence nephrologists have in the clinical profile of FILSPARI and how they’re using it to help reduce their patient’s proteinuria. Notably, this patient start froms growth appear even with the slower summer season when fewer patients typically visit physicians as is common dynamic observed in benchmark launches and we observe growth following the some amounts. As you heard from Jula, her team of medical science renaissance have received positive feedback on the recent two-year results from the PROTECT study and that is consistent with our market research. In fact, recent market research conducted after the top line press release of the PROTECT two-year data announcements shows that after reviewing the two-year data, a significant number of nephrologists that prescribe FILSPARI expect to increase their utilization.

And 60% of surveyed nephrologists that do not yet have the prescriber experience indicate the plan to prescribe FILSPARI in the next three months based on this new data. Nephrologists also mentioned that they are encouraged by the rapid and sustained proteinuria reduction and that the eGFR results indicate a clinically meaningful long-term benefit on kidney function and delay in disease progression. The market research also indicates that the two-year safety profile could provide confidence for physicians furthering their intent to prescribe. This feedback gives us confidence that we will continue to see growing demand through the balance of the year and into ‘24. During the quarter, we also continued our progress in payer engagement with 67% of the U.S. lives covered of FILSPARI by the end of Q3.

Importantly, we nearly doubled our FILSPARI specific formularies from 50 by the end of the second quarter to more than 90 by the end of Q3, and we continue to be very pleased with the quality of these specific formularies and authorization criteria. From a revenue perspective, we reported to FILSPARI net sales of 8 million for the third quarter. We are beginning to see the expected upward inflection in revenue, but it is not yet closely matching demand seen from patients’ platforms. The main component of this is that there is a segment of patients who, without increased education and support on the REMS either have not yet initiated therapy or have taken longer to receive the first shipment. Importantly, our teams recognize the need for additional patient education and support in the fulfillment process for this segment of patients, and we adjusted quickly during the quarter.

We enacted targeted approaches to enhance communication and increased patient support, including physician guidance materials for their conversations with patients that are candidates for FILSPARI. We provided educational patient friendly communication materials in print and online, and additional patient support [indiscernible] total care nurse educators to walk patients through the REMS certification process. Notably, we are seeing early signs that these efforts from providing additional support for this segment of patients are working. Both the number of patients completing their REMS certification shortly after receiving a patient’s start form inpatient initiating payer therapy have been increasing. As we discussed on our previous call in February, FILSPARI’s launch would be a rolling one that’s unfolds over the first 9 to 12 months, punctuated by important milestones such as the two year data and peer-reviewed publications.

Moving ahead, we see further growth opportunity with the growing body of sparsentan evidence and in combination with SGLT2. The potential inclusion in prescribing guidelines such as FILSPARI to be updated next year, and most importantly, the planned submission of an SMBA for the full approval of FILSPARI in IgAN in the U.S. To close, we have great confidence in the future loss trajectory of FILSPARI based upon key fundamentals. First, FILSPARI’s profile, FILSPARI has a superior treatment profile compared to active compared to irbesartan and addresses the needs of patients with IgAN and risk of rapid progression. Two, demand for nephrologists. Prescribers are excited about the FILSPARI profile, which is demonstrated by the high patient platforms and the increasing new and repeat prescribers.

Three, the payer progress quarter over quarter we have shown increasing payer coverage growth. Now two thirds of the lives are covered and we are seeing high level of payer approvals, fulfills, aspiring. And four patient experience and adherence, we continue to hear feedback that patients on therapy have positive clinical results in their proteinuria levels, and once the patient starts FILSPARI, we are seeing that both compliance and persistence is high. Importantly, our team is focused on delivering a strong force water and we will continue to adjust based on ongoing learnings to achieve our ambition of FILSPARI becoming the foundational treatment for IgAN patients at risk of rapid progression. We now turn the call over to Chris for the financial updates.

Chris?

Chris Cline: Thank you, Peter, and good afternoon everyone. Following our third quarter results, we’re in a very strong financial position. From an operational perspective, we continue to grow revenues and we focus our investments for the future. We also completed the bile acid portfolio transaction, which has brought forward several years of value from the products and meaningfully strengthened our balance sheet. In our financials, the transaction is being reflected as discontinued operations, and as a result, the following discussion will be focused on our continuing operations unless otherwise noted. For the third quarter of 2023, net product sales were $33.9 million compared to $25.4 million for the same period in 2022. The increase is primarily attributable to an increase in net product sales from the ongoing launch of FILSPARI and IgA nephropathy.

Thiola and Thiola EC also continue to perform well, contributed $25.9 million in net product sales in the third quarter. This growth continues to be driven by organic patient demand. During the quarter, we also recognized $3.2 million of licensing collaboration revenue, which translates to $37.1 million in total revenue for the period, compared to $28.1 million for the same period in 2022. Research and development expenses for the third quarter of 2023 were $60.6 million compared to $57.1 million for the same period in 2022. The difference is largely attributable to the continued advancement of the Company’s pegtibatinase clinical program as it prepares for Phase 3 initiation, including clinical trial expenses and manufacturing as well as increased headcount.

On a non-GAAP adjusted basis, R&D expenses were $53.8 million for the third quarter of 2023, compared to $51.9 million for the same period in 2022. Selling, general and administrative expenses for the third quarter of 2023 were $67.8 million compared to $52.4 million for the same period in 2022. The difference is largely attributable to commercial launch related activities following the accelerator approval of FILSPARI in February 2023 as well as legal fees. On a non-GAAP adjusted basis, SG&A expenses were $51.8 million for the third quarter of 2023 compared to $43.5 million for the same period in 2022. Total other income net for the third quarter of 2023 was $3.4 million compared to total other expense net of $1.3 million in the same period in 2022.

The difference is largely attributable to an increase in interest income during the period. Net income including from discontinued operation for the third quarter of 2023 was a $150.7 million or $1.97 per basic share compared to a net loss of $69.7 million or $1.09 per basic share for the same period in 2022. On a non-GAAP adjusted basis, net income including from discontinued operations for the third quarter of 2023 was $173.5 million or $2.27 per basic share, compared to a net loss of $55.3 million or $0.86 per basic share for the same period in 2022. As of September 30th, 2023, the Company had cash, cash equivalent and marketable securities of $634.6 million. This includes gross proceeds of approximately $210 million received during the quarter in conjunction with the closing of the bile acid portfolio divestiture.

To maintain our strong cash position, we are following a disciplined capital allocation approach that is expected to reduce our cost base from this year while ensuring the appropriate investments are made in the ongoing FILSPARI launch and advancing pegtibatinase into Phase 3 development. Importantly, with these efforts and our reported cash balance at the end of the third quarter, we believe we can manage our balance sheet to support operations beyond 2026. Now turn it back over to Eric for his closing comments. Eric?

Dr. Eric Dube: Thank you, Chris. The Travere team has accomplished and executed on a remarkable number of milestones, making significant progress towards delivering innovative treatments for patients with rare diseases. Overall, for the third quarter, I remain incredibly proud of our team’s execution. We have successfully delivered a quarter demonstrating demand for FILSPARI. And with the PROTECT Phase 3 data in hand, we remain confident in our goal of enabling FILSPARI to ultimately become the foundational therapy in IgAN. Feedback from the scientific community at ASN is deeply encouraging as we continue our FILSPARI launch and continue our plans to pursue an sNDA to convert FILSPARI for traditional approval. We remain on-track to provide an update on our FDA engagements for both IgAN and FSGS this quarter.

Additionally, the data packages from the Phase 1/2 composed study for pegtibatinase continues to support its potential to become a transformative disease modifying therapy for the HCU community. We are excited to continue our efforts in this program and we remain on track to initiate a pivotal study by year end. As we approach the end of the year, our efforts are concentrated on finishing strongly. We are focused on executing continued progress with the FILSPARI launch, advancing pegtibatinase forward, and remain committed to delivering on our promise of making profound differences in the lives of individuals living with rare disease. I’ll now pass the call over to Naomi for the Q&A question. Naomi?

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

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Q&A Session

Operator: [Operator Instructions] We’ll now take the first question from Joseph Schwartz with Leerink Partners.

Unidentified Analyst: Hi, this is Will on for Joe. Thanks for taking our questions today. So to start for us, are there any notable patterns among the nephrologists that you have interacted with after the PROTECT readout? Just wondering, if there are any groups of decisions that seem to appreciate the totality of the data more as compared to those who may not be fully comfortable to profile yet profile? And then I have a quick follow up to this. Thanks,

Dr. Eric Dube: Will, thanks for the question. I will turn that over to Jula for her thoughts in the early reactions. What I can say is that I walked away from the ASN meeting with a very consistent view that nephrologists are excited about the profile. Jula, why don’t you share what you heard?

Dr. Jula Inrig: Yes, I would agree with what Eric just said. I think people were excited to see the results and the full data presentation that shows that sparsentan has the potential to preserve kidney function and significantly delay the time to kidney failure. The other important thing that was demonstrated is the rapid and the durable and sustained reduction in proteinuria. And when people get to see the totality of data, they feel like it’s very promising and has the potential to be foundational treatment in patients with IgAN nephropathy. And I would say, and the additional thing that I would say is looking to the future, the additional data that we showed with regards to earlier treatment from the sparsentan trial data that shows, if you treat people early even before they’ve seen ACE inhibitors or ARB, you see even more reduction in proteinuria in preservation of kidney function.

And if you used it in combination with [Indiscernible], we presented some of that early data as well. It’s safe and effective. So, I believe we saw a fairly consistent response to what we were able to demonstrate and show.

Unidentified Analyst: Great. Thank you. And just quick follow up here, given the literature suggests that the 40% reduction in proteinuria should lead to around a 2.7 mL per minute per year benefit on eGFR, but we saw a bit of a different relationship and protect. Have you heard any concern from docs on this? And now that you have the published data and have had some more time to review the results, do you have a better idea for what may have drove this outcome? Thank you

Dr. Eric Dube: Jula, I’ll pass that one over to you.

Dr. Jula Inrig: Yes, happy to answer that. When you look at the meta-analysis and all the data in combination, you’re looking at drugs with different mechanisms of actions. Some that acutely increase eGFR and some that decrease, this is a two-year study where over two years we saw an absolute difference in benefit of 3.7 mL after two years favorable for sparsentan and that’s a really important point to take into consideration. Obviously, the slope data is a modeled treatment effect where we see an annual benefit of greater than 1 mL per minute per year. And with drugs that have a slight acute effect, we know that that stabilizes kidney function over the long term. And the important thing to take away is that benefit accrues over time.

So each year you get a benefit. It’s 1.1 in one year, it’s 0.2 in two years, it’s 3.3 the next year. That’s the important take home message that you get, it cruises over the long term, which is very different than other drugs which might increase eGFR and don’t over the long.

Operator: And our next question will come from Anupam Rama with JP Morgan.

Anupam Rama: On the patient start forms, maybe you can give us a little bit more color beyond the opening remarks on what you’re seeing on the month over month growth here? Was there any particular headwind in the quarter beyond the summer seasonality that you talked about? Or was there a group of physicians that were kind of on the sidelines until they saw the two year PROTECT eGFR? Maybe give us a little bit more color on that.

Dr. Eric Dube: I will have Peter talk about what he is seeing in terms of prescribing.

Peter Heerma: I would say overall, we see good continuation of growth during the quarter and we have a little July inflection when less patients see their physician, and that’s what I recommended on in the prepared remarks. But overall, we see in continued growth from both new prescribers as well as repeat prescribers. And most of these patients are being managed through the community physician and that’s why we see the majority of the prescriptions coming from as well. But other than what I was talking about from a seasonality perspective, we didn’t see any other headwinds and I’m really pleased with the continued growth that we showed today in continuation of demand.

Operator: And our next question will come from Maury Raycroft with Jefferies.

Maurice Raycroft: I think, Jula just alluded to benefit occurring over time in the PROTECT study. Since patients on Sparsentan and PROTECT washout prior to starting the open label extension, how does this impact ability to show that treatment effect occurs beyond the two year period in case FDA asked for longer term data like this, I guess, is there a way you can account for the washout?

Dr. Eric Dube: Maurice thanks for the question. Jula. I will pass that one over to you.

Dr. Jula Inrig: Yes, Maurice, it’s a fair question because in reality, that’s not how we’re going to treat patients over the long term you would keep them on. But that was a question that wanted to be asked because the acute hemodynamic effect, and I would say the important thing is that what we saw was a durable treatment effect after patients went back to standard of care, where you saw an absolute overall favorable eGFR in patients sent a washout. Now we can continue to monitor those patients when they resume sparsentan. And I think the important data that we’ll have that comes out of open label is what is the trajectory for those patients who are on irbesartan versus when they switch over to sparsentan. So, it’ll be incrementally important information that we’ll provide over the long term. But to your point, we believe that the data that we have from the double-blind will be supportive of our sNDA filing, at this point in time.