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Presentation

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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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.

Operator: And our next question will come from Greg Harrison with Bank of America.

Greg Harrison: Are you able to give any color on the volume of patient start forms in the periods before and after the announcement of the PROTECT data, and what feedback are you hearing, from physicians on their appetite for prescribing FILSPARI in light of the data?

Dr. Eric Dube: Greg, thanks for the questions. I would say, before handing it over to Peter to provide a bit more perspective on what he is hearing including some market research that his team quickly did. It is really too early to be able to look at projections sort of for after PROTECT in terms of prescribing. What I can say qualitatively coming out of ASN where there was much greater exposure to the actual data was a real excitement, particularly for those that attended ASN much more academic. Peter’s team did some really great research quickly to understand that. So, Peter, why don’t you share a little bit more about what your team learned.

Peter Heerma: Thanks. Thank you for that question. I would say, first of all, the patients start forms of 430 in the third quarter. I think it is a really good number and that lead to, like, a thousand pages for a function only the first seven-and-a-half months. So I think we are making really good progress there. To Eric’s point, it is too early after the top-line data announcement to see any change in inflection But I think overall, what we saw in the market research and it was those market research, right, after the press release of the top-line is that, there is good confidence in the profile of your style. And having been at the ASN and having had many of the conversations with physicians, I think, there was a really good reception of the FILSPARI profile, the totality of the data, and what FILSPARI to need for those physicians patients. So I think overall good reception and more to go.

Operator: And our next question will come from Vamil Divan with Guggenheim Securities.

Vamil Divan: Hi. Great. Thanks for taking my questions. I am just curious, if you can share some more feedback on the REMS and safety side of things. I think you said you have now touched about 5,500 nephrologists, I believe, was the number you shared. Can you share anything in terms of how many nephrologists are now sort of worked their way through the REMS program are certified to prescribe it? And then again, the team has any other questions, just any feedback on the safety side of things, now that we have seen, the doctors in the poll, data both on PROTECT as well as DUPLEX?

Dr. Eric Dube: Vamil, thanks for the questions. Before I hand it over to Peter, what I will just share is that, we can provide some qualitative and directional feedback on the REMS as well as safety profile. We are not providing metrics on REMS certification, but we continue to see that grow. Peter, why don’t you talk a little bit about what the reaction and what direction you are hearing both from the physician and the patient perspective? And, certainly, Jula, if there is anything further you want to add on reactions to safety coming out of ASN by all means to add that. Peter?

Peter Heerma: Certainly, Eric, And I think you were referring to the amount of nephrologists that we have seen in face-to-face interactions that indeed I did call out 5,600 nephrologists that we have seen in face-to-face interactions with our field force is the launch. And that is — I think a very good progress because as we announced during the launch call, we are consistently want to call on about 6,000 nephrologists and discovering about 85% of the patient population. And so, I think we are making really good progress and we are nearly there from overall nephrology perspective. With regards to the safety profile, I think that was the second part of your question. Maybe Jula, that’s a more an appropriate question for you to answer.

Dr. Jula Inrig: Yes, I think that I would respond significant reassurance with regards to the safety profile around sparsentan across the program to date, both PROTECT and DUPLEX where we saw the exact same safety profile with regards to the liver elevations of 3x upper limit of normal, and really no new elevations since our interim from PROTECT. And so, where physicians rapidly move to is, can this be changed over time, which of course we will readdress this as we continue to accrue data and go back. But that’s where physicians quickly move to. So we feel reassured by the safety profile at this time.

Chris Cline: Well maybe I can just add one other insight that I think is, might be helpful. And it’s really behind some of the comments that Peter shared in his prepared comments. And that’s really the reaction of physicians versus patients to the REMS. Most physicians are familiar with how to read prescribing information, what a box warning is and what a REMS is. And in fact, many nephrologists have familiarity and are accustomed to REMS. For patients on the other hand, some of them may just be accustomed to going to their local pharmacy and picking up a prescription for an ACE or an ARM or others. So for some patients, it requires a bit more education, a bit more handholding through the process for that segment of patients that Peter talked about.

It really does require a bit more information, education and support. And so, there is a segment as we refer to where the REMS does take a little bit more time. But overall, what we’re hearing from physicians is, the REMS doesn’t take that much time. It’s very straightforward for many patients, it works incredibly well, but I think we do need to make sure that we’re providing all patients the information that they need to be able to move from patients start form to actually fulfilling their prescription. So, I think that was the key insight and the pivot that we had this quarter to make sure that we’re able to move all patients as quickly through the process as possible.

Operator: And our next question will come from Liisa Bayko with Evercore.ISI.

Liisa Bayko: Can you just give us a little detail on things like gross to net, for example, where you’re at there, and then actually how many patients did you have on therapy by the end of the quarter?

Dr. Eric Dube: Chris, why don’t we have you go through gross to net, and Liisa, I’ll say that, we are not yet in a position to be able to comment on number patients on therapy or other types of KPIs that you might be looking for because as you can imagine, the first year of launch it is quite variable. You’ve got patients that are on free drug, as well as just working their way through the reimbursement process. So, we’re not in a position to be able to come in at this point. What I can say is that we continue to see very strong demand and we continue to see that inflection in revenue that we expect to continue and become more closely aligned with the underlying demand of patient start forms. Chris, do you want to comment on gross to net?

Chris Cline: Sure. So Lisa, consistent with our prior guidance, we expect that stable state sparsentan or FILSPARI gross to net to be mid to high teens, and that’s consistent with what we see today. There’s going to be some variability quarter to quarter as we’re getting all the processes and as Eric highlighted, the different elements of reimbursement, et cetera, in place. But overall, we feel very confident that we’re going to end up in that mid to high teen range and that’s consistent with how we’re operating now.

Liisa Bayko: And how many patients did you have on at the end of the quarter roughly?

Dr. Eric Dube: We did not report on numbers of patients on therapy because again during the first parts of launch, it is variable. And so, getting to a study state would allow us to be able to report on a consistent basis to be able to project forward. So at this point, we’re going to continue to report on those three metrics since that we shared and guided to on in February of patient start forms payer coverage and revenue. And I think as you see from the revenue inflection that we had from Q3 to Q4 that we have many more patients that are on reimbursed medicine. And we would expect that only to continue through the fourth quarter and beyond.

Liisa Bayko: And then can any commentary on or update on the new guidelines coming out the KDIGO guidelines?

Dr. Eric Dube: Jula, do you want to take the latest on the guidelines?

Dr. Jula Inrig: Yes, we’re very pleased that we were able to get our PROTECT results published and in peer reviewed. We knew that our interim data was going to be included in the KDIGO guidelines and now that we have the complete data. They will also be able to be reviewed and included in the guidelines. Those will be available for publish or public commentary in the very first quarter of 2024.

Liisa Bayko: And then just final question for me, kind of as we see the landscape evolving, I was really kind of struck by the eGFR results that [indiscernible] presented for sibeprenlimab, which is one of the B cell modulators targeting April. I guess in the context of having that kind of effect on eGFR, like how do you see kind of the need for other mechanisms on top of that, if you’re able to keep eGFR relatively flatter? Is there still like you can do better and what about proteinuria and all those other things? So just curious how you were thinking about kind of sparsentan in the context of kind of that kind of a remarkable change in eGFR?

Dr. Eric Dube: Yes, I’ll have Jula talk about the view of maybe hers or of nephrologists in kind of the evolving treatment landscape. What I’ll share is that the thing that really excites us about the profile of FILSPARI is the ability to combine with all of these new classes of therapies that are being developed. And each of them are being studied on top of RAS inhibition that occurs of to address the over activation in the kidney. I think now what we’ve seen with our two year data is the superiority of FILSPARI versus RAS inhibition alone. So, it really is the question of how and when and in what patients do you combine is really the way that we think about it in the positioning and that’s what we mean by that foundational therapy. I know that a lot of this data’s early, but Jula, do you want to comment on how you view as a nephrologist and what you’re hearing from your peers in this emerging treatment landscape?

Dr. Jula Inrig: Yes, I think it’s important, as Eric said, you need a foundational treatment. When you get diagnosed with IgA nephropathy, you have already damage that’s ongoing, and you need to reduce the proteinuria to preserve kidney function. And what we have demonstrated with PROTECT is that you replace your RAS inhibitor with sparsentan, you can get incrementally closer to a normal function in the tubes. If you want to then add additional treatment on subsequently, if that patient either doesn’t get into complete remission or continues to progress, certainly, that’s an alternative treatment option to add on, with regards to the sibeprenlimab data, that’s one year data. We showed similar 36 week data. If you start treatment very early, the SPARTAN trial data, 80% reduction in proteinuria two-thirds of patients getting into complete remission and no change in eGFR early data.

So again, we do need to follow the data that we are seeing from these Phase 2s to further out. But I do believe that sparsentan as foundational treatment with the increment of other therapies we want to preserve kidney function as much as we can, and combination therapy is absolutely the future of treatment for patients with IgA nephropathy.

Operator: [Operator Instructions] And our next question will come from Mohit Bansal with Wells Fargo.

Unidentified Analyst: This is Adam on for Mohit. Thanks for taking our question. Would you briefly touch upon the early persistent data you have for patients on FILSPARI? And how you think REMS contributes to this? And then separately, we would appreciate an update on what you are seeing in terms of step edits and prior ops that let you have more formularies covering FILSPARI?

Dr. Eric Dube: Thanks for the question. Peter, I will turn to you in just a moment to talk about, to explain a little bit more about, persistence compliance as well as step edits. But before I do, I want to share a story that I have heard from a patient who really talked about their journey with IgA nephropathy. And he shared this at ASN last week. Where I think initially he had some questions or really uncertainties about what a REMS would mean for him. And this was a patient that struggled to get his proteinuria down for years, and his physician offered him FILSPARI. And you can imagine that, like, for many patients, having to go and do additional testing and starting a new therapy, there were many questions. What he shared, and I think was really an uh-huh from many of us in the audience was that, he looked forward to those monthly calls with the nurse from our total care center.

And the ongoing monitoring and support that he felt from our hub services, our patient services, as well as those regular check-ins from his physician. So actually, that may be for many patients a real additional support for that longer-term compliance persistence with therapy. And we know that for many patients, particularly those that are otherwise young, healthy, working, busy, it can be a challenge. So I think that it would really is a real benefit. We have heard lots of questions about the challenges of REMS. I think he did an incredible job to articulate what he found in value of that regular monetary and really people looking after his health. Peter, do you want to share anything further on the persistence as well as the payer coverage?

Peter Heerma: Certainly, Eric, and thanks Mohit, for that question. I think your question was on three components. One was on payer approval, one was on compliance persistent, and one was on REMS if I understood you correctly. So let me go one-by-one. I think really pleased with the payer approval rates that we are seeing for FILSPARI, which closely matches the progress we’re making in the overall coverage as well. So, I think we have made really good progress there. And the compliance and persistence patients are on products in clinical results and remain on product. I know this is one of the questions initially, with the monthly monitoring, will patients remain on therapy? And what we are seeing so far, and it’s still early days, we see strong compliance and persistent rates.

With regards to the REMS and patient perception of the REMS, I think for a large amount of patients, the process is working very well. And these patients receive FILSPARI well within benchmark numbers. But as Eric mentioned earlier, and I was alluding to that in the prepared remark, there’s also a segment of patients that need a little more handholding through education and support. I think you have to realize that it was only until the second half of June, if we had the opportunity to educate physicians and patients other than the package inserts as part of the FDA guidance for accelerated approval. So really by the end of June, we were able to provide that additional educational support for patients. And with additional support, we are seeing that the early REMS certification for that group of patients, it’s already improving.

It also translates them into an increase in full FILSPARI shipments to patients.

Operator: And our next question will come from Carter Gould with Barclays.

Edwin Delfin: Hey guys, you’ve got Edwin Delfin on the line for Carter Gould. Thanks for squeezing us in here. We have a question on pegtibatinase for HCU. I know you’ve completed the end of Phase 2 meeting, but have you guys received clarity from the agency on amount of follow-up and, any impacts on clinical measures beyond the biomarker impact for the primary endpoint? Thanks.

Dr. Eric Dube: Edward. Thanks so much for the question. And we are really excited about our HCU program and moving into Phase 3 here very soon. Bill, why don’t you take that question to share a little bit more to answer those questions, but before I turn over to Bill, I will say that we’ll be sharing much more detail, once we initiate the trial on aspects of the trial design. But certainly, Bill can share what we’ve shared publicly at this point.

Dr. Bill Rote: Certainly, now that I’m off mute, we’ve completed the end of Phase 2 as you noted. We’ve had very collaborative discussions with the agency and I’m happy to report that we’ve aligned as we intended to all along on total homocysteine as the primary endpoint for the study. There are various aspects of the program that look at clinical benefit. Some of those are measures of function. Some of those are quality of life. Some of those will be looking at what we’re able to do with diet. And as Eric said, we’re going to have more detail about this once the study starts, we’ll give you a full picture of the Phase 3 program. And I think you also asked around overall study duration. If we look at the range of other enzyme replacement therapy studies, the period of observation ranges from 6 months to 18 months and we’ll be in that window and most of those studies are less than a hundred.

So I think that gives you kind of a ballpark of where we’re headed and we’ll have more once the study has started.

Operator: And our next question comes from Laura Chico with Wedbush Securities.

Laura Chico: I wanted to go back to the patient start forms for a moment for FILSPARI, and 430 over 417. I guess the question I’ve got is, have you plateaued in terms of how high you can go with patient start forms? If I look back, for example, at the first year of TARPEYO was launched, I believe they peaked out at 589 enrollments during those first four quarters. So I’m curious as to whether you think you can actually grow this much more beyond 430?

Dr. Eric Dube: So, Laura, I think the question is unequivocally yes. We have nearly a thousand patients start forms through the third quarter of this year. And as we think about the number of patients that believe are addressable that that will increase, I’ll turn it over to Peter, but I want to be able to emphasize our confidence and be able to identify those patients. But equally the enthusiasm that we hear from nephrologists, not just that anticipate prescribing, but those that have prescribed, we’re seeing repeat prescriptions and new prescribers added every month. That’s a really important lead measure for any launch. In my experience, those are critical. Those and the clinical experience, the feedback anecdotally we’re hearing, we are seeing really positive results there. So, we do expect it to grow. And Peter can talk a little bit more about what he’s seeing and where we expect to go from here.

Peter Heerma: Yes, thanks Eric and thanks Laura for that question. I think there’s really three components here that I would like to highlight. To answer your question, like how far can you go and how many patients are out there? The first one is, I would say there have been limited innovations in nephrology in the last 30 to 40 years. And that’s what you see as well with physicians. Nephrologists are relatively conservative in adaptation of new medicine, and part of that is also the education in particular in IgA nephropathy where there have been little investments in education. And I think the RaDaR publication that we discussed actually at the last earnings call and Jula can provide a little more context on that really is providing that that increased in urgency of to treat.

Because historically, a lot of the physician thought like IgA nephropathy is a relatively slow progressive disease. But what we are seeing right now based on new data and registry research is that those patients actually progress much more rapidly. So I would expect that the patient population over time will be increasing also with new guidelines in new guidance. So within that context, I would say I’m really pleased with the progress we have been making. To Eric’s point, we have now nearly a thousand patients in the first seven and a half months of FILSPARI. And I see with all the continued investments and education in community, there is that recognition that these patients should be treated more early and more urgently. So Jula, maybe we can provide a little more context on your perspective on, for example, RaDaR.

Dr. Jula Inrig: Yes. I think that as we educate the physicians and they realize that what they historically understood and were trained in their educational program 10, 20, 30 years ago, that IgAN is a benign disease and they can send them back to their primary care physician and see them every few years is not the case. And the patients even with 500 milligrams of proteinuria are at risk of progression to kidney failure within their lifetime. We had additional data presented at ASN that confirmed the RaDaR data and this is U.S. registry data that showed similar results. Patients even with lower ranges of proteinuria are at risk to progression to kidney failure. That dissemination of information needs to get out to the community physicians, who don’t always go to these kidney meetings and don’t always read the journals.

And as they see this information, that urgency to then treat their patients increases. And to Peter’s point, then that translates into the need to treat them with a foundational medication such as FILSPARI, which reduces proteinuria and preserve kidney function.

Operator: And our next question will come from Tim Lugo with William Blair.

Unidentified Analyst: Hi. This is John on for Tim. Thanks so much for squeezing us in. So with the recent irbesartan data, I was wondering if you could just give us some thoughts on that data and how you might think that might impact the regulatory landscape moving forward.

Dr. Eric Dube: I mean, we certainly expect that, there are going to be additional data, potentially new therapies that are going to be approved. I think it is hard for us to comment because there were no data disclosed. And so, I think we will have to wait to see what is presented from irbesartan for us to be able to comment. I mean, our working assumption is that it is an endothelin blockers. So it should show benefit. We certainly have demonstrated that with PROTECT with the sparsentan, and we have seen that proof-of-concept with other endothelin blockers, but we’ve got to see the data on benefit and safety before we can comment.

Operator: And our next question will come from Alex Thompson with Stifel.

Alex Thompson: Great. Thanks for taking my question. I guess in the past, you have commented through with this uptick in sales in the second half of the year that you are comfortable with consensus numbers for the year, which I think on Bloomberg are in the low 30 million range at this point. I guess maybe if you could reiterate your confidence there? That would be great. And then could you also maybe comment on the impact at all of stocking in the revenue this quarter? Thanks.

Dr. Eric Dube: Thanks, Alex. I will take the first part of that question and then I will turn it over Peter to talk about the impact of stocking throughout the year. What I can say is that, I am incredibly proud of the progress that we have made on FILSPARI launch and the ability to continue to grow demand, to be able to show the early signs of that inflection that we expect. And as we have guided in the back half of this year, we will start to see revenue track more closely with that underlying demand with a number of patient start forms. I think as Peter alluded to, we still have some room to go in terms of aligning that more closely. We expect that we are going to make that progress in the fourth quarter. And in fact, when we look at other rare renal launches, we have seen that there is a meaningful proportion of their first year of sales in that fourth quarter.

We fully expect that to be the case with us as well. We have seen the inflection so far. And in terms of providing specifics on guidance, we have not provided that this year. We won’t for the rest of the year. But we are confident in the continued selection of both patient start forms and end of revenue.

Operator: And our next question will come from Allison Bratzel with Piper Sandler.

Allison Bratzel: Hi. Good afternoon guys. And thanks for the update and for taking my question. First one on the SPARTAN study, update at ASN. And this is kind of a follow-up to a prior question and prior discussion. But just based on your interactions with Nephrologists and KOLs, could you help us understand what kind of additional clinical data you think you need to generate to really catalyze or just drive widespread first line use of FILSPARI in IgAN or just earlier line used more broadly? Thanks.

Dr. Eric Dube: So, first let me take a part of that and I’ll turn it over to Jula and then to Peter. What I would say is our focus right now is within, under accelerated approval, we’ve got a focus very much on the label at hand. We would expect that with traditional approval that we would expect to see that expansion. But Jula, do you want to comment on what additional data you’re hearing from Nephrologists, and Peter then perhaps further what you’re hearing in market research?

Dr. Jula Inrig: Well, to Eric’s point, right now, we’re primarily being utilized in prevalent IgA nephropathy patients who remain at risk for progression per our label. Physicians are very excited about the sparsentan data, because we are one of the only ones that’s generating this data. Patients who are newly diagnosed, who haven’t failed RAS inhibitors yet, and the potential for sparsentan to be used as a first line treatment and the magnitude of proteinuria reduction in kidney function preservation. So I think that the sparsentan data can incrementally show that. The other important data that we’re going to have in this is some of the biomarker data, the fluid data, the bio impedance that shows the safety profile, as well as some of the novel data that’s going to come out from this study is the repeat kidney biopsies in these patients.

So incrementally, the information that’s going to come out of sparsentan will further give confidence with regards to the place of therapy that sparsentan can play in patients with IgA nephropathy.

Peter Heerma: Yes, thank you. And building on that, I would say we have very strong data now for patients that basically have failed RAS inhibition, both ACE and ARBs. And we know for market research that over half of the patients that are on ACE and ARBs are not getting to the target levels of proteinuria as a physician would like to. So, we have still a lot of patients to go in that segment. But now we also have patients’ information and very strong data in patients that are RAS naive. And then, I think the third category is really building upon the evolving treatment landscape and being prepared for combination therapies, as Jula was mentioning. And I think the combination data that we presented last week at ASM with SGLT-2 provide that additional context as well. So, I think we are building the data and the evidence across a broad patient population that could benefit from first-party treatment.

Operator: And we’ll take a question from Ed Arce with H.C. Wainwright & Company.

Ed Arce: Peter and Jula, it’s great to see you this weekend in Philadelphia. Three questions for me. First of all, in one of the sessions at the conference, I saw Eliza Thompson discuss the chronic versus total slope and basically acknowledge that there’s a hemodynamic effect there early on. And so in light of that, I’m just wondering if you could discuss your thoughts as you approach the meeting with the FDA and discuss all the other supportive data in the context of the totality of the data for full approval. And then two more just in terms of the ongoing launch of FILSPARI. Firstly, can you discuss the PFS in October, if there is any further acceleration from the third quarter? And then lastly, I’m wondering if you can discuss the conversion timeline from PFS to treatment initiation perhaps now and then also eventually steady state expectations?

Dr. Eric Dube: So, Bill, I’ll have you comment on the regulatory perspective and how we are thinking about the totality of data and Peter you can talk about directionally what we’re seeing in October as well as conversion bill.

Dr. Bill Rote: Certainly, thanks for the questions, Ed. I thought that was a very good session on IgA nephropathy endpoints and, and the question was put to Dr. Thompson about how is the agency looking at assessing all the different drugs that are in Phase 3 studies now for approval or moving toward that. And her remarks, one, they were very consistent with the discussion that we’ve had over the years around endpoints that there are different ways to measure kidney function. eGFR, she pointed out is a surrogate in itself, but it’s a validated surrogate. And for those patients with a high risk of kidney progression, they want to see a compound showing a meaningful effect on the rate of loss across the body of evidence. And they’re also looking for compounds that show an accumulation of benefit across various stages of the disease, whether they are early in the disease progression or later in that.

And I think that the data package that we have with the chronic slope, the total slope measurements pre and post, the overall absolute difference at two and a half years, the reduction in hard endpoints, the kidney failure endpoints, the increase in patients that get to complete remission. All of this on a background of a very safe therapy, it’s clear, mechanistically, there’s two things going on in these kidneys, angiotensin and endothelium, both driving negative effects and blockade of both together. It’s really required to have the best outcomes in these patients. So, I’m very confident in the fact that we have a very strong case to make with the agency. And I look forward to the review.

Dr. Eric Dube: Alright. Peter, would you like to comment on direction of what we’re seeing in October and the conversions which we’re not providing metrics on, but directionally?

Peter Heerma: Yes, I would say to your point Eric, we have to practice not to commend on metrics. Within the quarter with regards to demand, I would say that we see a continuation of new patient source forms coming in, so really pleased with that. And also to what I mentioned in the prepared remarks, we start to see like the increase in patient-ship. So, I’m really pleased with the progress and also expect to have that further inflection on revenue in first quarter and moving into 2024.

Operator: And that does conclude the question and answer session. I’ll hand the call back over to you.

Dr. Eric Dube: Thank you everyone for joining us for our third quarter 2023 financial results call. We look forward to providing additional updates on our progress. Have a great rest of your day and thank you.

Operator: Thank you. And that does conclude today’s conference. We do thank you for your participation and have an excellent…