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spk06: Good day and welcome to the Ardellis Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Caitlin Lowy, Vice President of Corporate Communications and Investor Relations at Ardellix. Please go ahead.
spk05: Thank you. Good morning and welcome to our third quarter financial results call. During this call, we will refer to the press release issued earlier today, which is available on the investor section of the company's website at ardellix.com. During this call, we'll be making forward-looking statements that are subject to risk and uncertainty. Our actual results may differ materially from those described. We encourage you to review the risk factors in our most recent quarterly report on Form 10-Q that was filed today and can be found on our website at Ardell.com. Only elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our views change. Our President and CEO, Mike Robb, will begin today's call with opening remarks and an overview of the company's progress during the third quarter of 2023. Susan Rodriguez, Chief Commercial Officer, will provide an update on the performance of Estrella and the launch of Exposet following its approval earlier this month. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks for the review of the company's financial performance during the quarter ended September 30, 2023, before we open the call to questions. With that, let me pass the call over to Mike.
spk18: Good morning, everyone, and thank you for joining us on the call. I'm very pleased to be here once again, just a short few weeks after we celebrated the approval of Exposa. With this approval, we now have delivered on our mission to provide patients with medicines that matter for the second time. It is something I am immensely proud of. Today, Susan, Justin, and I will share details on the performance from the third quarter, as well as important updates from the first couple of weeks in the fourth quarter following the announcement of Exposa's approval. Before I hand it over to them, let me share a few of my thoughts on the third quarter and what we expect in the near future for our delits. First, Ibsrella momentum continues. Our quarter-over-quarter growth in Q3 was driven by a clear need patients have for new medicine to address the challenging and sometimes intractable symptoms experienced by patients with IBSC. Ibsrella is establishing a unique role in what has traditionally been thought to be a challenging market to penetrate. We are demonstrating that when you have a novel mechanism product with a strong safety and efficacy profile that is benefiting patients, and when you're thinking differently about marketing innovative products, that you can disrupt markets. Exposa is ready for success. As Susan discussed on our approval call, awareness, interest, and intent to adopt Exposa are high among the nephrology community. The response to our approval has been nothing short of amazing. It is also humbling as we now have the responsibility to deliver for patients. We've received words of congratulations from across the kidney community with nephrologists expressing their excitement about having this novel therapy available to prescribe for their patients. As we've shared, there is significant pent-up demand, and we expect strong uptake at launch. Our sales team is already in the field, and we expect to have exposure at our distributors shortly after the conclusion of ASN's kidney week. The new era for managing hyperphosphatemia among kidney patients is here. Finally, we are well resourced for the foreseeable future. We've carefully and thoughtfully financed the company and have a strong cash position as a result, sufficient to fund the commercialization of Exposa and support the critical ongoing investment in Adrelva. We will also begin investments in R&D in the coming quarters as we work towards the next phase of Ardelix. I will now hand it to Susan. who will share more on Exrella's performance and additional details on the launch activities for Expoza. Susan?
spk09: Thank you, Mike. It is great to be back today speaking about Exrella and now Expoza. We continue to disrupt the established IBSC market with Q3 revenue for Exrella at 22.3 million, reflecting a 22% increase versus Q2. This first-in-class drug is offering meaningful benefit to patients who have been in need of a novel approach. As I've noted on previous earnings calls, our growth is consistent and persistent. New prescriptions are growing. Resale prescriptions are growing. We continue to grow new riders, and existing riders are expanding their use. These results reflect the extent to which physicians continue to identify more and more of their patients as candidates for Azrella, that patients are gaining access to Azrella, and that their treatment experience is favorable. Our team's efforts are supported by the strong clinical data package for Azrella, which we continue to expand. Just recently, at the American College of Gastroenterology meeting in Vancouver, we had a significant commercial and medical presence, which included a well-attended product theater, as well as two posters and an oral presentation on data analyses about symptom response during treatment with Azrella. Our research was incredibly well-received. Our poster titled, Tanapenor Can Improve Abdominal Symptoms Independent of Changes, in Bowel Movement Frequency in Adult Patients with IBSC, authored by notable opinion leaders, Dr. Darren Brenner and Dr. Tony Lembo, as well as our DELLIC scientists, was recognized with the Presidential Poster Award by the ACG Abstract Selection Committee. Awarded to less than 5% of all posters, this distinction recognizes high-quality, unique research. Our dedicated team is fully engaged with the physician community and carving out a meaningful role for Azrella among the IBSC patient population. Based on the uptake we are seeing, it is clear that the potential for Azrella is high among this target group of patients who are in need of a novel option and that Azrella is on pace to achieve a high single-digit market share position across this 5 million script market over time. With the price point we established within this market enabled by the value of its innovation and the favorable uptake dynamics driven by the patient need, we are well positioned for success with Ipsrella. Turning to Exposa. During our call a few weeks ago, I characterized in detail the dynamics and our commercial approach. I will summarize those briefly before discussing our pricing and access strategy in more detail. The market dynamics for EXOSA are favorable. Hyperphosphatemia is a well-established therapeutic area with treatment goals centered on globally recognized treatment guidelines. 80% of the estimated 550,000 patients with CKD on dialysis in the US are treated with a prescription therapy in an effort to control their elevated levels of serophosphorus. Of those being treated, it has been shown that 77% are unable to consistently maintain target levels of serum phosphorus over a six-month period. The market is primed and ready for Exposa. Nearly 70% of surveyed nephrologists report a high or very high need for a new treatment option. And among nephrologists aware of new treatments for hyperphosphatemia, three-quarters mentioned Tanapinor by name. Surveyed nephrologists rate the novel mechanism efficacy, tolerability, and dosing attributes favorably, and 59% reported that they intend to adopt Exposa within the first six months of product availability. Ardellix is well positioned to capitalize on this opportunity. Positioning for Exposa will center on integrating a novel blocking mechanism therapy for their binder-treated patients who have an inadequate response or are intolerant to any dose of binder therapy. WAC pricing for Exposa will be set at $2,960 per month of therapy, reflecting the value Exposa brings to patients in the context of the CKD market pricing landscape. We have built a dedicated nephrology sales force of 60 reps that cover the approximately 8,000 nephrology healthcare providers who write the majority of the hyperphosphatemia prescription. Our distribution network is also in place and will provide full coverage across the U.S., aligned optimally to our access strategy. Our comprehensive patient services program, our DelixAssist, has gone live for Exposa and is receiving calls. Product is on track to be in the channel following ASN's Kidney Week in early November. As I outlined in our approval call, there are three foundational components to our go-to-market approach centered on enabling nephrologists to integrate first-in-class phosphate absorption inhibitor Exposa into the treatment regimen of their binder-treated patients who have had an inadequate response or cannot tolerate any dose of binder therapy. First, Exposa is novel. It is a first-in-class phosphate absorption inhibitor. It is not a binder. This is a significant innovation for patients who up until now have only had one treatment option for managing hyperphosphatemia. Second, patients are in need of innovation. The vast majority of the 550,000 CKD patients on dialysis who are treated with a phosphate binder to lower their phosphorus levels are unable to consistently achieve or maintain target levels. And third, Ardellix's commitment to patient access and affordability. Patients prescribed Jexosa will have access to comprehensive prior authorization support and affordability programs. Ardellix Assist connects providers, payers, and specialty pharmacies to help facilitate prior authorization and other administrative processes. For commercial patients, their copays will be covered at the level of 100%. Patients unable to afford EXPOSA can apply for our patient assistance program that provides drug at no cost to patients who meet the program's broad eligibility criteria. I'd like to further characterize the access landscape and our access strategy as we received a number of questions following our approval call two weeks ago. EXPOSA, like ADDRELA, will be available to patients through a prior authorization process. We have been engaged with payers for several months to educate them on EXPOSA, its novel mechanism of action, clinical data, and now the approved label. Over the coming months, payers will issue their coverage policies. We anticipate that the requirement will be that physicians attest that patients have not had an adequate response to their binder treatment or that they are not able to tolerate binder therapy. While the specifics around the requirements will vary by plan, It is important to note that the majority of patients treated with binders today by nephrologists meet these criteria. What will be most important is that nephrologists prescribe EXPOSA based on patient needs and integrate the prior authorization workstream into their office practice so that patients prescribed EXPOSA can access EXPOSA. Nephrologists are well accustomed to the prior authorization processes as several products commonly used for patients with CKD on dialysis require them. Given the limited agents available today to treat hyperphosphatemia, the recognized unmet patient needs, and unopposed position of EXPOSA as the only non-binder, next-line option for patients, we anticipate that EXPOSA will be accessible via the prior authorization pathway early in the launch. We do not intend to contract as payers and anticipate a steady and persistent uptake of Exposa by HCPs based on addressing the patient's unmet needs and effectively engaging in the prior authorization administrative process. The Exposa sales force has been in the field and will be joining the nephrology community this weekend at the ASN Kidney Week in Philadelphia. In parallel, the Izrella sales team maintains their singular focus on disrupting the IBSC market, also with a first-in-class therapy, addressing important unmet patient needs. The Ardellix commercial team is executing at the highest level with teams of experienced, dedicated, and highly capable individuals who are delivering on Ardellix's mission every day, addressing important unmet treatment needs through innovation. With that, I will hand it to Justin.
spk08: Thank you, Susan. Our Delft has delivered on a number of key milestones since August. Continued growth of Ibsrella across all key measures. The approval and imminent commercial launch of Expoza. The expansion of our commercial organization to support Expoza. The approval of Tenapnor for hyperphosphatine in Japan. The approval of Ibsrella in Hong Kong for IBSC, which we announced this morning. And an amended loan agreement which provides additional cash and flexibility to fund our future growth. We find ourselves with a very strong cash position. We are well-resourced to support our ongoing operations, including the commercialization of both of our in-market products. With that backdrop, I will discuss the specifics of our financial performance. In the third quarter of 2023, we had total revenues of $56.4 million, compared to $4.9 million in total revenues during the third quarter of 2022. The increased request draws net product sales growth as well as milestone and collaboration payments from our international partners. Next, let me take you through the relative contributions of our revenue components during the quarter. First, as previously mentioned, we had U.S. net product sales of Israel in the quarter ended September 30, 2023 of $22.3 million, a 22% increase from the $18.3 million we reported in the second quarter. As a reminder, in the third quarter of 2022, we reported IZRELA net product sales of $4.9 million. Second, we reported other IZRELA net product supply revenue of $2.1 million related to our international partners. This is compared to 92,000 in product supply revenue in the third quarter of last year. Third, we recorded $30 million in licensing revenue as a result of milestone and contract amendment payments from Kiowa-Kirin following the approval of Tenapenor for hyperplasphatemia in Japan in September. Fourth, we recorded a $2 million milestone payment from Folsom Pharma following the NDA submission for hyperphosphatidine in China, which we announced back in July. And finally, we recorded a small amount of royalty income from Knight Pharmaceuticals as we received a percentage of their Absrella net product sales in Canada. Overall, our revenues were in line with our expectations regarding US net product sales for Absrella, as well as milestone payments related to our international collaboration partners. Looking ahead, we currently expect net drill sales revenue in the U.S. for the full year of 2023 to be between $76 and $78 million. Please note that this does not include any anticipated sales from Expoza, partner milestone payments, or product supply revenues. In addition, the FDA approval of Expoza triggered a $3 million milestone payment from Postman which will be recognized as revenue and is expected to be received in this current 4th quarter. At the end of Q3, we reported year-to-date 2023 net gross sales revenue of approximately $52 million. Our raised and narrowed full-year guidance range of $76 to $78 million represents our expectation of continued consistent growth. We are still early in our launch and unable to fully anticipate how seasonality made plans of performance during the fourth quarter, so we will continue to take a measured approach as we dive into our expected sales performance. Research and development expenses were $8.6 million for the third quarter of 2023, which is an increase of $1.1 million from the $7.5 million in the same period last year. Selling, general administrative expenses were $32.7 million for the third quarter of 2023, an increase of $14 million from the $18.7 million we reported for the same period of 2022. The increase was due to the cost associated with the continued commercialization and growth of Ipsrella, as well as lost preparation activities for exposure. As we mentioned during our second quarter call in August, we anticipated the cost associated with exposure would be an incremental $20 million per quarter. ramping up in the third quarter, and then being fully reflected in our SCNA expenses beginning in the fourth quarter this year. We had net income of approximately $6.6 million, or 3 cents per fully diluted share, in the third quarter of 2023, compared to a net loss of $22.9 million, or 14 cents per share, in the same period last year. Our net income in the third quarter has resulted in a $30 million milestone and collaboration amendment payments from Kiowa-Kuren, as well as increased sales from Ipsro. From a cash perspective, we have never been in a stronger financial position as a company. Let me take a step back and tell you where we are, how we got here, and what it means. First, as you saw in the press release this morning, as of September 30th, 2023, we had total cash, cash equivalents, and short-term investments of $165.1 million, as compared to $123.9 million at the end of 2022. This reflects $58.4 million in gross proceeds that we raised during the quarter through sales of approximately 14 million shares of common stock under our ATM program at an average selling price of $4.24 per share. We also received a $2 million milestone payment from POSEN following the submission of an NDA for TNAFNO for Hypertrophic Hemia in China, which we announced back in July. In addition to our cash as of September 30th, 2023, subsequent to quarter end, there are also three other contributing factors that I want to point out that significantly strengthens our cash position. First, we have received payment from Kyocere for the $30 million receivable associated with the approval in Japan. Second, also associated with that approval is a $5 million milestone payment we have received from Healthcare World Department. And finally, we drew $22.5 million from our loan agreement with SLR or Solar Capital. Considering these items, as well as the ongoing business in October, as of yesterday, October 30th, our cash investments amounted to approximately $218.1 million. When combined with access to additional capital, our option, via the loan agreement with Solar and our continued financial discipline as a company, We believe that we are very well resourced to a foreseeable future. We have taken a very thoughtful, disciplined, and patient approach to how we fund the company. We are positioned to support continued investments in our in-market products, as well as beginning investments in our pipeline programs. We will continue to make thoughtful decisions that maximize shareholder value. And with that, I'll turn it back to Mike.
spk18: Thanks, Justin. This is an exciting time at Ardellix. Within a couple of weeks, we will have Xposa at our distributors and ready for fulfillment to patients alongside of Xrella. We have focused on execution this year, and yet we are not done. We have a lot of work ahead of us, continuing the momentum we've established with Xrella, ensuring a successful launch of Xposa, and looking ahead to next year where we will begin investing for further growth. We have shown that we can deliver on our promises. We continue to strengthen our company and our balance sheet. We are well resourced and excited about what is to come. I want to thank the members of the investment community who have been alongside us on this interesting journey. However, none of this would have been possible without the dedication, the passion, and the resilience of Team Ardelix. Thank you for what you do for patients every day. I will now open the call to questions. Operator?
spk06: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Louise Chen from Cantor. Please go ahead.
spk13: Hi, congratulations on a strong quarter and thanks for taking my questions. I wanted to ask you, how are you thinking about growth to net for Expoza? And then also, do you think there's a bolus of patients waiting for drugs? Just kind of curious how you think about how fast the uptake might be, especially in the last quarter of the year, or do you expect more of the uptake to come in the first half of 2024? And then last question I wanted to ask you was, obviously, you have a very strong cash position. What do you think your cash runway takes you out to? Thank you.
spk18: Yeah, so let me ask Justin to address the first and last question first, and then Susan, please, about uptake.
spk08: Great. Thank you, Mike. Good morning, Louise. Regarding our gross-to-debt-for-exposa, our commercial strategy will be very similar to Zrella, which means that we don't expect significant rebating to payers other than the statutorily required rebates for certain government payers, which would obviously have a negative effect on our gross to net. But in general, we expect it to be very similar to what we saw with Adrella. There may be some seasonality or gross to net in our first quarter, being perhaps less the other quarters due to the reset of commercial copayment programs. But otherwise, we're very confident that it'll be, certainly in the early years, comparable to Adrella. And then regarding our cash position, you may see in our 10Q, which we filed earlier today, that we no longer have a going concern, which means our auditors are confident we have more than a year of cash. For us, we believe that it is more than that. We believe we have enough cash runway for quite a while. We can't simply put out because we're waiting to see how successful we are at the close of launch, but we're quite confident in our cash position. Susan?
spk09: Yes, and regarding the uptake of Xposa, you're exactly right. There is a very large group of patients today who, despite treatment with binders, are unable to consistently maintain target levels, and patients that can't tolerate binder therapy. So there's clearly a nice opportunity there, and now these patients will have a new option with Xposa. I think what's important here is thinking about the integration of novel mechanism Xposa into the nephrologist prescribing pattern, you know, how exactly they're going to integrate use of Exposa across their patient groups. So it's always going to take some time for the physician community to adapt their practices now that they have an expanded treatment armamentarium. So given that and given our promotional presence with nephrologists, we believe that the uptake of Exposa is really going to be really quite steady and consistent as they identify patients early that they believe are most in need of Xposa, and then based on their experience, proceed to expand their use to those additional patients that they're quite aware today are not meeting the target levels despite finder treatment.
spk03: Thank you.
spk06: The next question comes from Dennis Bing with Jefferies. Please go ahead.
spk14: Hi, good morning. Two questions for me. Number one, maybe on the congressional action to delay moving orals into the bundle, can you comment if you have met with the CBO and what can you disclose from those discussions as it relates to exposure pricing and how the $3,000 a month price would impact their cost estimates for moving orals into the bundle versus keeping them out? And then number two, on the Ipsen Relic guidance, seems based off of Scripps, which continue to generally grow week over week. Your guidance for the year seems a little bit conservative for Q4. So is there anything you could be expecting in the quarter that investors are missing? Thank you.
spk18: Sure. Thanks for the question, Dennis. So with any congressional action and meeting with the CBO, we don't meet with them. I've never seen that companies actually meet with the Congressional Budget Office. Any bill going through Congress needs to get scored. That's just standard fare. So that's our expectation that's going to be happening here. Whether or not our price has an impact on that, again, that is the process the CBO goes through, and that's not something that we have transparency to. With Ibsrella, I think in the guidance, as Justin said, and I think as you've seen, we take a very measured approach in the way that we have certainly financed the company and the guidance that we give. We're very confident with this range and felt that raising it the way we did and narrowing it was giving you a perspective in terms of our confidence of where Ibsrella revenue and uptake is going.
spk04: Got it. Thank you.
spk06: The next question comes from . Please go ahead.
spk02: Yeah. Hi, Mike and Jean. Thank you very much for taking the question. On the pricing for Xposa, can you just give a little more insight into the thought process around the 2960? If you look at the binders, obviously, they're priced around 20K a year WAC, which is a year about a 75% to 80% premium. Obviously, you have a very significant value proposition with the unique mechanism of action. And we don't have anything like it in the market. But nonetheless, maybe spend a little more time discussing the thinking around that type of a premium. Thank you.
spk18: Sure. Thank you, Gal. I think what you just described as the significant difference in the opportunity and the benefit that exposure will bring patients, that's really the differentiator here is looking at what we're thinking is the best thing what's most appropriate for patients especially in the context of other branded uh binders within the marketplace so we're very comfortable with where we've landed um and think the price is exactly where it needs to be and it's appropriate um for the patients and what we are going to be bringing for them okay thanks um and then maybe for susan uh susan if you could talk a little bit more about umbrella um if you have this data but can you tell us what the resale rate is and
spk02: the number of scripts per writer so far, if that's data you have access to.
spk09: Yes, thanks, Egal, for the question. Yeah, we track that closely. We have not specifically disclosed those growth rates, but what I can tell you is that the refill rates, you know, are growing at comparable or greater than the, you know, the new Rx rate, so both are showing very healthy growth, and that has been So, reflecting that physicians are continuing to write new scripts for patients, and when those scripts are written, they're getting refilled. So, it's very encouraging looking at those rates. And in terms of the average script per writer, again, it's not a specific metric we have disclosed, but we track that very closely. And what's really encouraging is that every single month, we see a new cohort of writers join the Adrella Writing Group. We're persistently accumulating riders, and when you track existing riders monthly on a persistent level, they're increasing their prescription volume for Absrella. So all of those fundamental demand indicators continue to be very strong.
spk02: Okay, thanks. And then one quick one for Justin on the cash and the finances. Obviously, you highlighted a very strong cash position yesterday. I'm just curious, and you also mentioned that you did report positive net income, although I know that it was driven by perhaps some one-time items. But nonetheless, I'm just curious, Justin, if you could kind of give us a sense as to the likelihood that you might need to use the SLR credit line again, or if that's more of a backup plan and it's not really something you're expecting to draw on again.
spk08: Hi, Yigal. I'm sorry. I had trouble understanding the second part of your question. You're asking about our cash from because there was one time item.
spk18: And then the rest of the question was whether we'd be accessing the credit that we have or financing the company in the future. How about that? Oh, yeah.
spk08: Thank you. Thank you. Yes. So we're very pleased with that third quarter. We're clearly not at a point yet where we can share where break even is. But we think a very measured approach to our funding, as you've seen. I do think with our internal projections, we can be very flexible and patient. We have until March 15th of next year to potentially draw the next tranche of debt. And so that's something that the team will evaluate as we see how well Exposa launches and the continued growth of Ibsrella. So it's something that we want to have the flexibility on. We don't have any intentions to do a significant equity race this time. We're always looking at all of our different ways to raise capital when appropriate.
spk18: Yeah, and what I'd add to that is, you know, solar has been a spectacular and unique partner in this whole process for us. Right? I mean, you think about when we first established a relationship with them, the company was in a very different position. And the terms around this loan are really favorable to us and what we're able to accomplish with it, which is why we drew down the 22.5. The additional 50 at our discretion is nice to have. And we may at some point in the future take that down before the timeframe that Justin just mentioned. But, you know, I think it's important that we have taken the approach that we have and have strong partners like solar to grow the company to where we want it to be.
spk04: Got it. Okay. Thank you very much.
spk06: The next question comes from Ed Art with HC Wainwright. Please go ahead.
spk15: Hi, thanks for taking my questions and congrats on the approval and the quarter. First, I wanted to ask about Ibsrella. You know, given the guidance, the new guidance range, you could discuss sort of what you're continuing to see as drivers of additional uptake, both with new and existing riders. And then Turning to Exposa, I'm wondering if, you know, with initial sales in the fourth quarter, are you expecting to report quarterly metrics, say, fourth quarter or early next year, and sort of disclosing those and tracking those beyond Spritz? And then finally, on pricing, I know this was already brought up, but I wanted to ask, how you came to that number as you think about balancing the ability to capture the differentiated value proposition with the patient access and affordability that you mentioned is important for your launch. Thanks so much.
spk18: Sure. Let me make a couple of comments on all of those. Thank you for the question. And then I'll ask Susan to address all of them as well. So, you know, the Israel uptake dynamic, it's because the drug works, right? It is something that people are getting, you know, the samples and then their first prescription and the drug is doing something that they've never experienced before with the products that they've previously been utilizing. So that's really what's driving us is the experience is positive. And our adults assist program that facilitates access is extraordinarily important and a hallmark of what we do in the way that we help patients get access to the drugs that we develop. With exposometrics, you know, we'd love to provide as much as we can, but we'll provide what we think is appropriate. Early in the launch, you know, we want to make sure that, as we did with Absrella, it's probably going to be four to five quarters of, you know, these questions being asked and that we'll do the best to answer them before we're giving, you know, more solid metrics as we see things evolve. And with pricing, you know, pricing is, an art as well as a science. I think what we have done here, given the expansiveness of the entirety of what we do for patients, that this is a completely appropriate price for what this drug brings because there are no other drugs to manage phosphorus that our next line opportunities with a novel mechanism that may very well be the way that we can ultimately get a greater percentage of our patients to goal. And that's what we should all be focused on is, is that we, with this approval and, the field force out there already. This week with ASN is going to be spectacular. And we're all going to learn a lot about this together. And we feel very confident that we have priced this appropriately and are going to be reflecting that in uptake over the ensuing, you know, quarters that we work together talking about this. Susan, would you like to add anything?
spk09: Yeah, thanks, Mike. I think in terms of, let me take the umbrella aspect of your question first and then touch the exposure pricing. I think for Ibsrella, what we're finding is, I mean, there are many high-riding physicians who are just beginning to prescribe Ibsrella. And as we get in their offices with the frequency and the sampling, we continue to bring on more and more new riders. So that's really, there is a lot of runway there to continue to bring on new riders for Ibsrella. then as i mentioned before on top of that the existing writers expanding their use across their patient population and what we're finding you know even the third dimension you know as a growth driver is as they gain the favorable experience with israel they're expanding their view as they see patients daily in their office on patients who could benefit from israel so we have very very strong growth dimensions there in view for israel are taking us into the future I think in terms of exposure pricing, as Mike mentioned, we consider multiple dynamics. Let's just talk a little bit about, you know, obviously we've talked about the novelty of the drug, the unmet need, and our commitment to patient access. If you look at the CKD pricing landscape, there have been a few innovations launched recently, which is really encouraging for CKD patients with dialysis, you know, in high and unmet need areas like nephropathy, IgG nephropathy, lupus nephritis. those products priced in the range depending on which one, depending on $4,000 to $10,000 a month. If you look at specifically hyperphosphatemia, I know Yagal had mentioned the branded pricing of the products. If you look at the number of castles that they're on and it depends on which product they're on, the expense of branded binders is actually distributed across a pretty broad range. which ranges from $1,400 a month to, we estimate, around $2,400 a month. So in that context, you know, if you consider the overall CKD pricing landscape, the hyperphosphatemia branded binder ranges of cost per month, the novel innovation that exposure represents, we believe that it's an appropriate price point. You had mentioned the commitment to access. Mike has emphasized this. both for Absrella and Xposa, you know, we are quite confident with the program we have in place that we're going to support the nephrology offices with this prior authorization submission so patients can gain access to Xposa and that Xposa will be affordable either because we can offset their copay for commercial patients and for patients who can't afford the product, who don't have local pay programs, they would be eligible for our patient assistance program. Access and affordability really is our primary focus, and that's what's going to be important to bring exposure to these patients.
spk15: Great. Mike and Susan, thank you so much for those comments. Very helpful. Look forward to seeing the team later this week in Philly. Thanks, Ed. We'll see you then.
spk06: The next question comes from Joseph Stone with TD Cowan. Please go ahead.
spk16: Hi there, good morning, and thank you for taking my questions. Maybe the two on Ibsrella uptake, I guess, are you seeing physicians, obviously the drug is launching well, are you seeing physicians wanting to use the drug earlier in the treatment line of their patients? Or obviously we talked about the target, you know, post-sickness market, but are you seeing them want to use it earlier? And then second, we did see that phase three trial in adolescent patients. I guess, what is the current uptake in adolescent patients between 12 and, I guess, 17, 18 years of age, and what's sort of the eventual goal of this study? Would it be just to remove that line on the label that said safety and efficacy of the drug aren't available in pediatric patients at 18, or is there something else that can be done with it after the study reads out? Thank you.
spk18: Sure. Thanks for the question, Joe, and I'll ask Susan to speak to the But first, let me address the pediatric adolescent question. That was an interim look at some of the data that was presented. We are still indicated only for adults with IBSC, so that hasn't changed. So, any insights that we have, I can't think of any that say that we're treating adolescents because that's not indicated in our label. Nor is first line therapy, right? I mean, if you look at the way that we position this, it is a drug that's gonna be used for patients that are no longer responding to the GCC agonist. Specific feedback as to whether or not people are using it earlier. Susan, you wanna address that?
spk09: Yeah, thank you. Actually, it's interesting for, if you recall, we have a very focused approach calling on the highest writing physicians for IBSC-indicated prescriptions. For those physicians The patients they see in their offices daily have all been cycled, you know, have cycled through GCC agonists. So very important to think about the context on where we're focused with ISRELA. So for those physicians, patients they see daily typically have already been treated with these products. So it depends on how you define early. What we're finding is that because the patients meet already the prior authorization criteria, it's really the physician's eagerness and identifying increasingly patients that they believe can benefit from a novel option. Remember that the overall label for Ipsrella does support broad-based use, but in our case, focusing on these high-riding physicians, it's really not an issue for the patients who walk into their office every day to meet the prior-off criteria.
spk04: Okay, perfect. Thank you very much. Thanks, Jeff.
spk06: The next question comes from Matt Kaplan with Leidenberg Salmon. Please go ahead.
spk17: Hey, good morning guys. And we're actually on the strong quarter. Just focusing on Ibsrella a little bit. Maybe Susan, can you talk about how patients are using Ibsrella in a real world setting now versus the use in the long-term clinical studies?
spk09: Yeah Matt, actually what we're finding in our clinical data package really shows a rapid response to Azrella and a sustained response to Azrella which is really a piece of our overall product profile and clinical data profile that physicians respond very favorably to and what we're finding in the real world is that that has been their experience that patients have responded to Azrella and when they respond to Azrella they continue to have a sustained effect. I mean, obviously you're not going, it's not going to be the best, the right drug for every single patient, but where the physician feedback really has been quite favorable on their treatment experience, consistent with their expectations based on the clinical data package. And Spirix has been tracking the launch over time and persistently they're reporting either moderate or high satisfaction with treatment with Azrella and reporting low discontinuation rates.
spk17: All right, thank you. I guess given the similarities between the IBSC market and the hypersensitivity market in terms of going into these two markets with a novel mechanism of action combined with the unmet need, can you talk a little bit about the learnings that you've had in the launch of ISRELA that you're going to apply to EXOSA? Sure. Susan, please.
spk09: yeah so uh yeah you're spot on in terms of the parallels between the two markets and a very important learning is the physician interest because of the limited options that they have had and the recognized unmet need their interest in the novel mechanism profile understanding uh the way the drug works uniquely and its clinical data package so we're very much uh science-based clinical-based cell patient-based cell and also learn the criticality of emphasizing our commitment to patient access and affordability. So physicians really, they prescribe based on patients needing a drug, and it's important that we encourage them that they do not have to have a concern around the prior authorization process, that we can support that. We can remind them that they have familiarity with that administrative process with other drugs they write, and this one is no different. And in this case, the patients that they're identifying who are in need of our novel drugs implicitly meet the prior authorization criteria. So all of that will be very critical in really supporting physician uptake, integrating novel mechanism exposure into their treatment patterns for these patients who have for so long have had no options outside of binders.
spk18: And Matt, what I would add to that is, you know, the power of our DeluxAssist and the comprehensiveness of that program When physicians utilize it in the way that it's been designed, I think they find an extraordinarily seamless program where they get confidence that if they're going to write a script, that their patient is going to get it, irrespective of whether or not it's a co-pay pay down, it's an affordability issue, Medicaid, Medicare, our Deluxe Assist is there to accomplish an awful lot. So it's really the that program and how physicians and ultimately the patients who are receiving, whether it's Adrella or then Exposa, are finding that our DeluxAssist is really doing the job that it's been designed to do.
spk17: Okay, great, great. And then last question. Can you provide a little bit more detail on the presence that you're going to have at the upcoming ASN meeting later this week? Sure. Susan?
spk09: Yes, so we will have a very strong presence for Xposa at the upcoming ASN meeting. We will have a strong promotional booth presence reflecting our whole launch campaign for Xposa. As we mentioned earlier in the narrative, we have a Salesforce out and deployed calling on nephrology healthcare providers as we speak, so we'll have a strong promotional presence at ASN. Reminder at Banner, you know, I think anywhere you look across the ASN floor, you're going to see EXPOSA and its novel blocking mechanism campaign. We also have, you know, a clinical scientific presence At ASN, we'll have a product theater where we have opinion leaders presenting on the novel product profile of Exposon, its clinical data package. So we're quite encouraged about all of the events at ASN, and hopefully look forward to seeing you there.
spk04: Great. Thanks. Thanks, Susan. Thanks, Matt.
spk06: The next question comes from Laura Chinko with Wedbush Security. Please go ahead.
spk07: This is anchored on for Laura Chico. How should we be thinking about gross to net dynamics for exposure pricing over time? And what are your steady state rate expectations for gross to net discounts? And then just our last question is, could you perhaps review why IZRELA as a competitor makes sense?
spk18: Let me start with the last one first. It's a great question, is why does IZRELA as a competitor make sense? Susan is the best one to address that given what the experiences are that we're seeing in the field. And then I'll ask Justin to address gross net for exposed and discounts. Susan?
spk09: Yes, so I think if Joe is a comparator, let's just take a step back and think of some of the parallels that Matt alluded to. So as a novel mechanism drug, a specialty drug, there are, you know, the gross to net component take into account the distribution, the mandated government rebates, and other considerations that Johnson can touch on. Overall, in the gross and average between the two products, we're going to need to wait and see because the mix of patients, the payer mix of patients, also determines the extent to which the government-mandated rebates become a part of your gross to net profile. But what is comparable between the two, which is an important comparator, is that there will not be incremental rebates that we're providing payers for access to the drug. Access to the drug will be achieved by a prior authorization because for these patients in both cases, They have limited options and a physician prescribing our novel mechanism drugs is because those options have not been adequate and they're in need of a new option. So that's how patients will access our drugs. And therefore, there will not be the incremental pay or rebate gross to net item, which we get a lot of questions on that because I think for product launches, those are rebates that are negotiated over time. So they start to integrate themselves into your gross to net profile. That is one item that we can tell you today is not going to be something that's going to show up on the profile. for either product.
spk18: And just to follow up on the question, were you asking about the financial comparator or the clinical comparison to other drugs in the market?
spk07: Financial comparator.
spk18: Great, thank you. Justin, if you want to address Rosinet for Exposyn and discounting?
spk08: Sure, thank you. Susan briefly touched on it, and just to elaborate, the most important thing for us is access and making sure the patients have access to it. Our commercial strategy will be very similar to what we did with Ibsrella, which means, as Susan mentioned, we don't do SNF and rebating to payers, but we will have our same generous commercial co-pay, commercial buy-down process, where if you have commercial coverage, we will take care of your co-pay to 100%. And so as a result, we may expect to see the seasonality that we saw with Ibsrella, where in the first quarter of the year, when many patients' plans reset There may be deductibles where we will help the patient meet that need. And then it may improve, if you will, over the course of the following subsequent quarters. So as a general premise, withdrawal, as you may have seen, our first quarter was just about 33%. It's come down into the high 20s over the course of this year. And I think it's fair to say, at least initially, we expect similar gross net margins for Xhosa.
spk03: Thank you.
spk06: This concludes our question and answer session. I would like to turn the conference back over to President and CEO Mike Robb for any closing remarks.
spk18: Thank you everyone for joining us this morning. Before I close the call, I want to recognize a member of the kidney community who we recently lost, Derek Forfang. Derek was an incredible person and patient advocate who meant so much to so many people in the kidney community and beyond. For Ardelix, Derek brought the patient voice to the Ardelix Scientific Advisory Board and was the driving force behind the creation of the Ardelix Patient Advisory Council. Derek was a warrior who, despite his many health challenges, always persevered, put others first, and continued his mission to advocate for kidney patients with a smile. Derek's passing is a reminder to all of us that our job is not done. There are so many patients with CKD who need innovation, and we need to continue investing in and developing innovations with urgency for this community of patients. With that, we can close the call.
spk04: Thank you, operator.
spk06: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
spk12: We have become more efficient as a finance department, making better and quicker decisions. We've gone from 30 miles an hour to 80 miles an hour, and I'm not sure that we're not going to 100.
spk18: You asked the question, where did all the bears go? And I think we know the Fed shot them.
spk08: I think there's an uber amount of optimism coming up.
spk13: When we look at all of these markets, we're kind of priced for perfection.
spk18: Let's just enjoy this calm right now, because I think it's going to get a lot rockier and a lot more uncertain.
spk13: The question is, you know, does the party stop? I think most folks think it doesn't stop.
spk00: This is Bloomberg Surveillance with Tom Keen, Jonathan Farrow and Lisa Abramowitz.
spk10: The year feels over, but it's not. Welcome. Good morning. This is Bloomberg Surveillance from New York for Audience Worldwide. Alongside Katie Greifeld, I'm Lisa Abramowitz. Tom Keen, Jonathan Farrow both thought that the year was over, and so they left. But it is not over, very much not, considering the fact we've got some key data coming up. So, Katie Greifeld, I am so pleased to have you in the seat as we really parse through, yes, thin liquidity, but also some really big questions heading into the beginning of next year.
spk11: Big time. And of course, we're going to get some important economic data today. You think about what we learned last week from the Fed. It's going to be interesting to see jobless claims and PC on the heels of that. But also yesterday, something interesting actually happened in the equity market. Around 230 or so, suddenly stocks puked. So, of course, thin liquidity, like you said, but shows that there's still nerves under the surface here.
spk10: OK, just to put some numbers around stocks puking because, you know, it is still 6 a.m. in New York. We're looking at the biggest decline in the S&P going back to September. And this metric I thought was interesting. It was only 19 companies that eked out a gain in the entire S&P. So broad-based gain on the way up, broad-based sale on the way down. And some people are looking at certain options trades as a culprit. Is that sort of the mood on the street?
spk11: Zero-day options right now, that's the scapegoat there. Apparently there was really heavy put volume in particular markets. which could explain some of the very technical feeling moves that we saw because there wasn't a really clear catalyst necessarily. Nothing happened at 2.30 p.m. I was paying attention. But like you said, of course, it was very broad-based, felt like everything sold off at once.
spk10: Well, it's a little bit calmer this morning. I do find it interesting the bond market did not participate in the puking. They were very much still getting a bid in with actually a 92% chance now priced in of a March rate cut. So it still is this belief that the Fed, despite all their pushback, are going to come out, embrace the disinflation by paring back where rates are and giving an extra leg to what we've seen in markets.
spk11: It's really interesting how higher for longer turned into higher for a little bit. Now maybe we cut in March. Of course, we have seen some pushback against how soon these rate cuts are priced in from some of the Fed speak. But yeah, the broad-based consensus at this point is that sooner rather than later, the next move is going to be a cut.
spk10: higher for a hot second. I find it interesting that we got a dip yesterday, and my first reaction is, is this a buyable one? Because literally every single analyst who's come on has basically said, we're looking for some kind of turmoil. We're looking for some sort of volatility so we can buy, so we can have a better entry point. That has literally been the comment from every single person, the latest being Citigroup's Scott Cronert, putting this in an actual note, talking about the message is to expect pullbacks and buy into them. Does that mean we don't get pullbacks?
spk11: They're short-lived if we get them. But it is a good point. I mean, we think about zero-day options, et cetera, being blamed for what we saw yesterday. But it's important to note that you think about how overbought we were. You take a look at the RSIs, whatever you like to look at. And by some measures, I mean, the S&P 500 was the most overbought since 2020. So we've come really far really fast. It makes sense that we'd hit some turbulence here.
spk10: especially given the fact that we do have a host of issues on the geopolitics side, which we'll be getting into with respect to China, and a tit-for-tat that seems to be escalating between the U.S. and China on the trade side of things, as well as, of course, that Houthi militant attack regime that's really caused some consternation in the shipping sphere. What we're looking at in markets today is a bit of calm after yesterday's 2.30 p.m. puke, as Katie Greifeld said. And I'll stop saying that after that. That was our allotment for the day. We could see about almost a half a percent gain on the S&P 4771, just off the all-time highs. Euro getting a little bit of a bid versus the dollar, 109.58. Ten-year yields, this to me is the most interesting. Yes, they are inflected up four basis points today. But yesterday, a sharp rally. Yields lower on the heels of that U.K. inflation print. despite the sell-off in stocks, 3.88%. Katie, I did wonder, was this a growth concern starting to creep up into the price action, or was this just idiosyncratic technicals under the surface?
spk11: It's a great question. What is actually driving the Treasury market right now? Is it that traditional haven bid? Maybe some of those growth concerns coming to the surface, or maybe it's something else. Maybe it's just a reflection of Fed policy. But, of course, it's known for certain that we firmly broke below 390.
spk10: is the floor when it comes to the tenure. And where are the buyers all going to be coming from? We're watching today, 8.30 a.m., initial jobless claims come out. And this is sort of the latest tea leaf that people look for, for signs of weakness. We have not gotten it. Unemployment has actually declined over the past month. So here's the question. Do we start to see a greater sign of weakness, especially as we saw the likes of General Mills, as well as others come out yesterday with some warning signs? in their earnings releases. 1 p.m. presidential press briefing takes place, including National Security Council's John Kirby. Very curious to hear where the administration's mind is when it comes to the Houthi militants, what kind of action they will be willing to take, as well as sort of any updates on how they see that evolving. And before market, we do get a host of earnings, including from Carnival. And after market, earnings from Nike. To me, this is where... Perhaps the rub is going to come into place, Katie, because a lot of people, a lot of enthusiasm on the macro level. On the micro level, a bit more volatility in terms of the signals that we're hearing, the commentary from CEOs.
spk11: And it's a really nice pairing that we have both Carnival and Nike. Of course, you think about people really going back into experiences. Travel stocks have been on fire this year, maybe at the expense of some of those retailers selling physical goods. So a really nice juxtaposition to really tie a bow on that point.
spk10: Let's get the day started with Margie Patel, Senior Portfolio Manager at All Spring Global Investments. Margie, I want to start with, is your year over? Are you actually doing anything or are you just sort of watching with a wary eye and counting days until you can go on vacation?
spk01: Well, really, I think there's still some opportunities on days like yesterday to add a little when the market has a nervous day like that and just take advantage of that volatility. I think the market is going to return the rest of the year and finish on a strong note. And I think, again, 24 is going to be a surprisingly good year for the market to the frustration of so many people have been looking for a recession.
spk10: Do you feel sort of vindicated, Margie? I felt this sort of sense of, you know, all those people who've been calling for gloom and doom. You can keep feeling frustrated. Is there sort of a sense that people have been warning you and you've been pushing it aside and you've been right and you've seen things that they have not seen?
spk01: Well, I think that just looking at the fundamentals is really what's kept me pretty positive about the market. And I continue to feel that way. You know, we've had three quarters of economic growth this year that have been, again, surprisingly strong. And it seems that most of the statistics are, again, surprisingly strong. And yet people are still looking for a big recession, a big correction in the market, because That's what history has told us we should have. So I think people are rejecting the facts and looking backward and expecting to have a big drop. We had a little drop this year, a quick drop here this year, a quick drop last year. Very difficult if you were out of the market to jump in and take advantage of those. So I think people are still hoping we'll have another big drop where they can maybe readjust their investments or get in the market. There's a lot of cash out there.
spk11: So, Margie, it sounds like what you're saying is that against this backdrop, with all that cash in money, market funds, et cetera, that by the dip, that mentality is really back in the forefront or at least coming to it.
spk12: We have become more efficient as a finance department, making better and quicker decisions. We've gone from 30 miles an hour to 80 miles an hour, and I'm not sure that we're not going to 100.
spk01: Well, I think that's going to be the right strategy to do. And the reason is because I think we're going to continue to have reasonably strong economic growth next year, even if it's 2% or 3%. I think that would still allow, say, the standard and poor's to be up, say, 8%, 10%, 12%, something like that, which would be a reasonably attractive rate of return, especially if the Fed is beginning to lower short rates, making money markets a little bit less attractive for the investor.
spk11: Well, let's talk a little bit more about the relationship between the equity market and the bond market right now. Because as Lisa and I were talking about, you take a look at 10-year yields firmly below 390. We were at 5% not too long ago. I take a look at your notes that the 10-year yield should remain between 425 and 525. It feels like we're a far way away from even the low end of that range. Should we get back there? Is that any hurdle to the equity market? How are the two working alongside each other?
spk01: No, I think even a higher rate above 4% wouldn't really be an impediment. And the reason is because when you look at the economy, business and consumers, neither of those big sectors are over leveraged. There's no sector you can look at in the market and say, oh, they're a very precarious position. They're likely to fall and have a cascading effect in the whole economy. So business consumers look pretty good. And so I don't think that we're going to see any slowdown in a modest, continued modest recovery.
spk10: In this paradigm, Margie, do you still like stocks over bonds in a big way?
spk01: Yes, I do, especially because when we've had the 10-year go from 5% to under 4%, you've taken a lot of the performance out of that sector of the market. I think that there's still some attractive opportunities in the high-yield sector. That's another sector people were worried about because as we go into a so-called recession this year, we should have had spreads gap out. They never gapped out. They actually narrowed. But I think with defaults probably remaining 4% or lower for corporate bonds and the Fed beginning to cut short rates, the economy growing, I think to get, say, 400 basis points over treasuries looks pretty attractive for an income-oriented investor.
spk11: I want to talk a little bit more about the equity market and where you see opportunity there because one of the breakout stars in terms of sectors has been the chip makers. Of course, we got micron results after the bell yesterday being received pretty well by the market. You take a look currently up about five percent or so in pre-market trading. Can that momentum continue into 2024?
spk01: Yes, I think so. We like the semiconductor sector. It's been a volatile sector, but a great total return vehicle. And a lot of those names these days, as opposed to previous cycles, actually have dividend yields that are actually competitive with other stocks. So we think they're good all around.
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