Travere Therapeutics, Inc. (NASDAQ:TVTX) Q1 2024 Earnings Call Transcript May 6, 2024
Travere Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.7639 EPS, expectations were $-0.98. Travere Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day and welcome to the Travere Therapeutics First Quarter 2024 Financial Results and Corporate Update Conference Call. Today’s call is being recorded. At this time, I would like to turn the conference call over to the Manager of Investor Relations, Anne Crotteau. Please go ahead, Anne.
Anne Crotteau: Thank you, Rachel. Good afternoon and welcome to Travere Therapeutics first quarter 2024 financial results and corporate update call. Thank you all for joining. Today’s call will be led by our President and Chief Executive Officer, Dr. Eric Dubey. 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 & 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 risk, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company’s press release issued earlier today as well as the risk factors section in our Form 10-Q and 10-K files with the SEC. In addition, any forward-looking statements represent our views only as of the date such as statements are made, May 6, 2024, and Travere specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, let me now turn the call over to Eric.
Eric?
Eric Dube: Thank you, Anne, and good afternoon, everyone. This year, our organization is focused on executing on the key priorities that will drive sustainable growth for Travere in 2024 and the years ahead. I am pleased to report that we made significant progress on all fronts. Our commercial launch of FILSPARI in the U.S. is continuing to reach new highs. We successfully achieved multiple regulatory milestones with FILSPARI and the first patients were dosed in the pivotal HARMONY study of pegtibatinase. I’ll begin with the FILSPARI launch in the U.S. Following a strong close to 2023, our team continued to elevate performance in quarter one. Importantly, this was demonstrated across all key aspects of the launch, increased patient demand, new and repeat prescribers, faster time to reimbursement and broader payer access.
We continue to have the highest demand amongst recent rare renal benchmarks and we achieved 35% growth in revenue over last quarter despite the typical new year headwinds with gross to net adjustments. Notably, we are seeing the strength continue in the second quarter. This reflects strong execution by our commercial team but also the underlying demand for a superior foundational treatment. Peter will provide further detail on the quarter one performance and our outlook shortly. To start 2024, our regulatory team achieved important milestones in our journey to deliver FILSPARI to more patients globally. Today, we are very pleased to report that our submission to convert FILSPARI from accelerated approval to full approval has been granted priority review by the FDA.
This marks a critical step forward for full approval, which we expect would include a label enabling us to reach a broader set of patients living with IgA nephropathy in the U.S. Outside of the U.S., our partners made important progress with the recent conditional marketing authorization, or CMA, of FILSPARI for IgAN in Europe and submission of an IND for a Phase 3 trial in IgAN patients in Japan. Jula will provide further detail on our regulatory engagements and milestones for the rest of the year. We also made good progress on our pegtibatinase, which provides an opportunity for significant growth for Travere beyond FILSPARI. This program is the only late-stage development candidate for HCU and the only medicine in development for HCU that has the potential to be disease-modifying.
With successful efforts, we anticipate that pegtibatinase could become a new treatment standard in the market that we expect to grow well beyond $1 billion. We initiated the Phase 3 HARMONY study at the end of last year, and we are pleased to have dosed our first patients in the study. Overall, we remain on track to report Phase 3 top line results in 2026. Now let me turn the call over to Jula for her update. Jula?
Jula Inrig: Good afternoon. I’ll start with IgAN nephropathy where our medical activities for 2024 are focused on ensuring we achieve full approval of FILSPARI and providing the education and support to enable FILSPARI to replace RAS inhibitors as foundational care. It is important to remember that patients living with IgAN nephropathy face a high lifetime risk of kidney failure and the time to needing kidney replacement therapy is even shorter for those with persistent proteinuria. IgAN is caused by overactivation in both the kidneys and the immune system. As a result, clinicians have historically focused on two complementary ways of treating IgAN nephropathy. First, with foundational care directly addressing the overactivity in the kidney.
This has been the role RAS inhibitors have played. And second, addressing systemic inflammation with steroids for select patients. We are at an exciting juncture where we are seeing improvements in the options addressing both of these approaches independently and the future will include using both of these in tandem in more effective ways. This is critical as there is no single medicine approved or in development that will arrest the progression or effects of IgAN nephropathy. We are most excited about the evolution of the treatment paradigm because FILSPARI is the only medicine that is in position to replace the foundational role of RAS inhibitors. This is because FILSPARI is the only approved non-immunosuppressive medicine for IgAN that directly targets kidney injury, known as Hit 4 and protects the kidney from further structural damage.
And most importantly, FILSPARI is the only treatment that has been evaluated head-to-head against RAS inhibitors, specifically aliskiren and shown clear superiority in proteinuria reduction along with clinically meaningful long-term kidney function preservation. Everything else has been added on top of RAS inhibitors and/or is targeting elsewhere in the disease cascade, but unfortunately not comparing directly to what works on that similar pathway. As we move ahead, we believe nephrologists will use FILSPARI as a foundational kidney targeted therapy and then add upstream immune mediated medications as needed. Perhaps not surprisingly, we are continuously hearing from nephrologists, as they are gaining more experience with FILSPARI, that they are making the choice to utilize FILSPARI as foundational care for their eligible IgAN patients.
And this is further validated by increasing recommendations in treatment guidelines and algorithms to replace RAS inhibitor therapy with FILSPARI in patients who remain at risk for progression. We also continue to generate additional supportive data. At the recent World Congress of Nephrology meeting, we presented new data describing subgroup analyses from the PROTECT Study demonstrating that treatment with FILSPARI had a clinically meaningful benefit on long-term kidney function preservation at two years across a broad range of baseline proteinuria subgroups. This signifies that FILSPARI can have a positive impact in a wide range of proteinuria levels and we believe it is supportive for potentially broadening our label at full approval. We also presented data from our SPARTAN Study, examining newly diagnosed RAS inhibitor naive patients, which showed an 80% reduction in proteinuria and stable eGFR out to 36 weeks, some of the most impressive IgAN data to date.
These results show that if you treat IgAN patients early enough with FILSPARI, you stabilize eGFR and can get two-thirds of patients into complete remission. Additionally, we presented data that showed adding SGLT2 inhibitors to FILSPARI is safe and can further reduce proteinuria. Collectively, these results are supportive of earlier and broader use, and we look forward to providing longer term results at upcoming Congresses. As the IgAN treatment paradigm continues to evolve, we also hear from thought leaders and hold the belief ourselves that the field is moving towards earlier diagnosis and treatment of patients earlier in their disease. This is widely anticipated to be recognized in the upcoming KDIGO guideline revision. This will support intervening earlier with foundational care, and following full approval provide a good opportunity for us to further educate on the lifetime risk for these patients.
They don’t have time to wait as every day they are losing kidney function. Now turning to our key regulatory milestones to start the year. As Eric highlighted earlier, we were very pleased to receive priority review for our sNDA with an assigned PDUFA target action date of September 5th of this year. Additionally, the FDA has communicated that they do not plan to have an advisory committee meeting to discuss the application. We look forward to continuing to work with FDA throughout the review process, including engaging on the REMS for liver monitoring. We are also pleased with the recent European Commission decision to grant conditional marketing authorization to FILSPARI in Europe. It is important to note that FILSPARI is the only medicine for IgA nephropathy to receive a CMA for patients with proteinuria greater than 1 gram per day or greater than 0.75 grams per gram.
The next step in Europe is transitioning to full approval, and we are presently supporting the submission preparation process in partnership with CSL Vifor. We also recently announced that our partner in Japan, Renalys, has made progress with an IND submission and advancing their study to support ultimate approval in Japan and other Asian Pacific regions. I’ll provide a brief update on FSGS. Our efforts in FSGS continue in the background, and we remain hopeful that we will be able to identify a path forward for an additional indication for FILSPARI. In parallel with our efforts, PARASOL, which is a public-private partnership with NephCure, the FDA, EMA, and academia, is bringing together FSGS datasets from around the world to help define the relationship between proteinuria, eGFR, and kidney outcomes.
Their goal is to align on an endpoint that would support approval of new therapies for FSGS patients, and they plan to present their data at ASN in late October. We will continue to compile our data and re-engage with FDA at the appropriate time once the PARASOL work is near to completion. Now let me discuss our HCU program in Phase 3 development. We continue to be very excited about our potential to deliver pegtibatinase as the first disease-modifying therapy for HCU. We recently engaged with HCU thought leaders and patient advocates at ad boards and medical conferences, and there is significant enthusiasm about the potential for pegtibatinase to positively change the lives of people living with HCU. The available treatment options do not address the underlying cause of HCU, nor do they help patients address the risk of thrombotic events or address the need for low protein diets.
These often require drinking medical formula to help achieve adequate nutritional intake and can negatively impact many social aspects of daily life. We believe that pegtibatinase as the only therapy directly targeting the key enzyme defect in HCU can change that if approved. We are pleased to have achieved the first patient’s dose in the Pivotal HARMONY Study. As we’ve discussed, we are metering enrollment in the earlier stages as we ensure we have high quality adherence to our protocol and continue to scale our supply for the duration of the program and commercial use. So far, we’re getting positive feedback from our site, and we continue to anticipate top-line data in 2026. This quarter, we will also begin to transition patients from our Phase 1/2 COMPOSE trial onto our open-label ENSEMBLE Study.
This will allow for eligible COMPOSE patients to enter into our Protein Tolerance or Diet Modification sub-study and start generating data for this important exploratory endpoint. In summary, we are pleased with the progress in each of our programs, which is a testament to the talented team at Travere who are passionate about working to deliver life-changing therapies for people living with rare diseases. Let me now turn it over to Peter for a commercial update. Peter?
Peter Heerma: Thank you, Jula, and good afternoon, everyone. 2024 is going to be an exciting year for FILSPARI as we are building upon a solid foundation that was created in 2023, and I’m pleased to report that we started the year with strong performance in the first quarter. We continue to see strong and growing demand from physicians and their patients. This is evidenced by the continued increase in both breadth and depth of prescribers during the quarter. Notably, we have now had more than 2,000 pathologists who have enrolled and certified in the FILSPARI REMS program. Most of these physicians have already started prescribing FILSPARI and have witnessed how dual inhibition of endothelin and angiotensin benefits their patients in a meaningful way, and this number continues to grow with signals that demand is expected to remain broad.
This growing prescriber base and persistent demand resulted in a continuation of growth in new patient starts forms to 511 in the first quarter. We have now seen sequential growth in patient start forms for the first five quarters of launch and exceeded the 500 patient start forms faster than any of our benchmark comparisons in rare nephrology. From a payer perspective, approximately 95% of the U.S. patients have a pathway for reimbursement of FILSPARI. We continue to be pleased with the quality of the authorization criteria, which are largely in line with label language and guideline recommendations. I am pleased that this early in the launch, we have achieved such a high level of progress. And the pace of transitioning demand into paid shipments continues to improve.
The enhancements we made in the second half of last year are working, and we now see that about 80% of the patients that are prescribed FILSPARI are enrolling in the REMS program within 14 days of patient start form receipt. And our quality number of new paid shipments continues to climb. Our collective efforts led to 19.8 million in revenue sales for the first quarter. We are pleased with the continued increase in revenue, especially in the first quarter of the year, where we experienced elevated gross net adjustments, as is typical to start a new year. The strong start of 2024 adds to our confidence in driving significant growth for FILSPARI this year, and in our goal of outperforming the benchmark metrics for the second year of launch. In addition to the consistent patient start form growth, we have also maintained a high growth rate in revenue since the initial launch quarter compared to benchmarks.
And of note, this strong sales trend has continued through the second quarter so far. This adds confidence to our belief that we will drive continued revenue growth quarter over quarter as we move to some of the key inflection points later this year that can further accelerate our growth. To this end, we anticipate FILSPARI will be included in the updated KDIGO guidelines which are expected to be available for public review in the coming months. Additionally, based on the increasing body of evidence that proteinuria is directly toxic to the kidney, and therefore a prominent risk marker of progression towards kidney failure, we anticipate a more ambitious proteinuria target in the guidelines, which will further increase the urgency to treat patients earlier and more aggressively.
Upon potential full approval in September, we anticipate an expanded label which would provide greater support for physicians to prescribe FILSPARI to a broader patient population. This could be particularly well-timed as the project digests the KDIGO guidelines and begin to diagnose and treat their patients earlier. We also expect the additional clinical evidence that Jula highlighted earlier will ultimately provide additional support for physicians to treat earlier with FILSPARI and to use it potentially in combination with other available medicines for patients that may need more aggressive treatments. These milestones will support our ambition to make FILSPARI the foundational treatment option for IgA nephropathy patients, with the potential for novel complementary modalities, if approved, to be added on top in the future.
As for Thiola and Thiola EC, these medicines remain steady, contributing approximately 20 million in net product sales in the first quarter, while encountering the typical growth-to-net reset at the beginning of the year. As previously reported, we saw a generic approval earlier this year and are continuing to evaluate how the market may evolve as a result. Let me close out by reiterating that I really plan to continue to work with the execution of our fantastic commercial team and the clearly positive results in the first quarter of the year. All their efforts have resulted in a strong foundation for growth, leading towards anticipated full approval later this year and the continued confidence that FILSPARI has the potential to become a blockbuster therapy.
Let me now transfer the call to Chris for financial updates. Chris?
Chris Cline: Thank you, Peter, and good afternoon, everyone. We’ve started the year with strong operational performance, illustrated by the continued growth of FILSPARI and reduced operating expenses. For the first quarter of 2024, net product sales were $40 million, compared to $24.2 million for the same period in 2023. The increase is attributable to growth in net product sales from the ongoing launch of FILSPARI and IgAN profits. During the quarter, we also recognized $1.4 million of license and collaboration revenue, which results in $41.4 million in total revenue reported for the period, compared to $30.9 million in the same period in 2023. Research and development expenses for the first quarter of 2024 were $49.4 million, compared to $58.2 million for the same period in 2023.
On a non-GAAP-adjusted basis, R&D expenses were $45.8 million for the first quarter of 2024, compared to $51.3 million for the same period in 2023. Selling general and administrative expenses for the first quarter of 2024 were $64.2 million, compared to $66 million for the same period in 2023. On a non-GAAP-adjusted basis, SG&A expenses were $48.2 million for the first quarter of 2024, compared to $49.5 million for the same period in 2023. The approximate 11% decline in non-GAAP, R&D, and SG&A expenses compared to last quarter is largely attributable to the restructuring enacted in December and reduced clinical expense as this percent in Phase 3 studies advance towards completion. Total other income net for the first quarter of 2024 was $3.5 million, compared to $0.9 million in the same period in 2023.
The difference is largely attributable to an increase in interest income during the period. Net loss including from discontinued operations for the first quarter of 2024, was $136.1 million, or $1.76 per basic share, compared to a net loss of 86.3 million, or $1.27 per basic share, for the same period in 2023. On a non-GAAP-adjusted basis, net loss, including from discontinued operations for the first quarter of 2024, was $116.2 million, or $1.51 per basic share, compared to a net loss of $62.9 million, or $0.92 per basic share, for the same period in 2023. To begin the year we achieved a number of milestones with our programs, that will result in corresponding milestone payments. During the first quarter we recognized a one-time in-process research and development, or IPR&D, expense of $65 million.
This was triggered by achieving the first patient dose in the Phase 3I Harmony Study, and is expected to be paid in the second quarter of this year. With the recent conditional approval of FILSPARI in Europe, we expect to receive a $17.5 milestone payment from CSLV4 upon conversion of the CMA to full approval And we also anticipate receiving an additional milestone payment in 2025 upon achievement of market access milestones in certain countries. Also related to the CMA approval, we expect to pay Ligand Pharmaceuticals a one-time milestone payment of $5.75 million in the second quarter of this year. As of March 31st, 2024, the company cashed cash equivalents and marketable securities to $441 million. Cash use during the first quarter included approximately $61 million of non-recurring items related to the strategic reorganization announced in December, delivery of inventory, corporate performance payout, and pass-through receivables to Mirum Pharmaceuticals as a result of the bio-acid products transaction last year.
Importantly, we anticipate operating cash use to decline meaningfully through the balance of 2024. With our current strong cash balance, expected significant growth in FILSPARI, continued expense management, and anticipated incoming future milestone payments, we continue to expect that our balance sheet can support current operations into 2028. I’ll now turn the call back over to Eric for his closing comments. Eric?
Eric Dube: Thank you, Chris. We are in a differentiated position to drive value and growth. We are executing very well on the commercial launch of FILSPARI, which is targeting to outperform benchmark launches in year two and continue to grow significantly in the years ahead. FILSPARI also has the potential for a second indication for FSGS, which would be the only approved medicine for a rapidly-progressing kidney disorder with little else in development. And we are advancing pegtibatinase, an innovative enzyme replacement therapy in a Phase 3 program that could deliver the only disease-modifying therapy for a devastating rare condition affecting an estimated addressable population of 7,000 to 10,000 patients worldwide. With these opportunities to create significant value, we are acutely focused on executing in 2024.
We have started the year by achieving all of the milestones anticipated thus far, and we expect to continue that trend through the balance of 2024. Now let me turn the call back over to Anne to open up the lines for Q&A. Anne?
Anne Crotteau: Thank you, Eric. Rachel, we can now open the line up for Q&A.
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