Calliditas Therapeutics AB (publ) Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 23, 2024

There are 15 speakers on the call.

Operator

Welcome to this Q1 2024 report from Caliditas Therapeutics. My name is Rene Agier Luchander. I'm the CEO of the company, and I'm today joined by Frederic Johansen, our Chief Financial Officer Richard Phillipson, our Chief Medical Officer and Maria Thornsand, our President of North America. Next page, please. I'd like to draw your attention to the disclaimer notice, which covers forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, and I refer to public filings, including those containing risk factors.

Operator

Next page, please. So I'd like to take you through some of our Q1 highlights, which included the appointment of Maria Tornsand as President of North America, who brings over 10 years of rare disease experience to Caliditas, including multiple product launches, both in the U. S. And ex U. S.

Operator

Following our full approval in December last year, we were able to roll out new marketing materials to a fully trained field team in February, introducing the new indication of reduction of loss of kidney function to nephrologists in the U. S. In February, we also announced that the USPTO had issued a new patent covering Tarpeo with expiration in 2,043. In March, we could also announce that the FDA had granted us 7 years of orphan exclusivity for the new indication, which expires in December of 2,030. Finally, we also saw the approval in Singapore of Neficant, which will be known as Nephogan.

Operator

Next page, please. In terms of commercial highlights for the quarter, this I want to from a commercial perspective, this quarter was another record quarter in terms of enrollments with 705 new enrollments, reflecting a 27% increase over the previous quarter, in which we saw a 51% increase. This continued strong demand is very encouraging and we continue to see strong demand for the product in the market. As expected, we saw somewhat of a lighter quarter from a revenue perspective due to the typical reverification process, but this quarter also saw something quite unexpected in the form of a cyber attack on Change Health, 1 of the 3 providers of claims processing in the U. S.

Operator

We use one specialty pharmacy, Manchimpar Biologics, which exclusively use Change Health, which due to the delays in processing due to this cyber attack led to a negative impact on the quarter of approximately $4,700,000 resulting in net product revenues for the quarter of $26,800,000 We do not expect this to have an impact on our annual revenues as these revenues are not lost but merely pushed out in time, which is also borne out by the strong start to Q2 reflected by net product revenues quarter to date of approximately CAD25,500,000 with an additional 5 weeks to go in the quarter. The team is doing the quarter undertaking a very substantial number of TNT committee meetings, and we're starting to see some plans update their rules, but our expectations remain that the majority of plans will update their rules in the June, July timeframe. We're also hopeful that EMA will review and make recommendations a potential full approval of Campego at their next meeting. And in the period post the quarter, we also were excited to see the commercial launch in China by our partner Everest Medicines. Next page please.

Operator

Other post period events, so we did have a positive readout of our Phase 2 proof of concept trial in head and neck cancer, which Richard will give you a little bit more information on, but we saw statistically significant benefits in progression free survival as well as overall survival. There's also an R and D day that's been scheduled for May 30 to provide some additional information around cetanaxib. We also had supportive open label extension data, which was presented at ARADTA. There were several in the form of in the form of a notice of an allowance that was received for cetronaxib in the area of cancer. And as I already mentioned, there was the commercial launch in China by Everest Medicines.

Operator

Next page, please. So in conclusion to this section, I just want to highlight that we are very excited about what 2024 will bring following the successful start in Q1. That includes the potential full approval of Kimpego in Europe, the commercial build out in China with the potential for an Epikon to be included in negotiations related to national reimbursement already this year potentially the readout of Sertanaxib data from the Phase 2 trial in PBC, which we expect to be able to share with you in Q3 the readout from a Phase 2 investigator led study in IPF, which we're hoping to be able to share with you in Q4 Reimbursement decision is expected for additional countries in Europe by our partner working with that Stata. And then we're also hopeful that we will see the start of a Phase 3 study in Japan with neficon by our partner Viatris. And obviously, we're certainly looking forward to continued strong growth of Tarpeo in the U.

Operator

S. Market. And with that, I'm going to hand over to Richard Phillipson.

Speaker 1

Thank you very much, Rene. So next slide. I'd like to start by talking briefly about our recent conference attendance. Next slide. We're delighted to have had a strong presence at the World Congress of Nephrology, a conference organized by the International Society of Nephrology, which was held in Buenos Aires from 13th to 16th April this year.

Speaker 1

We presented 4 posters and also held a sponsor symposium where Doctors Richard Lafayette, Laura Mariani and Heather Riesch presented and discussed the evolving landscape of EGFR and proteinuria surrogate markers in IgA nephropathy. We very much valued the opportunity to meet with nephrologists from the U. S. And also from many other countries where we were able to talk about IgA nephropathy and hear about their experiences in managing the condition. I'd like to highlight some of the data and analyses that we presented at this conference.

Speaker 1

Next slide. One of the important observations that we made in the secondary analysis of the Phase III Neficar trial was that the time to 30% reduction in eGFR or kidney failure was significantly delayed in patients treated with nephikom. This analysis was presented in a poster at WCN and is also illustrated in a figure on the right of this slide, demonstrating a 55% reduction in the risk of an event in patients treated with nephicon compared to placebo treated patients, which was statistically significant with a p value of 0.0014. It's also noteworthy that this treatment effect was consistent irrespective of baseline UPCR category, with hazard ratios of 0.51.42 for the below and above 1.5 gram per gram UPCR categories. Other posters presented additional analyses from the NEFEQA trial.

Speaker 1

These posters included a subgroup analysis indicating that NEFEQA was efficacious and well tolerated irrespective of white or Asian race. A poster described the beneficial effects of neficon on the EGFR slope in patients with lower levels of baseline proteinuria. And finally, a poster describing quality of life outcomes. Next slide. So I'd now like to move on and talk about the recently announced results of the company's Phase 2 proof of concept study in squamous cell carcinoma of the head and neck.

Speaker 1

Next slide. As a brief reminder, this was a randomized, placebo controlled, double blind Phase 2 study investigating the effects of cetinaxib 800 milligrams twice daily in conjunction with pembrolizumab 200 milligrams IV administered every 3 weeks. Patients with recurrent or metastatic squamous cell carcinoma of the head and neck and with moderate or high levels of cancer associated fibroblasts in the tumor were randomized to receive cetinaxib or placebo on top of standard of care pembrolizumab. The tumor biopsy was taken prior to randomization and again approximately 9 weeks after the start of treatment. Treatment continued until disease progression.

Speaker 1

For brevity, I'll subsequently describe the treatment groups of setamaxib or placebo. But please remember that these randomized treatments were both given in addition to pembrolizumab. Next slide. The study was conducted at 37 sites in 7 countries. The last patient was randomized on the 25th October 2023, with data collected until all randomized patients had at least 15 weeks of follow-up.

Speaker 1

The primary analysis comprised 55 randomized patients and included 38 progression events, which was in line with our target for the statistical analysis. The treatment groups were well balanced at baseline and importantly, no patients were excluded from any of the analysis sets, nor were there any important protocol deviations that were considered likely to impact efficacy. Next slide. We observed statistically significant improvements in progression free survival and overall survival. Median progression free survival was 5 months in cetinaxib treated patients versus 2.9 months in placebo treated patients.

Speaker 1

The hazard ratio for this outcome was 0.58. In other words, patients treated with cetinaxib had a 42% lower risk of experiencing disease progression at any time during the study. At 6 months, 92% of setinaxib treated patients were alive compared to 68% of placebo treated patients. The respective percentages were 88% 58% at 9 months and the hazard ratio for this outcome was 0.45. In other words, patients treated with cetinaxib had a 55% lower risk of death at any time during the study.

Speaker 1

We also saw a higher percentage of setanaxit treated patients achieving a best response of at least stable disease. 70% of setanaxit treated patients showed a best response at least stable disease compared to 52% of placebo treated patients. And the responses in ceftonaxib patients appeared to be more durable. It was very pleasing to see a corresponding increase in CD8 positive T cells in tumor tissue in response to ceftonaxib treatment, which supports the mechanism of action of ceftonaxib in solid tumors and indicates an increase in the immunological activity of the tumor. There's no significant difference in the primary endpoint of best percentage change from baseline in tumor size.

Speaker 1

From a safety point of view, the tolerability of cetemaxib when given with pembrolizumab was generally good, with no new safety signals items. Next slide. So in summary, we saw statistically significant improvements in progression free survival and overall survival with more durable responses in Sesanaxit treated patients. There was an increase in inter tumoral CD8 positive T cells in Sesanaxit treated patients, which is in line with the mechanism of action of setanaxit and indicates an increase in the immunological activity of the tumor. Finally, cetinaxib was generally well tolerated when given with pembrolizumab and there were no new safety signals.

Speaker 1

So I'd like to now hand over to Maria Thornton.

Speaker 2

Thank you very much, Richard. Next slide, please. As you recall, in Q4 2023, we had our strongest quarter since launch with 555 enrollment forms. And in the Q1 of 2024, we continue to see a very strong demand for received by our patient services hub, Tarpeo Touchpoints. During this quarter, we also have 354 new prescribers, which is another record since launch.

Speaker 2

And we now have close to 2,000 health care providers who have prescribed Tarpeo. We believe the strong demand we are seeing is an early sign of the impact of our full approval, our new label with the removal of the UPCR criteria and physicians recognizing the impact Tarpeo has on reducing the loss of kidney function. Our total sales for TRYPEA in Q1 was $26,800,000 As Rene mentioned earlier, Q1 was impacted by seasonal changes due to the open enrollment period in the U. S. As well as the cyber attack on Change Health.

Speaker 2

And this does not impact our 2024 guidance. As you can see from our estimated quarter 2 sales to date, we've seen a very strong revenue in the 1st 8 weeks of the quarter with approximately $25,500,000 of net sales. Next slide, please. In the Q1, we launched the full approval of Tarpeo with multiple commercial and medical activities. As a reminder, Tarpeo is the 1st and only product approved by the FDA to reduce the loss of kidney function for patients at risk of progression.

Speaker 2

Our field teams are trained on our new label and are promoting it to healthcare professionals. We have also launched various new patient educational programs and materials. And for market research, we know that patients appreciate Tarpeo's 9 month treatment course with no REMS requirement Assertruv provides them with the freedom to complete a course and see the long term benefits. Our medical team have been engaged in multiple scientific exchanges and participated at congresses. At WCM in April, we had presentations highlighting the EGFR results and impact of quality of life experienced by patients in the clinical trial.

Speaker 2

And finally, our market access team have been busy engaging with payers, educating them on their new label, the inclusion of the eGSR data and removal of the UPCR criteria.

Operator

Next slide, please. We're

Speaker 2

very excited at the opportunity ahead of us. We see very strong demand for Torpeo, both from existing and new prescribers who recognize Tarpeo's positioning as a disease modifying therapy in IgAN. Our focus is on continuing our promotional efforts with our expanded field team and drive scientific exchange at large conferences. We're eagerly awaiting the update of the Qadeo guidelines and estimate they will be published in the second half of twenty twenty four. These guidelines have the potential to broaden the definition of the at risk population and also support the use of Tarpeo as the only fully approved drug with impact on EGFR.

Speaker 2

As mentioned earlier, we're continuing to focus on engaging with U. S. Payers to ensure that their policies reflect the new label. We have already seen one of the largest payers in the U. S, UnitedHealthcare, update their policy in May, and we are anticipating that the largest payers will update their policies mid-twenty 24.

Speaker 2

This should facilitate access for patients and reduce market access barriers. And with that, I will hand it over to our CFO, Fredrik Johansen, to talk about our financials. Fredrik?

Speaker 3

Thank you, Maria. Next slide, please. I will now present to you the financial overview for the Q1, as always. The numbers presented to you are SEK1 1,000,000 unless otherwise stated. To start with, we report SEK295,500,000 dollars in net revenues for the quarter.

Speaker 3

For the same quarter last year, we reported net revenues of 191,300,000 dollars Sarpeo net product sales for the quarter amounted to $278,300,000 or $26,800,000 which is a reported increase of 50% from the same quarter previous year. As Renee mentioned, the Safe Harbor attack had an estimated negative impact on revenues in the quarter of approximately $4,700,000 or approximately SEK50 1,000,000 This revenue is not lost, but will roll forward into the next several months. Therefore, we're up to the year today on the progress to date for Tateo in the Q2, and we were were encouraged to report that the preliminary TrapEO net sales in the 2nd quarter to date amounts to $25,500,000 which are almost already at the level at the reported Q1 TRAPEA net sales with approximately 40% of the quarter remaining. The remaining $30,000,000 in revenues in the quarter is related to our partnerships, primarily from royalties for Europe from Stata. For the same quarter last year, we had royalty revenues for Europe of 4,400,000 dollars Our total operating expenses for the quarter amounted to $485,300,000 compared to $362,400,000 for the same quarter last year.

Speaker 3

The cost for research and development increased by $24,000,000 in the quarter to 150 point $6,000,000 compared to $126,700,000 for the same quarter previous year. And this is primarily related to our pipeline where we just had a positive readout in head and neck and have 2 more expected data readouts this year, including the readout in PBC, which is expected in the Q3. Moreover, as we had 4 trials running, including open label extension and the head and neck, which are close to be completed also from a cost perspective, and the PBC and OPA trial, which are running with full speed, the R and D cost between the quarters may be somewhat lumpy and less linear this year. But as previously communicated, we expect R and D cost for the year to be broadly in line with the previous year. The cost for sales and marketing increased by $72,900,000 in the quarter to $240,100,000 compared to $167,200,000 for the same quarter previous year.

Speaker 3

The increase is primarily related to sales and marketing of Tepranger in the U. S, where we, during the quarter, continue our work to leverage the market opportunity for the Tarek Afford approval we received at the end of last year. This included costs related to completing new marketing materials due to the new indication. And as previously communicated, we started this investment in the commercial organization already in Q4, and we have particularly strengthened the sales, marketing and market access functions during the Q1. We made an operating loss in the quarter of $203,800,000 compared to a loss of $180,100,000 for the same quarter last year.

Speaker 3

The cash flow used in operating activities in the quarter was $198,200,000 compared to $231,900,000 from the same quarter previous year. And this leaves us with a net decrease in cash in the Q1 of $207,500,000 and we continue to have a healthy cash position of $810,300,000 at the end of the quarter. At last, I wanted to bring to your attention that we'll leave our 24 total net financial net sales estimate unchanged at between $150,000,000 to $180,000,000 for the year. That was all for me. Thank you.

Speaker 3

And now back to you, Uli.

Operator

Thank you very much. Next page, please. There we go. So just some key takeaways for the quarter. As you've heard, this was another record quarter, both in terms of enrollments and new prescribers, with 705 new enrollments and 354 new unique prescribers.

Operator

We have seen an improved product protection of Tropeo in the form of both orphan exclusivity as well as patent protection, with the new patent expiring 2,043 covering Torpeo and orphan exclusivity in the U. S. For the new indication expiring December 2030. As Maria has shown, there continues to be strong demand for Tarpeo with this disease modifying mechanism. And we believe that the recent sethonaxib data clearly supports its anti fibrotic effect.

Operator

And we are looking forward to and excited about the upcoming readouts in our clinical pipeline related to our rare diseases. And finally, our total revenue guidance remain unchanged and reflecting strong growth expectations of $150,000,000 to $180,000,000 for the year for the entire Nephicom franchise. And with that, we're happy to take questions.

Speaker 4

The next question comes from Maury Raycroft from Jefferies. Please go ahead.

Speaker 5

Good morning. This is Yao on the call for Mori. Can you maybe talk about how many new patients are formed you have seen so far in the Q2? And for the $25,500,000 revenue in the 2nd quarter, which day was the cutoff date and was the $4,700,000 included in it? And what are some of the additional assumptions and drivers behind the reiterated revenue guidance for 2024?

Speaker 5

And then I'll have a follow-up question.

Operator

All right. Well, those were 4 questions. Let me see if I can start with those. So in terms of the actual kind of the $4,700,000 let's start there. So obviously, they will be kind of to some extent, it will catch up over the next several months.

Operator

So it's not something that's necessarily only going to be in Q2. It will probably be both over Q2 and Q3. As the quarter hasn't ended, we're not really in a position to be any more precise about where we might have seen what coming in from kind of the cyber attack. So I think that's going to have to wait until the quarter is actually completed. In terms of the we're not going to report on any other aspects of Q2.

Operator

I think we felt that this was a kind of a bit of an exception because obviously the cyber attack was something that was outside of our control. And it was kind of like this technical issues. We wanted to provide some insight into kind of the quarter to date and that is truly quarter to date. So that is as of the reporting date. And so that's I think that covered all of the

Speaker 5

Then I guess the second question is, can you maybe provide some additional color on the Phase III open label extension data for Tarpeo? How did the data inform the treatment gap and timing for starting a second course of therapy? Also are the data consistent with what you're seeing in the real world? Thank you so much. I'll hop back in the queue.

Operator

So the data will be presented at the upcoming ARI ETA. And I think that as we mentioned in the press release, what we've seen is kind of consistent trends and patterns as we saw in the original Phase 3 trial. I think that we'll be happy to kind of take more questions or discuss this maybe more at the R and D Day when we cover some of those aspects as well and where we will be joined by Professor Barrett.

Speaker 4

The next question comes from Vamil Divan from Guggenheim Securities. Please go ahead.

Speaker 6

Thanks for taking my question. So I just had one other follow-up on the change, the 4.7. Just so I understand the dynamics there. So those patients already received the product. It's just a matter of getting the reimbursement now, getting the payment.

Speaker 6

There's no risk that they sort of may not end up getting the product as well. So confirm that, if you could. And then my other question is on just sort of the prescriber base that you're seeing, obviously, nice increase in the number of new prescribers. Is there any change that you're seeing now in terms of which sorts of prescribers are writing for the product given the broader label, just thinking in terms of academic based physicians versus more community based doctors? So any sort of insights in terms of where the prescriptions are coming from now would be helpful.

Speaker 6

Thank you.

Operator

Maria, you want to take that?

Speaker 2

Sure. So maybe I'll first address your first question on Change Health. So Change Health is one of the largest claims processes in the U. S. They process approximately onethree of U.

Speaker 2

S. Lives. And the way it works is that every single time you have a new claim as you need to get a new prescription, either a new patient or an existing patient that is going to get another shipment, they should they need our pharmacy need to confirm that the patient still has coverage from their insurance. And that is what Change Health is providing through their online system. And as the system was down, it created some issues in terms of verifying insurances.

Speaker 2

I want to reassure you that all patients are have still received drug. We didn't lose any patient per se, but it did provide a bit of delay of approximately 10 days when we were unable to verify the insurance for the patients. But that's why Renee mentioned earlier that the revenue will it's not lost, that it's going to come over the coming months and we're going to catch up on that gap that we experienced in the Q1. And with regards to your second question on prescribers, we're very happy that we're seeing both new prescribers but also existing prescribers prescribing traditional patients. I don't think we've seen any change in terms of academic versus community nephrologists, but we've always had prescriptions coming from both groups.

Speaker 2

But I guess you can say that we're both seeing a healthy growth in terms of new prescribers but also in existing prescribers identifying additional patients.

Speaker 4

The next question comes from Yigal from Nokomovitz. Please go ahead.

Speaker 7

Hi, this is Ashok on for Yigal. Thanks for taking my questions. I'm just wondering what you're expecting for the updated CITAGO guidelines. I'm assuming that will broaden the definition of that, the at risk population and reflect the updated label language. I'm just curious what you expect will be specifically included and if you really view that as a sales inflection point, especially with new prescribers?

Speaker 7

Thanks.

Operator

Yes. So I think we are expecting the Credigo guidelines to at least come up for kind of public review at some point in time in Q3. And I think that there have we have no knowledge of exactly what is going to be in those guidelines. But what we have heard and what we observe in different conferences and interactions with a lot of KOLs is clearly that there is a concern generally that the existing level of 1 gram per gram may not kind of truly reflect the correct patient population is being defined as being at risk. So I think there is a kind of in our view a significant probability that that level may be reduced.

Operator

To what level, I don't think that we know. But certainly, I think that would obviously just further broaden the kind of target market as in our label, it does cover patients that are considered to be at risk.

Speaker 7

Okay, understood. And then in terms of the European story at this point, I guess we're waiting for some EU commentary. I'm just curious what the remaining steps are and if there's any reason to think that you might push back on a full approval? Or if your expectation is that everything should be smooth sailing from this point on?

Operator

It is our expectation that we that Kimpago will receive a positive opinion from EMA. However, as all regulatory processes, you kind of never know until you know. And there's you can never be sure of what's exactly going to happen, but that would certainly be our expectation. And we're hopeful that EMA will take this up on their agenda in their upcoming meeting. So if that is the case, there is a possibility that there would be a positive opinion fairly shortly.

Operator

And then obviously there is that kind of 67 day kind of delay between a positive opinion and the actual kind of formal decision by the European Commission.

Speaker 7

Got it. Thank you very much.

Operator

Thank you.

Speaker 4

The next question comes from Annabel Samimy from Stifel. Please go ahead.

Speaker 8

Hi, everyone. Thanks for taking my question. So just following on the KdIGO guidelines, you did mention that there seems to the guidelines obviously are potentially identifying this at risk population, but you said that it could also include Tarpeo specifically as a potential treatment. Do you have any sense as to how they might talk about TARPAO within these guidelines? And then secondly, I was just curious, we've all been focused on how long patients are staying on treatment, whether it's below 9 months, above 9 months.

Speaker 8

But is this really the wrong way of thinking about it? Are you now using this 9 month treatment period as a selling point, I guess, especially in light of the competitive environment that seems to be evolving with only chronic therapies available for these patients or possible for these patients. So can you just talk about, I guess, how you're using that 9 month treatment period as a possible selling point as opposed to sort of a guideline for treatment?

Operator

Thanks. So with regards to the Codigo guidelines, so obviously we are clearly expecting Torpeo to be part of the guidelines. And I think that the guidelines obviously are based on kind of scientific evidence, which is ranked based on kind of by a third party, really who provides the author with that kind of a ranking. And so we believe obviously that our data is very strong and that it will be recognized in the guidelines in terms of the fact that we have really in our view kind of a disease modifying immunomodulating effect on B cells. And so this is something that we would expect to hopefully be reflected in the guidelines, but as to exactly how that treatment paradigm will be expressed and discussed, we don't at this point in time have any insights into how that exactly would be kind of described.

Operator

In terms of 9 months and I'll have Maria also comment on that. I guess my view is actually that there is a very significant benefit from a patient perspective, which sometimes I think is forgotten in some of these conversations. We're obviously a vast majority of patients are actually diagnosed between the ages of 20 40. 40% of these patients are female And for pretty much most or if not all of these kind of treatments, there is an issue in terms of becoming pregnant if you are on any of these chronic treatments. I think that this is actually an extremely important issue for a very large and important part of this patient population.

Operator

So yes, I do think that there could be a very substantial benefit of actually being able to hopefully delay dialysis, keep patients out of dialysis hopefully with intermittent treatments rather than forcing all patients to be kind of in chronic treatment. But from a kind of for sales perspective, Maria, do you have any comments?

Speaker 2

Yes. So I would say, 2 things. I mean, first, we know that what our label says is that the recommended duration is 9 months of therapy, and that is also what we provide in all of our promotional materials and all of our communications to our field teams. We also know for market research that this is something that patients appreciate. Going back to what Ronnay mentioned before, this is a lifelong disease, fairly young patients.

Speaker 2

And we see in market research that patients really appreciate this 9 month course with extended benefits and that is something that they see as a benefit in treating their disease. So it's definitely something that is appreciated by patients for what we can see and also something that physicians recognize when they prescribed TROPAYO.

Speaker 8

Great. And just one more follow-up question on the KDIGO guidelines. Do you have any analogs as to what kind of impact that could have when a drug is specifically included in the guidelines as opposed to just say, identifying an at risk population, something that's more general?

Operator

You know what, I wish I did have something off the top of my head that I could provide you with. It's an excellent question. But I don't necessarily have an analog. But I do think obviously this is a rare disease. And I think it is something where these nephrologists are not highly specialized in subcategories of nephrology.

Operator

So it's actually a very it's quite a feat to be a nephrologist and cover everything that it kind of relates to nephrology. So I do think that these guidelines are going to be very impactful, because I do not think that many of the KOLs who are often kind of maybe interviewed or discussed in this kind of setting that they are very representative in terms of the broader nephrology community. So my guess is that the broader community nephrology community of nephrologists will very much appreciate and refer to the guidelines and to get some insight into how they might treat these patients.

Speaker 8

Okay, great. Thank you.

Speaker 4

The next question comes from Christopher Yud from SEB. Please go ahead.

Speaker 9

Hi there. Chris Ruedi from SEB. Thanks very much for taking my questions. I just wanted to check-in, in terms of what can you tell us about the rate of conversion in the quarter from enrollments to actually dispensing medicines? And then I had a question on cetinaxib.

Speaker 9

What are your thoughts preliminarily for a Phase 3 trial design when you go to the FDA for an end of Phase 2? In particular, I'm curious about the number of arms, but other comments would be great as well. Thanks.

Operator

So with regards to kinocetanaxib, I think that obviously we probably would not go to the FDA on our own with regards to kind of any progression on the oncology side. I think our preference would be to use this time right after the clinical data to engage with potential partners, with other interested partners and gain a bit of insight into which way would kind of be the most effective and efficient way to kind of take this forward oncology as we don't have any plans to really kind of do that on our own. I also think that if it's an anti fibrotic effect that this obviously could very well have or would be expected to have a very similar kind of effect in solid tumors such as pancreatic cancer, etcetera. So there might be other kind of solid tumors that partners would choose to kind of go into, not necessarily just head and neck cancer. So I think that this is something that we will interact with a variety of parties, which we have plans to do over the next kind of couple of months.

Operator

And really, I think on the basis of that, we will kind of jointly decide on kind of what steps we may or may not take in the kind of near term related to oncology.

Speaker 3

Okay. Thanks. That's clear.

Operator

In terms of rate of conversions, we don't really kind of provide any specifics around that. But obviously, I think what we are kind of seeing and we can talk a little bit about the kind of like potential market access friction that we're seeing today.

Speaker 2

Yes. So I would say the way I would look at it is that we have a very strong demand for TROPEO. We get a lot of enrollment forms, as you've seen from what we've reported today. In the U. S, patients need to go through the prior authorization process where we verify the benefits and see if their payer will cover Tarpeo.

Speaker 2

The situation we're in right now is that we have a full approval label, we have a broad label. But as we mentioned, not all of the payers have updated their policies. Some of the largest payers, we expect to update their policies mid year, which is why we have guided that the second half of the year is going to have a stronger revenue. So we don't provide no specific conversion rates and how quickly a patient converts from an involvement form to on therapy because it depends on the type of insurance that they have. But I think the way I would look at it is that we have a very strong demand, which I think is a lead indicator for future growth and future revenue for the brand.

Speaker 9

All right. Thanks very

Speaker 4

much. The next question comes from Suzanne Van Voorheeweisen from VLK. Please go ahead.

Speaker 10

Hi, team. Thanks for taking my questions. First of all, can you comment on the operating expenses? How should we think about how those will develop coming time for both R and D and SG and A? And perhaps especially with regards to the sales and marketing expenses, what can you clarify what drove the increase?

Speaker 10

And yes, what how to think about the run rates going forward? And then I have a follow-up question.

Speaker 3

Yes. Thank you. I'll take that. So starting with the R and D cost, as I said earlier, we expect some lumpiness between the quarters on the R and D cost, but overall for the year. We expect them to be broadly in line with the previous year.

Speaker 3

And for the sales and marketing expenses, what we see now from Q4 to Q1 is kind of a I think it was around 20% increase. And I believe you should think that we have now taken, I mean, most of our investment, and I believe that the Q1 is kind of representative. So I would think that for the year, you should expect kind of a 15% to 20% increase from the level of the full last year.

Speaker 10

Got it. That's very clear. And then maybe a question on cetanexip. Now with the recent data in oncology signaling a potential anti fibrotic effect, For the upcoming readouts, can you give some context on what you would like to see there? The interim futility in PBC is probably straightforward, but yes, maybe some thoughts that you can share on the IPF data, the study design there and thereafter the LPORT data, what would be in your view?

Operator

So I think in terms of the PBC, obviously, overall, apart from kind of the endpoints and the secondary endpoints, I mean, we're also in that we are looking at things like FibroScan. And that would obviously be another really interesting kind of component of kind of validating this anti fibrotic effect. So I think there'll be quite a lot on the PBC data that will complement what we've seen kind of from the head and neck cancer trial. IPF obviously is a really interesting and I think we as we reported out, I mean we've also seen in the interim readout from the head and neck cancer, we saw that that was one of the pathways that was modulated in that kind of smaller group of patients. And so I think that would obviously be something that's very exciting.

Operator

The drug trial that's being run right now as you know is an investigative study and it's also run at a kind of half the dose of what we're using in our other clinical trials. But clearly, I think any signal that we could get from that in terms of efficacy would be really exciting. And so this is obviously why we're hoping that we can get to see that data kind of in Q4 of this year. We will spend a little bit more time on this clearly in our R and D Day. So the whole point really of the R and D Day is to provide a little bit more thinking about this.

Operator

We will take you through all of the kind of different designs in the pipeline. And I think obviously also talk a little bit more about what we might be expecting to see or what we would think would be kind of a positive to see. But I think generally in the PBC, I would say apart from the obvious kind of things, I think really it's the FibroScan that we're really interested in seeing. And I think also really the possibility of having a statistically significant effect on fatigue, I think is something else that we'd be very excited to see. So I think that those are probably the two things.

Speaker 10

Got it. Thank you very much.

Speaker 4

The next question comes from Johan Aniras from Redeye. Please go ahead.

Speaker 11

Taking our questions. Just a few add ons. You mentioned that one private insurance, P and T Committee has taken a decision already and do you expect several to follow by mid year July sort of? What's your what can we expect from that on the back of full label? Will you do you expect to see reimbursement without prior authorization, sorry?

Operator

Maria, do you want to take that?

Speaker 2

Sure. So the insurance companies you referred to is United Healthcare. They cover approximately 13,000,000 U. S. Lives.

Speaker 2

They made an update to their policy in May, which reflects our new label. So we have a broad inclusion criteria, removal of UPCR criteria, the recognition of the impact on eGFR, so exactly in line with what we expected. I still believe that Tropea will require prior authorization in the majority of cases. That is very typical in the U. S.

Speaker 2

Most rare disease, highly specialized drugs have a prior authorization in the majority of cases. But I think the anticipated the positive change that we are anticipating is that it will be easier to get that first approval because their policies will be aligned to our label. So but it will still require a prior authorization expectation.

Speaker 11

Great. And you also extended your commercial team and the support team, presumably partly to support this review and of course work with the specialist. Can you perhaps give us some more flesh what that requires or what you work with since the team is in place since February, I believe?

Speaker 2

Yes, of course. So we took the decision in Q3 last year to expand our field team and some other type of functions in anticipation of the Board approval. We now have today 70 rare disease account managers. So these are sales specialists in the field. We have, in addition, hired thought leader years of months.

Speaker 2

We have expanded our market access teams in terms of bringing in house our field reimbursement managers and our national account managers. And we've also expanded some of our home office functions in marketing to support our field team with materials and also with digital efforts. So in total, we now have approximately 100 people in the field in the U. S. To support the full approval and the promotion of TRpeo.

Speaker 11

Excellent. And finally, from our side, this cyber attack, it seems to be handled well even though it was substantial, especially on Change Healthcare side. Perhaps you can give some feel for what you sort of what you measures you've taken and preparation if something similar would happen again?

Operator

So I think obviously this is a 3rd party provider. And obviously once some when these things happen, there are always quite a lot of follow-up activities, particularly on the Change Health side. I mean, we know from kind of they've been actually also gone to Congress and have kind of to explain themselves as to what happened there, etcetera. So I think on their side, they have certainly announced that they are they have taken actions to try to avoid that this can happen again. But exactly what those details are, we are not privy to.

Speaker 11

Yes. And is there something that you have done on your side to perhaps mitigate visavis change or

Operator

That's very early. We can't really do anything because it's really kind of biologics that cover our hub. So we can only kind of try and collaborate with them and look at their systems, etcetera, what they might do. But actually, it's very difficult to do anything as a kind of third party because obviously this really relates to the situation of the change health.

Speaker 11

Yes. Excellent. Thank you.

Speaker 4

The next question comes from Rami Katkuta from LifeSCI Capital. Please go ahead.

Speaker 12

Hi, guys. Congrats on the progress and thanks for taking my questions as well. I guess for septumaxib, do you have any hypotheses as to why you didn't see changes from baseline in tumor size in conjunction, I guess, with the PFS and OS benefit? And then did you measure the CPS score for these patients? And could those values have influenced the overall results?

Operator

Richard?

Speaker 13

Yes. Sure.

Speaker 1

So I think in this kind of setting of what we were evaluating, we were looking at this treatment on top of pembrolizumab. Pembrolizumab itself is not typically a drug that we would use to that is used to shrink tumors. What you see is the longer term benefits in terms of progression free survival and overall survival with pembrolizumab. And what we're seeing when we add cetinabxib on top of that is we're seeing evidence of patients when they respond, more patients receiving Sesamaxib tend to achieve stable disease. And those responses when they are achieved are more durable.

Speaker 1

So I think when we were setting up the study, I think progression free survival ideally might have been chosen as a primary endpoint. We also have to approach it from a feasibility point of view and what's reasonable from a sample size calculation point of view. Change in tumor size is a sensitive way of detecting a clinical effect. So from a sample size point of view, it's a kind of it was a pragmatic decision to use that endpoint to allow a reasonable sized study and a feasible study. But nevertheless, we had sufficient power to detect changes in PFS.

Speaker 1

And indeed, that's what we did. So I mean, overall, in summary, what we're seeing is a kind of increase in patients achieving at least stable disease and the durability of those responses being longer in patients who receive septanaxib. I don't think that there's anything that would indicate we did have a CPS score requirement to get into the study. But I don't think there's anything there that would indicate patients responding differently with respect to their baseline CPS score. What we do see is that when patients receive treatment with cetinaxib, we see evidence from various biomarkers and transcriptomic analyses that we see an increase in the immunological activity of the tumor.

Speaker 12

Got it. That makes sense. And then I guess switching gears a bit, have the baseline care mix of patients being prescribed SARPEO changed at all with the full approval? Or is it still too early to tell?

Speaker 2

Well, great question. I think if you look at the patients that we received prior to the full approval, we did receive patients that were below the 1.5. That was the cutoff. So I think we're seeing a broader it's early days, but you're definitely seeing a broader group of patients being prescribed with Torpejo. And I think you can see that in the enrollment numbers that we've reported.

Speaker 2

The physicians that previously prescribed to one patient may have a second patient now that is eligible for treatment. So we're starting to see the positive signs. I think it's too early to say the type of patient and what does the profile look like since we only have a few months of the new label.

Speaker 12

Sounds good. Thank you very much.

Operator

Thanks.

Speaker 4

The next question comes from Erik Hultgaard from Carnegie. Please go ahead.

Speaker 14

Hi there. Thanks a lot for taking my questions and congrats on the progress. Two questions from my side. The first maybe for Richard on the Sotenaxib HEDDENECT data. So I was just wondering if you have discussed the data with any opinion leaders and if you're getting any initial feedback on the PFS and OS data, more specifically the clinically relevance of a 2 months extension of the PFS?

Speaker 14

Any view there would be helpful. And then also, when we could expect to see the peer reviewed publication for the data or any presentation of the scientific meeting? And then finally, on PBC, I was just wondering if you could update us a bit on the competitive situation and highlight the key competitive programs in the clinic that we should monitor? Thank you.

Speaker 1

Okay. Yes. So definitely, we've spoken to external experts and we also have very experienced people working with us who worked in large pharma oncology settings. And I think both from that point of view and from the external expert point of view, they consider these outcomes in terms of progression free survival impressive. I think one of the reassuring things that we observed is that the patients who were randomized to placebo and received pembrolizumab, the behavior of those patients in terms of these longer term outcomes like PFS was exactly as has been seen in other studies.

Speaker 1

So we know that our control arm was behaving very in a very expected way. There's nothing unusual about control arm. So we're seeing an augmentation, apparent augmentation of benefit when we have sezonaxyp on top of that treatment. And yes, definitely, those outcomes are considered impressive. We will be preparing a publication and we will hope to present the data at ESMO later this year.

Operator

So regarding your question on PBC, so obviously there is at this point in time really the dominant kind of area in PBC that's being kind of focused on are the kind of the PPARs at the moment. They're in kind of regulatory review. I think that there is an expectation that both of those candidates may very well achieve approval this year. So I think that that's probably where the and I think there are other kind of similar PPARs kind of in kind of development. I would say that the way that we've obviously looked at kind of the PBC is not to kind of be an all comer for PBC.

Operator

That's not the way the trial is designed either. So it's really kind of stratified for patients that have a higher score in terms of a reading of FibroScan. And so actually we have a trial that is specifically targeting a particular kind of patient group. And so I think from our perspective, this is really about looking at either those patients that have a more kind of compromised, I guess, kind of a more fibrotic from the view of looking at FibroScan, kind of liver disease and or really looking at these patients in terms of fatigue, which is a really debilitating and very broadly, very broad kind of issue for all of these patients. So I think that those are the 2 kind of components that we really look at kind of complementing with.

Operator

So we are not positioning ourselves as kind of kind of directly competing with the PPARs or with Opeliva for that matter, which is also why in this trial, we've actually allowed patients to come in with both Ocaliva as well as beta fibrate, etcetera. So I think that that's really kind of a slightly different positioning that we have. But those I think are still those 2 kind of drugs is really what I think the main focus of for anyone looking at PBC at the moment.

Speaker 14

Thank you so much.

Speaker 4

The next question comes from Arthur He from H. C. Wainwright. Please go ahead.

Speaker 1

Hey, Renee and the team.

Speaker 13

I just had a quick one. Could you guys give us more color on the launch in China for the nefecan? And I believe you still provide the drug as of now. How that is going to evolve in their upcoming years or quarters regarding that part? Thanks.

Speaker 2

Yes. So actually, it's a

Operator

little bit early for us to have any feedback really from them. And obviously, it was launched really a week or 2 ago really kind of in China. But it is something obviously that we're super excited about and we are just as curious as you are in terms of how that will develop. So the but yes, and obviously because China is not a rare disease and it's a much kind of bigger patient population. In terms of supply, you're correct.

Operator

We are obviously not directly, but through our existing kind of CDMO relationships, we are providing supply also to China. And I don't see that changing in the near term. So my expectation would be that in the near term, we would certainly still continue to play that role.

Speaker 1

Great. Thanks, Renee. I'll talk to you guys soon.

Operator

Okay. Thanks a lot. And I think that was the last question for this

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Earnings Conference Call
Calliditas Therapeutics AB (publ) Q1 2024
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