Calliditas Therapeutics AB (publ) Q2 2024 Earnings Report

Calliditas Therapeutics AB (publ) EPS Results

• Actual EPS: -$0.16
• Consensus EPS: -$0.25
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: -$0.33

Calliditas Therapeutics AB (publ) Revenue Results

• Actual Revenue: $52.36 million
• Expected Revenue: $42.89 million
• Beat/Miss: Beat by +$9.47 million
• YoY Revenue Growth: N/A

Calliditas Therapeutics AB (publ) Announcement Details

• Quarter: Q2 2024
• Date: 8/13/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 13, 2024
• Conference Call Time: 8:30AM ET

Calliditas Therapeutics AB (publ) (NASDAQ:CALT) is a Sweden-based biopharmaceutical company dedicated to the development and commercialization of novel therapies for rare immunologic and renal diseases. The company’s scientific focus centers on targeting the underlying causes of immune-mediated conditions with oral and biologic formulations. By leveraging proprietary drug delivery technologies, Calliditas aims to bring differentiated treatments to patients who currently have limited therapeutic options.

The company’s lead product, Tarpeyo® (budesonide) delayed-release capsules, received U.S. Food and Drug Administration (FDA) approval in October 2021 for the treatment of adults with primary immunoglobulin A (IgA) nephropathy at risk of rapid disease progression. Calliditas holds exclusive commercial rights for Tarpeyo in North America and several other territories, and it continues to pursue regulatory submissions and market access efforts in Europe and select international markets. In parallel, the company is advancing a preclinical pipeline of novel immunomodulatory compounds aimed at expanding its rare disease portfolio.

Founded in 2004 and headquartered in Stockholm, Calliditas Therapeutics maintains operations across Europe and North America, supported by a corporate office in Boston to oversee U.S. commercialization activities. The company is publicly traded on the Nasdaq Stockholm exchange as well as on the Nasdaq Global Select Market in the United States under the ticker symbol CALT. Calliditas is led by an experienced management team with backgrounds in biopharmaceutical research, regulatory affairs and commercial strategy, positioning the company to execute its growth plans in the global rare disease arena.

Calliditas Therapeutics AB (publ) Q2 2024 Earnings Call Transcript

Key Takeaways

• Record Q2 net revenues of $46.3 M from Tarpeo (+90% YoY) and SEK 49 M in partner revenues (+300% QoQ) driven by strong demand, 750 new enrollments and 343 new prescribers.
• Achieved adjusted operating profitability in Q2, excluding SEK 102 M in offer‐related and incentive costs, with minimal cash burn of SEK 7 M and ending cash position of SEK 797 M.
• Raised full-year 2024 revenue guidance to SEK 1,650–1,850 M ($165–185 M) for the Neficon franchise based on sustained growth trends.
• Sahikasai’s recommended SEK 208/share public cash offer values the company at ~SEK 1.2 B, with ~45% shareholder support and a tender deadline of August 30, introducing deal-related uncertainties.
• Key clinical and regulatory milestones: positive Phase IIb PBC TRANSFORM data with significant ALP reductions and improved liver stiffness; EU full approval of Kympaygo in IgAN triggering a €10 M milestone; and positive Phase II head & neck cancer POC with Setonaxib.

Presentation

[Operator]

Welcome to Calliditas' Q2 2024 report. The participants will be in listen-only mode, and there will be no Q&A session after the presentations. Now, I will hand the conference over to the speakers. Please go ahead.

[Renée Aguiar-Lucander, CEO at Calliditas]

Thank you very much, welcome to our Q2 2024 report. My name is Renée Aguiar-Lucander, CEO of Calliditas, and I'm joined today by, Richard Philipson, Chief Medical Officer, Fredrik Johansson, our Chief Financial Officer, and Maria Törnsén, 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 our public filings, including those containing risk factors. Next page, please.

[Renée Aguiar-Lucander, CEO at Calliditas]

So I'd like to review some of the key events in Q2, which included the conclusion of our phase III study NefIgArd, with the readout of the open label extension, from which we reported nine-month efficacy and safety data similar to that observed in the active arm of the phase III trial for those patients who were retreated with Nefecon after 15 months of observation. In April, we reported out positive top-line data from our phase II proof of concept study in head and neck cancer with a lead product candidate from our novel and unique NOX inhibitor platform, Setanaxib. This showed statistically significant impact on both progression-free survival, as well as overall survival. We also were granted a new patent by the USPTO for the treatment with Setanaxib in cancer, with expiry in 2039.

[Renée Aguiar-Lucander, CEO at Calliditas]

In May, our partner, Everest Medicines, launched Nefecon in China, and EMA issued a positive opinion for full approval of Kinpeygo in Europe. We also participated in several important conferences where we presented additional data, which Richard will cover a bit later in the call. Next page, please. In the quarter, there was an offer announced by Asahi Kasei. On May 28th, Asahi Kasei announced a public cash offer for all shares in Calliditas for 208 SEK per share, valuing the company at approximately 1.2 billion SEK. The tender is presently ongoing, with the last day announced to be August 30th, subject to any potential extensions. The offer is recommended by the board, and around 45% of shareholders have entered into undertakings to accept the offer, subject to customary conditions. Next page.

[Renée Aguiar-Lucander, CEO at Calliditas]

So with regards to commercial highlights of Q2, so from a commercial perspective, this quarter was a record quarter in terms of revenues, with $46.3 million of net TARPEYO revenues, representing 90% growth over the same quarter last year. In addition, we saw record enrollments with 750 new enrollments and continued strong growth in new prescribers. The strong demand we're seeing is very encouraging, and we continue to see demand in the market for TARPEYO, with summer seasonality seemingly being less pronounced this year in comparison to last year. The team is, during the quarter, undertaken a very substantial number of P&T committee meetings, and the vast majority of major plans have now updated their rules to align with the new label.

[Renée Aguiar-Lucander, CEO at Calliditas]

We are expecting the full approval and this kinda reduced market access friction to continue to drive TARPEYO revenue growth for the year. Revenues from partners in the quarter amounted to SEK 49 million, representing growth of close to 300% compared to last quarter, as Nefecon was launched in China also in May. Operating profitability for the underlying business, excluding those costs related to the offer by Asahi Kasei, for the quarter, came in at SEK 70 million, enabling us to reach our target of achieving operating profitability in the quarter. These excludes costs related to advisory services and provisions for incentive plans in connection with Asahi Kasei offer, amounting to approximately SEK 102 million, taking us to an overall operating loss for the quarter of SEK 31.5 million.

[Renée Aguiar-Lucander, CEO at Calliditas]

Achieving operating level profitability is a goal we were hoping to achieve in targeting in Q3, and we're obviously delighted that we reached this target already in Q2. With regards to cash, we were almost cash neutral for the quarter, with cash burn amounting to approximately $700,000 or SEK 7 million. We believe that we'll be continued to be profitable on an operating level for the remainder of the year, excluding any deal-related costs based on continued revenue growth from TARPEYO and the Nefecon franchise as a whole. Next page, please. Following the quarter, so in July, we reported out positive data from our phase IIb trial in PBC, primary biliary cholangitis, with both the 1,200 mg and 1,600 mg doses achieving statistical significance in terms of the primary endpoint.

[Renée Aguiar-Lucander, CEO at Calliditas]

This was a heavily pretreated population, making this outcome even more rewarding. Richard will cover these details in more detail shortly. Also, in July, Kinpeygo was granted full approval for the treatment of primary IgA in adults by the European Commission, which also triggered a EUR 10 million milestone payment, which will be recognized in Q3. With that, I'd like to hand over to Richard, who will take us through the PBC data as discussed.

[Operator]

Thanks very much, Renée. Next slide, please. The next slide. So I'd like to start by giving you a summary of the recently announced results of the TRANSFORM study of Setanaxib in primary biliary cholangitis or PBC.

[Richard Philipson, CMO at Calliditas]

...As a reminder, this was a phase IIb study evaluating patients aged 18 years and older with a confirmed diagnosis of PBC, a serum alkaline phosphatase level of 1.67x the upper limit of normal or higher, and a liver stiffness of 8 kPa or higher as measured by FibroScan. In this double-blind, placebo-controlled study, patients were randomized to one of two doses of Setanaxib or placebo. Patients randomized to Setanaxib received either a 1200 mg daily dose administered as 800 mg in the morning and 400 mg in the evening, or a 1600 mg daily dose administered as 800 mg twice daily. Treatment was administered for 24 weeks, and the primary endpoint was change in alkaline phosphatase at week 24 compared to baseline. Next slide. So we screened the 178 patients, of whom 77 patients were randomized.

[Richard Philipson, CMO at Calliditas]

The demography and baseline characteristics of the trial population were representative of the target patient population, and the treatment arms were generally well-balanced. It is worth noting, as Renée has already said, that this was a heavily pretreated population at baseline. 43.4% of patients was receiving dual therapy, that is UDCA plus ursodeoxycholic or UDCA plus a fibrate, and 13.2% of patients were receiving triple therapy of UDCA plus ursodeoxycholic plus a fibrate. Next slide. With respect to the primary endpoint, change from baseline in the ratio of alkaline phosphatase at week 24, there was a statistically significant difference for both dose comparisons versus placebo. The 1,600 mg dose group, there was a 19% difference compared to placebo, and for the 1,200 mg dose group, there was a 14% difference compared to placebo.

[Richard Philipson, CMO at Calliditas]

Again, it's worth noting that although week 24 was the time point for the primary comparison, significant changes were observed from week 8 onwards. Next slide. We also observed favorable improvements in liver stiffness at week 24 in patients treated with Setanaxib compared to placebo. This is encouraging, as clinically relevant changes in liver stiffness are typically detectable by FibroScan over a minimum of a 52-week observation period. Next slide. So in terms of safety, treatment emergent adverse events were balanced across the treatment groups overall. 76% of Setanaxib patients and 85% of placebo patients experienced at least one treatment emergent adverse event, but most of these were considered unrelated to treatment.

[Richard Philipson, CMO at Calliditas]

Serious treatment emergent adverse events occurred approximately at similar rates in the Setanaxib and placebo-treated patient groups, with 12% of Setanaxib patients and 11.5% of placebo patients experiencing serious treatment emergent adverse events. And events leading to study discontinuation occurred in 14% of Setanaxib patients and 7.7% of placebo patients. When we look at the adverse events occurring at a frequency of 10% or higher in the overall study population, then it's noteworthy that nausea, headache, and pruritus actually occurred at a higher frequency in placebo-treated patients. Arthralgia and fatigue both occurred at similar frequencies in the combined Setanaxib treatment group and placebo-treated patients, and nasopharyngitis occurred at a higher frequency in the combined Setanaxib treatment group compared to placebo. So in conclusion, the primary endpoint for the study was met.

[Richard Philipson, CMO at Calliditas]

Statistically significant reductions in alkaline phosphatase was observed in both Setanaxib arms versus placebo from week 8 onwards, and actually from week 4 onwards when we looked at the two active doses combined. We saw favorable improvements in liver stiffness at 24 weeks in patients treated with Setanaxib compared to placebo, and Setanaxib was generally well-tolerated. So now I'd like to move on and provide a brief update on the company's activities at ERA-EDTA this year. So next slide. So at ERA-EDTA in May, which was held in Stockholm, Calliditas gave an oral presentation on the real-world challenges associated with the use of systemic glucocorticoids in a US IgA nephropathy cohort. And we also presented a poster describing the outcomes of a matching-adjusted indirect comparison of eGFR in patients with IgA nephropathy treated with Nefecon or sparsentan.

[Richard Philipson, CMO at Calliditas]

We also sponsored a symposium entitled, "Clinical Markers in IgA Nephropathy: Is All Proteinuria the Same?" This was chaired by Professor Jonathan Barratt. In the latter poster presentation, we used patient-level data from our NefIgArd phase III trial and trial-level data from the sparsentan PROTECT trial in IgA nephropathy to estimate the relative effect of Nefecon with optimized RAS inhibition, compared with sparsentan on the absolute eGFR change from baseline at 9, 12 months, and 24 months, with common comparisons of optimized RAS inhibition for NefIgArd and irbesartan for the PROTECT study. The results from the anchored comparison showed statistically significant, favorable effects of Nefecon with optimized RAS inhibition versus valsartan on eGFR for all time points analyzed, as shown in the figure in the slide on the right.

[Richard Philipson, CMO at Calliditas]

These results suggest that Nefecon with optimized RAS inhibition may preserve kidney function to a greater extent than Valsartan, and provide support for Nefecon as a disease-modifying therapy in IgA nephropathy. So I'd now like to hand over to my colleague, Maria Törnsén.

[Maria Törnsén, President of North America at Calliditas]

Thank you very much, Richard. Next slide, please. As you recall, in Q1 2024, we had our strongest quarter since launch, with 705 enrollment forms. In the second quarter of 2024, we continued to see a very strong demand for TARPEYO, with 750 enrollment forms received by our patient services hub, TARPEYO Touchpoint, another record quarter. During the second quarter, we also had 343 new prescribers, and we now have over 2,300 healthcare providers who have prescribed TARPEYO. We believe the strong demand we are seeing is a result of our full approval, our new label, with the removal of the UPCR criteria, and physicians recognizing TARPEYO as a disease-modifying agent that treats the disease at the source, reducing the pathogenic IgA.

[Maria Törnsén, President of North America at Calliditas]

As mentioned, our total sales for TARPEYO in Q2 was $46 million, another record quarter. Year to date, net sales for TARPEYO is $73 million. As a result of the strong performance, we are raising our full year guidance to $165 million-$185 million for the Nefecon franchise. Next slide, please. In the second quarter, we launched our new promotional campaign, highlighting the full approval and shining a light on TARPEYO's eGFR data. As you know, TARPEYO is the first and only FDA-approved product to reduce the loss of kidney function. As mentioned last quarter, we've been spending time educating U.S. payers on the new label, and I'm pleased to report that we now have seen significant changes on key commercial plans.

[Maria Törnsén, President of North America at Calliditas]

Over 80% of U.S. lives covered by commercial plans now have policies aligned with our new label and removed UPCR completely or reduced to 0.8. In Q2, our medical teams also participated in multiple scientific congresses, where they presented scientific data and engaged with key opinion leaders, including the National Kidney Foundation and the 61st ERA Congress, which was held in Stockholm, Sweden, in May. Next slide. We are very excited at the opportunity ahead of us. We've already seen the positive reaction to the full approval of TARPEYO. We will continue to educate U.S. healthcare professionals on TARPEYO's position as a disease-modifying cornerstone treatment of IgA. In October, we will participate in the ASN Congress, and we also look forward to the rollout of the KDIGO guidelines in the fall. We expect the guidelines will include TARPEYO and also broaden the definition of the at-risk population.

[Maria Törnsén, President of North America at Calliditas]

And as mentioned earlier, we've seen a significant impact on payer policies in Q2, and we will continue to educate US payers to ensure more plans reflect the new TARPEYO label and secure broad access for patients. Next slide, please. Finally, the IgA treatment paradigm is evolving, and addressing the source of the disease is crucial. TARPEYO does that by targeting the production of pathogenic IgA. As shown in the diagram, there are no other approved treatments that work in the same way. Majority of healthcare providers view TARPEYO as a disease-modifying agent that treats the disease at the source, reducing the pathogenic IgA. In market research, healthcare providers further state that the primary reasons they choose TARPEYO are for its efficacy in reducing UPCR, significant eGFR data, favorable tolerability profile, and because TARPEYO is treating the underlying cause of IgA.

[Maria Törnsén, President of North America at Calliditas]

As you've seen from our strong results reported today, TARPEYO is becoming a cornerstone treatment for IgA. With that, I will hand it over to our CFO, Fredrik Johansson, to discuss our financial results. Fredrik?

[Fredrik Johansson, CFO at Calliditas]

Thank you, Maria. I will now present to you the financial overview for the second quarter, and as always, all numbers presented to you are in millions of SEK, unless otherwise stated. To start with, we report SEK 559.8 million in net revenues for the quarter. For the same quarter last year, we reported net revenues of SEK 269.4 million. TARPEYO net product sales for the quarter amounted to SEK 493.4 million, or $46.3 million, which is a reported increase of 90% from the same quarter previous year. The remaining SEK 6.4 million in revenues in the quarter are related to our partnerships, primarily from royalties from STADA and Everest, and shipment of products to Everest. For the same quarter last year, we had partnership revenues of SEK 10.1 million.

[Fredrik Johansson, CFO at Calliditas]

Our total operating expenses for the quarter amounted to SEK 537.8 million, compared to SEK 330.3 million for the same quarter last year. Included in the operating expenses for the quarter are expenses related to the Asahi Kasei offer and expenses related to provisions for Social Security contributions for incentive programs due to the increase in our share price. These totaling SEK 101.7 million. These costs are distributed over R&D, sales and marketing, and G&A. The cost for research and development increased by SEK 31.7 million in the quarter to SEK 120.7 million, compared to SEK 89 million for the same quarter previous year. Besides the previous mention, provisions for incentive programs, the change in the period primarily relates to increased costs for Nefecon manufacturing scale-up.

[Fredrik Johansson, CFO at Calliditas]

The cost for sales and marketing increased by SEK 61.5 million in the quarter to SEK 253 million, compared to SEK 191.5 million for the same quarter previous year. The increase is primarily related to scale-up of the sales and marketing of Tarpeyo in the US, following the full approval, and also the mentioned provisions for the incentive programs. The cost for G&A increased by SEK 89.6 million in the quarter to SEK 166.8 million, compared to SEK 77.2 million for the same quarter previous year. The increased cost for G&A primarily relates to dimension provisions for incentive programs and advisory fees related to the public offer from Asahi Kasei.

[Fredrik Johansson, CFO at Calliditas]

We made an operating loss in the quarter of SEK 31.5 million, compared to an operating loss of SEK 75.2 million for the same quarter last year. As mentioned by Renée, excluding the expenses relating to the Asahi Kasei offer and expenses related to provisions for Social Security contributions for the incentive programs due to an increase in the share price, we report an adjusted operating profit of SEK 70.2 million in the second quarter. The cash flow used in operating activities in the quarter was SEK 7 million, compared to SEK 163 million for the same quarter previous year.

[Fredrik Johansson, CFO at Calliditas]

This leaves us with a net decrease in cash in the second quarter of SEK 11.2 million, and we continue to have a healthy cash position of SEK 797.3 million at the end of the quarter. That was all for me. Thank you, and back to you, Renée.

[Renée Aguiar-Lucander, CEO at Calliditas]

Thank you very much. Next slide, please. Thank you. Obviously, as we've reported, Q2 was financially strong, with positive progress of our pipeline. Some of the key takeaways, obviously, we had a record quarter in terms of net product revenues from TARPEYO, in terms of posting $46.3 million for the quarter, as well as for the Nefecon franchise, achieving approximately $53 million for the quarter. We also achieved our target of operational profitability, excluding the advisory costs, and incentive program provisions, as stated. Our partner, STADA, was granted full approval of Kinpeygo in Europe by the European Commission, and also saw a new patent issued by the USPTO covering Setanaxib in terms of treatment of cancer, with expiry of 2039.

[Renée Aguiar-Lucander, CEO at Calliditas]

As Fredrik has said, we have a strong cash position, and obviously saw an almost neutral impact on cash for the quarter, and we are expecting continued strong demand for TARPEYO for all the reasons that Maria described. And as mentioned, in terms of our revenue guidance for 2024, we're updating that, reflecting these growth expectations. And so the revenue guidance for 2024 is updated to be $165 million-$185 million. And with that, this concludes our Q2 2024 presentation. Thank you very much to all for listening in.

Participants

Analysts

• Fredrik Johansson, CFO at Calliditas
• Maria Törnsén, President of North America at Calliditas
• Renée Aguiar-Lucander, CEO at Calliditas
• Richard Philipson, CMO at Calliditas