Travere Therapeutics, Inc.

and welcome to the Travere Therapeutics Fourth Quarter and Full Year 2022 Financial Results and Corporate Update. Today's conference call is being recorded. At this time, I would like to turn the conference call over to the Vice President of Investor Relations, Naomi Eichenbaum. Please go ahead, Naomi. Thank you.

Thank you, Rachel. Good afternoon, and welcome to Travere Therapeutics Fourth Quarter and Full Year 2022 Financial Results and Corporate Update Call. Thank you all for joining us. Today's call will be led by our Chief Executive Officer, Dr. Eric Dubé. Eric will be joined in the prepared remarks by Dr. Jula Inrig, our Chief Medical Officer, Peter Herma, our Chief Commercial Officer, and Chris Klein, our Chief Financial Officer. Dr. Bill Rote, Senior Vice President of Research and Development, will join us for the Q&A session. Before we begin, I would like to remind everyone that statements made during this call regarding matters that are not historical fact are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties, and assumptions that may cause actual results, performance, and achievements to differ materially from those expressed or implied by the statements. Please see the forward-looking statements, disclaimers on the company's press release issued earlier today, as well as the risk factors section in our Forms 10Q and 10K with the SEC. In addition, any forward-looking statements represent our views as of only the date such statements are made, February 23, 2023, and Travere specifically disclaims any obligation to update such statements to reflect future information, events, or circumstances. During today's call, we will be covering certain financial results for the quarter and for the year ended December 31, 2022, including certain non-GAAP financial results. Please refer to the company's press release issued earlier today again, among other things, a reconciliation of the differences between the non-GAAP financial results and the most direct comparable GAAP financial results. You can access the press release on our website at Travere.com. With that, let me turn the call over to Eric. Eric?

Thank you, Naomi, and good afternoon, everyone. 2022 was a year of many achievements that have further strengthened our position as a leader in the rare disease community. This is founded in our mission to identify, develop, and deliver life-changing therapies to people living with rare disease. Throughout last year, we advanced our pipeline, prepared our organization for launch, and continue to reach the patients that currently rely on our approved medicines. Perhaps most importantly, our work culminated in the recent accelerated approval of PhilSparry for the reduction of proteinuria in adults with primary IgA nephropathy, or IGAN, at risk of rapid disease progression. Filspare is the first and only non-immunosuppressive medicine approved for IGAN, which has demonstrated a three-fold superior proteinuria reduction compared to a standard-of-care herbosartan. As you heard us talk about on a recent approval call, we have high aspirations for Filspare, as we believe it will become the foundational treatment option for IGAN patients who are at risk of rapid progression. Importantly, we have the deep market insights, the product profile, the team, and the strategy to achieve that goal. If we are successful, we will be able to positively impact many patients in the U.S. with this important new medicine. We are only a few days into the launch in the U.S., but we're encouraged by the initial engagement with physicians, patients, and payers. And Peter will go into it in a bit more detail shortly. We still have more exciting milestones to come with Vilspari in 2023. Beyond setting the launch trajectory in the U.S., We are anticipating a review decision from the EMA in the second half of 2023 for the conditional marketing authorization application for sparsentin in the treatment of IGAM in Europe. We will continue to work closely with our partner CSLB4 throughout the review process. And we also look forward to the two-year data from the ongoing PROTECT study. As a reminder, the interim results from the study supported the accelerated approval of Nelspari last week. As such, we are awaiting with anticipation the two-year data set, which is planned for the fourth quarter of this year. Based upon the interim results, we believe the preliminary EGFR data available at the time of the interim analysis were indicative of a potentially clinically meaningful treatment effect after two years of treatment, and that we'll be able to utilize those data for a traditional approval submission in 2024. Additionally, from Sparsentin, We expect to have top-line data from the two-year endpoint in the ongoing duplex study in FSGS during the second quarter of this year. If the results from duplex are supportive of an FSGS regulatory submission, we would anticipate being in a position to submit an SNDA in the second half of this year, and would also target submitting, together with CSLV4, a subsequent variation to our European CMA application by end of year. This would represent an incredible opportunity for us to help patients with FSGS one of the leading causes of kidney failure due to glomerular disease. Beyond sparsentin, we continue to advance our novel PEG-debatinase program for classical homocystinuria, or HCU. Later this year, we anticipate being in position to provide additional data from the ongoing COMPOSE study, as well as plans for a potential Phase III program after we complete our regulatory engagements. 2022 was a remarkable year for Travere, and I am proud of our organization's accomplishments and perseverance to ultimately get us to our first approval from our pipeline of therapies targeting rare diseases. We have started off 2023 with a key milestone that has been years in the making, and we have much more to come as we continue working towards our mission of delivering life-changing therapies to people living with rare disease. Let me now turn the call over to Jula for a clinical update. Jula?

Thank you, Eric, and good afternoon, everyone. As Eric stated, 2023 promises to be an exciting year for Travere, the rare kidney community, and the patients and families impacted by IGAN. We could not be more pleased with the recent accelerated approval of Vilspari. This milestone has created momentum in the IGAN community and set the stage for many exciting developments to come. It is important to remember that IGAN is the most prevalent primary glomerulonephritis worldwide. It is often uncontrolled, and as a result, it is a major cause of kidney failure. In fact, high-risk people living with IGAN face a median time to kidney failure of approximately 11 years. Along the way, many face pain and debilitating fatigue, depression and anxiety, and challenges with keeping up with everyday work life. Patients and their nephrologists are desperately seeking new treatments that can effectively reduce proteinuria and be utilized long-term with less concern for limiting side effects. Right now, that's limited to ACE inhibitors or angiotensin receptor blockers, which more than 50% of patients don't respond adequately to, and SGLT2 inhibitors, which are less effective at reducing proteinuria. Steroids are also available, but are generally reserved for more severe IGAN patients because of their challenging safety and tolerability profiles. Bilspari is the only once daily oral non-immunosuppressive medication approved for the reduction of proteinuria in IGAN. As the first of its kind dual endothelin angiotensin receptor antagonist, Bilspari targets two causal pathways critical to IGAN disease progression. In the PROTECT study, we observed a rapid, sustained, and three times greater reduction in proteinuria compared to erbisartan, while showing a consistent and tolerable safety profile similar to erbisartan. We are thankful for the FDA's accelerated approval of Filspari and are proud of the label we have received, which highlights the strongest clinical data demonstrated in a head-to-head phase three study in IGAN to date. I encourage you to review the entire label at filspari.com to further understand the clinical performance, safety profile, and the REMS process. A point worth noting is that both the liver and pregnancy REMS monitoring can be obtained with a single blood draw. Since high-risk patients typically undergo monthly medical visits in labs, we expect that integrating REMS monitoring into their current course of care will be seamless and serve as an effective tool for physicians monitoring their patients. Overall, we believe this label will provide nephrologists with the confidence needed to prescribe Filspari for their IGAN patients at risk of rapid disease progression, and that this is just the beginning for realizing Filspari's potential. Later this year, we're expecting top-line data from the confirmatory portion of the PROTECT study. If these data demonstrate a clinically meaningful benefit on EGFR after two years of treatment, this will further solidify Filspari's potential as a new treatment standard. Achieving this would enable us to submit for traditional approval with the expectation of a label that would be more representative of the total population studied and protect and reflect the long-term benefits of FilSPARI. Beyond IGAN, we're nearing the top line results from the duplex study of Sparcentin and FSGS. The duplex study is progressing according to plan and we're pleased with the continued conduct and efforts to get to database lock. If the two-year data progresses in a favorable manner, we expect to submit an SNDA for sparsentin to gain an indication for FSGS and be added to the Filspari label. We would also look to submit a variation to our CMA application if approved for IGAN in Europe. This could be paramount for people living with FSGS, as many are facing an even faster progression to kidney failure and fewer effective and safe treatment options. Beyond sparsentin, we continue to advance our PEG-tobatinase program in classical homocysteineuria. During the fourth quarter, we completed enrollment activities in the sixth and final cohort of the ongoing Phase I-II COMPOSE study. As a reminder, PEG-tobatinase demonstrated dose-dependent reductions in total homocysteine during 12 weeks of treatment in COMPOSE. In the 1.5 milligrams per kilogram, twice-weekly dose cohort, treatment with PEG-tobatinase resulted in rapid and sustained reductions in total homocysteine of approximately 55%, resulting in maintenance of total homocysteine below a clinically meaningful threshold of 100 micromoles from week two through week 12 of treatment. Our sixth cohort is evaluating one additional higher dose and also a lyophilized formulation that, if effective, could be utilized in a potential pivotal program and the commercial setting if approved. We remain on track for additional data from Compose later this year. These data will be helpful for completing our engagements with regulators and potentially initiating a phase three study in the second half of this year. Finally, on the development programs, we received fast track designation for our QuinaDoll development program in 2022. As many of you may recall, QuinaDoll is currently approved for the treatment of radiolucent gallstones. but it has been recognized as the standard of care for cerebrotendinous xanthomatosis, or CTX, for many years. Our ongoing phase three restore study is designed to provide a data set that will allow us to submit an SNDA to have the label amended to reflect what we believe is the true use of the product. We believe this could significantly aid patient identification and help people living with CTX gain earlier access to a greatly needed treatment option. We know that if CTX is identified and treated early, oftentimes patients can go on to live a relatively normal life. We expect to have data from the phase three study in-house this year, and to subsequently submit an SMDA if the data are supportive. With that, I'll turn the call over to Peter for the commercial update, including additional color on the filspary launch. Peter?

Thank you, Jula. This has already been an exciting week for us. As I mentioned on the call last Friday, We built our Filspari launch team upon our proven commercial infrastructure, which has delivered consistent results over the past eight years. We further strengthened our execution capabilities and now have a dedicated launch team with the specific experience and expertise to be successful with Filspari. I mentioned that this team was ready to execute with a sense of urgency, and I'm pleased to report that our team has been executing very well since approval Friday afternoon. Within one day, our materials were finalized, consistent to the label, and the field sparring, field sparring ramps, and TREVIA total care websites were live and operational. Even though Monday was a public holiday, our commercial field teams were excited to finish their training and get out into the field engaging with their customers, both nephrologists as well as payers. All these extensive planning and execution efforts led to the first Vilspari prescription being written within eight business hours of approval. We anticipate this positive momentum to continue to build. To provide you a bit more context on our initial days of Vilspari commercialization, our experienced commercial field team of more than 80 seasoned professionals is engaging in productive conversations with nephrologists and payers, focusing on the burden of disease and identity. the challenges with current status of care and how Philzpari's profile could potentially address the shortcomings in the addressable eigenpopulation of adult patients at risk of rapid progression. The receptivity and initial interest from the nephrology community is in line with our expectations, amplifying that patients have been waiting for a product like Philzpari. Prior to approval, nephrologists have consistently expressed that they need more efficacious treatment options that allow for long-term use in treating their IgM patients who are at risk of rapid progression without the tolerability issues of immunosuppressive agents. We believe Vilspari is well-positioned to fill that need. It blocks angiotensin consistent with what nephrologists have been doing over the past 30 years. So it builds upon a common belief and routine. but it adds the missing component of antagonizing the endothelin A receptor. And we know that endothelin and angiotensin stimulate each other and act in tandem to amplify damage to the filtration barrier in the kidney, resulting in increased proteinuria levels. Integrally blocking endothelin and angiotensin with filspari has allowed for the superior efficacy relative to herbacetam as observed in the interim readout of the landmark PROTECT trial. Based on Phil Spary's novel mode of action and robust efficacy and safety data, we are convinced that Phil Spary has the potential to become the foundational treatment option for the roughly 30,000 to 50,000 IGAM patients addressable under the current integration. It is our goal to make Phil Spary the cornerstone therapy for these patients within the evolving IGAM treatment paradigm. Last week, I mentioned on the approval call that we have learned from recent product launches in rare nephrology and that we know that nephrologists are largely mechanism- and data-driven. Therefore, our initial focus is to educate nephrologists on the filspary profile, both the efficacy and safety findings as outlined in the label, to give them a solid understanding how filspary may help their rapidly progressing IgM patients. Another launch dynamic that we will be navigating is the process of getting to payer coverage. Here, I believe we are also off to a solid start. Prior to approval, we had already conducted scientific pre-approval engagement with payers covering over 150 million lives. And we are building upon those initial conversations now. This week, we had already interacted with several national payers. And these interactions have reinforced that payers are generally well aware of the burden of IGAM. and appreciate the importance of proteinuria reduction in relation to disease progression. Last week, I also referenced that we plan for an exquisite first-year experience for patients and physicians. We have established Travier Total Care to help patients by offering personalized education, support in the reimbursement process, and co-pay assistance for eligible patients. Travier Total Care also assists patients and physicians with their REMS enrollment, which is typically a simple procedure. During this process, physicians will review the prescriber guide and acknowledge their understanding of the label. Then they will be prepared to prescribe TIL-SPARI. It is also worth emphasizing that our REMS monitoring integrates seamlessly with the established REMS processes, nephrologies currently used for other therapies. From a logistical standpoint, we remain on track for Filspari to be shipped to our specialty pharmacies next week. In summary, our launch execution has started according to plan, and we are well positioned to deliver on our powerful purpose, bring Filspari to patients who need it most. During the performance of our inline product portfolio in the fourth quarter of 2022, I continue to be very pleased with the execution of our commercial organization. For Thiola, we continue to see solid demand as we have further supported the identification and treatment of systemuria patients. This is a testament to our organization's patient-inspired way of operating and our established capabilities in the rare kidney space. We are pleased with the meaningful Thiola performance within the evolving competitive landscape. As we have talked about historically, We are seeing the impact of generic dynamics that affect net sales of Viola, and we expect that this could materialize further this year. Our bioasset portfolio continues to deliver solid growth in the forest water. The Coalbomb team has a longstanding reputation of performance and dedication to educating pediatric geneticists and hepatologists. These efforts have been key to Coalbomb's continued growth. Our team's capability to help physicians in patient identification of these ultra-rare conditions is fundamental. This expertise provides a solid foundation to build upon as we prepare for a potential future CTX indication for kinadal, and as we progress with the Pact of Adamase development program. In 2023, we expect to return to year-over-year growth in net product sales. While we expect further pressure on Fiola, we anticipate that this will be offset by expected growth of our bioasset portfolio in the Filspari launch performance. As a reminder, we anticipate that Filspari's performance will be in line with recent rare nephrology benchmarks in the first six to nine months. And once we gain meaningful Filspari payer coverage and prescribers gain their initial experiences and observe the same consistent proteinuria reduction as observed in the PROTECT trial, we anticipate accelerated adoption towards the end of the year. Beyond this first year, we are well-positioned for ongoing growth of PhilSparry, which is exemplified by our ability to execute, as demonstrated with our commercial performance in 2022. This, together with the higher MEDEATH and IGAM, the robust profile of PhilSparry, and our meaningful timing advantage before additional therapies may potentially be approved, gives us confidence that we will succeed in our strategic objectives to make field sparring the foundational treatment for rapidly progressing item patients. Let me now turn the call over for Chris for the financial update. Chris?

Thank you, Peter, and good afternoon, everyone. With the continued execution of our commercial organization and the focus on our key priorities throughout the business, we ended 2022 in a strong financial position. For the fourth quarter of 2022, net product sales were $52.3 million compared to $54.6 million for the same period in 2021. For the full year 2022, net product sales were $200.5 million compared to $210.8 million for the same period in 2021. The difference is largely attributable to a decrease in dial-up sales, partially offset by an increase in sales for the company's bile acid products. Research and development expenses for the fourth quarter of 2022 were $60.2 million, compared to $62.2 million for the same period in 2021. For the full year of 2022, R&D expenses were $235.8 million, compared to $210.3 million for the same period in 2021. The difference is largely attributable to the continued advancement of the company's Percetin Pectabatinase clinical program, including clinical trial expenses, manufacturing, and increased headcount. On a non-GAAP adjusted basis, R&D expenses were $54.2 million for the fourth quarter of 2022, compared to $57.7 million for the same period in 2021. Selling, general, and administrative expenses for the fourth quarter of 2022 were $62.9 million, compared to $42.1 million for the same period in 2021. For the full year, 2022, SG&A expenses were $220.2 million, compared to $149.9 million for the same period in 2021. The difference is largely attributable to the commercial launch preparations for FOSPARI, including having the full sales team on board and ready to launch this week. On a non-GAAP adjusted basis, SG&A expenses were $50.2 million for the fourth quarter of 2022, compared to $30.9 million for the same period in 2021. Total other income net for the fourth quarter of 2022 was $1.1 million, compared to total other expense net of $4.4 million for the same period in 2021. The difference is largely attributable to increased interest income and lower interest expense during the period. Net loss for the fourth quarter of 2022 was $65.8 million, or $1.03 per basic share, compared to a net loss of $51.6 million, or $0.84 per basic share, for the same period in 2021. For the full year 2022, net loss was $278.5 million, compared to $180.1 million for the same period in 2021. On a non-GAAP adjusted basis, net loss for the fourth quarter of 2022 was $49.1 million, or $0.76 per basic share, compared to a net loss of $37.6 million, or $0.61 per basic share, for the same period in 2021. As of December 31, 2022, the company had cash, cash equivalents, and marketable securities of $450.2 million. As we look to the year ahead, we anticipate that our operating expenses will continue to increase and may be variable quarter to quarter as we advance our programs. For SG&A, this is primarily driven by having a full year of the expanded sales team in place and their associated launch investments to position PhilSparry for success. For R&D, it is primarily driven by the continuation of both the protect and duplex studies of sparsentin, as well as our work to evaluate sparsentin in combination with SGLT2 inhibitors and preparing PEG to batonades for a potential pivotal program, including building supply. Accordingly, we anticipate that we can manage our balance sheet to support our operations well into 2024, This takes into account potential further competitive dynamics for Thiola, investing in launches for both IGEA and potentially FSGS, advancing PEG to BATNACE, as well as milestone payments related to achievements for the programs. Importantly, we enter the new year with a strong financial position to support this exciting period of launch execution and the continued advancement of our pipeline to a number of key milestones in 2023. I'll now turn it back over to Eric for his closing comments. Eric?

Thank you, Chris. I want to express my gratitude to the rare disease community, the patients, their families, and the Trevere team for their hard work and dedication that has led us to this successful moment, the launch of PhilSparry. The strong reception by physicians, patients, and payers, even in these early days, demonstrates the value of PhilSparry in addressing the unmet needs of those in the rare kidney community. We are committed to improving the lives of patients, and to do so, are focused on the advancement of our pipeline. In this regard, we still have a number of exciting milestones to come, including the potential approval of sparsentin for IGAN in Europe in the second half of this year, and the two-year data from the PROTECT trial in IGAN in the fourth quarter. We also anticipate top-line data from the two-year endpoints in the duplex study of sparsentin in FSGS in the second quarter of this year, which could lead to an important new indication for sparsentin. And finally, we expect to be able to share more this year on our novel pig to batonets program as we prepare for a potential phase three program. Our years of hard work have set up for an incredibly bright 2023. I am confident our talented team will deliver strong results for our patients and for the rare disease community. Let me now turn the call over to Naomi for Q&A. Naomi?

Thanks, Eric. Rachel, can we please go ahead and open the lines for Q&A?

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question and one follow-up question, and then re-enter the queue if you would like to ask additional questions. We will take our first question from the line of Greg Harrison with Bank of America. Greg Harrison, your line is now open.

Hey, guys. Good afternoon, and thanks for taking the question. Maybe just to start off, could you walk me through the process from a patient's perspective of getting the script, enrolling in the REMS program, and then the monthly maintenance?

Yeah, great. Thank you very much for the question. Maybe we'll turn to you first and you can walk through how this fits within how these patients are treated. And Peter, you can walk through what the process is for prescription and receiving.

Certainly. Thanks, Greg, for the question. So realize that patients who are at risk for progression are going to see their nephrologist more frequently, particularly as you have a change in their treatment algorithm. So they may see them every month with labs. And so as a patient's going to go see their nephrologist, they're going to discuss their overall risk of progression, having significant proteinuria, as well as their EGFR decline. And the nephrologist is going to sign up for the REMS. And the process for signing up for the REMS is relatively simple. from both the physician perspective as well as the patient. They need to be educated. That's a significant proportion of the REMS. That means reading the label, reading the prescriber and pharmacy guide, and then signing up. Signing up means filling out your contact details and then signing a statement that says you're going to monitor your patient appropriately. That's the same process for a patient. They give their contact details, state that they've been informed about the overall risk benefits, and that they're going to follow the process. And for a patient, what that means is that they're going to get their labs every month. And then they're going to get the therapy through the specialty pharmacy. And then just I'll add one additional detail is we have just a couple of specialty pharmacies, and they're going to go through the similar process. Read the label, be informed, read the prescriber pharmacy guide, and then give their contact details, and then attest that they're going to follow this process.

Yeah, let me build on what Jule said, and thanks, Greg, for that question. Before giving you a little more details on the mechanisms of the TREVIR total care patient services, I think it's good to realize the high need for these patients, and that's the reason why we have accelerated approval in the first place. We have to realize this is a younger patient population, and it's often diagnosed in their late teens or early 20s. How will those patients progress to kidney failure within 11 years, as mentioned in the pre-remarks? So that means that a lot of those patients will end up in dialysis in the midst of their productive lives. When we talk about the REMS and the early responses we have seen so far, and this is still early days, and it's day four of promoting field sparring, but early responses from nephrologists confirmed that they don't have alternative treatment options today for these patients. If they have field aids and ARBs and steroids, it's often not an option. So once pathologists understand the efficacy and safety profile of Philzparin, they appreciate the simple procedure of the REMS enrollment and they focus back to the clinical value that Philzparin may have for their patients. I think you have talked already about like what the physician as well as the specialty pharmacist will be doing. But I will also say that within Travere Total Care, we provide the services to make this process as convenient as possible for both physicians the specialty pharmacist, and especially the patients.

Great. That's really helpful.

And then could you remind us how many IGAM patients are treated by community nephrologists and how this has influenced your launch strategy?

Yeah, I'm happy to take that question, Peter. So the vast majority of those patients are being treated by the community nephrologists. And we have plans for that as well. That's why I mentioned in the call last week that we will be consistently calling on about 6,000 nephrologists to cover about 85% of the patient potential.

Great. Thanks again for taking the question. Thanks, Greg.

We will take our next question from the line of Maury Raycroft from Jefferies. Maury Raycroft, your line is now open.

Hi. Thank you. Thanks for taking the question. When you did your most recent market research at the end of last year and asked about intent to prescribe in six months or one year of launch, I'm wondering if you tested key aspects of the label in your market research.

Thanks, Maury, for that great question. Peter, would you like to take that?

Yeah, absolutely.

And thanks, Maury, for that question. So we have done consistent uh market research and that also got validated by external research for example by syndicated market research it was quite surprising to me like that that intent to protect did not change after we announced uh deliver monitoring ramps that intended prescribed remained 90 and we just uh did i just saw a result actually this week of the latest uh profile uh the label And again, that intent to prescribe came in at 88%, so very consistent at around 90% prescription in the first year, and about 70% intent to prescribe in the first six months. So there didn't really meaningful change.

Got it. And Peter, you highlighted some of the plans around doctor education efforts. Can you talk about where the most challenging learning curves will be, and how will you message around EGFR to doctors?

Yeah, absolutely. I mean, it's early days.

As I mentioned, it's day four. But what we see so far, what I'm hearing from our field reps, is there is great excitement for the promise of Phil Sparry. In fact, I got a text yesterday from one of our camps saying, who has been in the field for 30 years, saying that he has never seen this level of excitement among nephrologists. I think that there is a certain level of excitement to learn about the profile of Phil Sparry And proteinuria is often the marker that physicians are measuring on a monthly base, and also how they monitor progression of disease and how they change their treatment plan. So the conversation on eGFR has not come up yet. In many of those conversations, they understand it's an ongoing trial, and they're excited to learn more about the Fils-Pari profile over time.

Got it. Makes sense. Thanks for taking my questions. Thanks, Maureen.

Our next question comes from the line of Joseph Schwartz with SVP Securities. Joseph Schwartz, your line is open.

Great, thanks so much. I have a question on IGA and the property and then FSGS. So how do you expect the rate of filspary uptake to differ if at all, amongst patients treated at academic versus community nephrology centers? And beyond those segments, are there any other particular physician demographics that you expect to be earlier or later adopters?

Joe, thank you very much for the great question. Peter, I'll pass that over to you.

Yeah, very timely question, Joe, because this was also part of the market research that I was just referencing, so I saw that yesterday. Very interesting, the utilization, the intended utilization for filspari is basically similar across community nephrologists as it is in academic nephrologists. So, we will see how that materializes over time, but the intent to prescribe is quite similar among those two specialty categories.

Thanks, Peter. Maybe if I could just add, Joe, one of the things that we are reflecting in our launch plans, and Peter's team has done a fantastic job, is really helping to understand not just those 6,000 for targeting, but also to segment to make sure that we recognize who are those physicians that have, through their behavior, adopted recent innovation strategies. Those sort of early adopters versus late adopters. And so, you know, our team is making sure that we're very much focusing our efforts in the first part of launch on those clinicians that we would see as early adopters. Very similar to many other launches. So I think, you know, it's not just about academic versus community, but it's also, you know, number of patients and, you know, as I say, behavior such as, you know, adoption of recent rare renal launches.

Yeah. Okay.

If I may build on that, Eric, I just mentioned that we would be consistently calling about 6,000 metrologists. So maybe to give you a little more context, how we got to those 6,000. It's really based on three different segmentation and targeting assessments that we did. One was based on patient volume. One was based on behavior, in particular on new product utilization to really get to those innovators and early adopters. And the third one is on influence on the nephrology community. So we have a very clear way to target and segment those physicians that we see as most valuable in the prescription process to get to that broad patient population.

Very interesting. Thank you. And then for the FSGS data next quarter, how should we be thinking about the bar for success in terms of EGFR difference? What is the overlap between what's clinically meaningful and the bar for approval? How does that look? And do you have any specific guidance from the FDA

um that says what you need to achieve there in order to be able to file for approval thanks sure thank you joe for the question i'll turn jula first to you on the clinical relevance of an egfr treatment effect and you know where we would see success and then bill you can share uh insights and expectations from a regulatory perspective certainly thanks for the question i think it's important to note that we saw

clinically meaningful and significant reduction in proteinuria in FSGS that should translate into a significant treatment effect on EGFR. And if you look historically at other trials, looking at a difference in EGFR slope, most of them, I mean, if you look at the SGLT2 inhibitor data, The difference in slope that's clinically meaningful for showing a long-term kidney protection is anywhere in the range from 0.75 to 1 mils per minute difference. And so we powered the trial appropriately to show both a clinically meaningful and a statistically significant difference based on the proteinuria reduction that we've seen to date.

I think very helpful. Thanks for putting your questions.

Yeah, I think when I think about it from a regulatory perspective, Yeah, this is Phil. From a regulatory perspective, it lines up pretty closely with what is clinically meaningful. We've seen Tolvapthin was approved with a 0.75 difference. So the agency is clearly recognizing what Jule is talking about. And, you know, with a therapy that's treated for years, you know, a consistent therapy, a small difference in mils per minute has a very large impact on time to progression. or if you're looking at time to renal replacement or need for dialysis, the impact's really quite significant, even with small differences in EGFR slopes.

Thanks again. Thanks, Joe.

We will take the next question from the line of Tim Lugo from William Blair. Tim Lugo, your line is now open.

Hey guys, this is Locke on for Tim. Thanks for taking the questions. First, I guess maybe for Chris, I was just wondering if we should expect any stocking dynamics in the next month, I guess, or is there not much stocking at the specialty pharmacies? And then the second one, quickly, just we noticed that there's a late breaker at WCN. Can you give any color on what will be presented there, or will new data that's not in the label be presented in that presentation?

Chris, why don't you take that, and Julek can cover WCN.

Sure. Thanks for the question, Lachlan. With our distribution model, you really shouldn't expect to have any kind of meaningful stocking. Really, when we get to stable state here, we expect it to be somewhere in the range of a week or two weeks at most. Not much of a dynamic there to work through.

At the beginning, there will be a little bit, but not really much at Stable State.

Yeah, and thanks. We're really excited to be able to present our data at WCN. Next month, you can expect to see additional efficacy data as well as our safety data. We will not be releasing our EGFR data as we have agreement with the FDA that we won't release that until we complete the clinical trial. But we're really excited to be able to present that to the nephrology community.

Okay, thanks.

Thanks, Lachlan.

We will take the next question from the line of Do Kim with Piper Sandler. So, Kim, your line is now open.

Hi. Thank you. Thanks for taking my question. Question on the Phase III duplex study in FSGS. When we look at or think about the EGFR slope, the 108-week data readout, Could we use the DUET extension study and the slope that was calculated for there as a good estimate? And when you calculate the slope of the EGFR curve, what time points do you look at? I know for DUET, you were looking starting at day 42 to week 108. I just wanted to know where the starting point is.

So, thanks for the questions, I'd say, you know, we certainly do feel that there is a parallel between what we have seen in duet. And what we expect to see, and how we designed duplex, you'll all turn I'll turn the question to you on. Sorry, I'm getting a little feedback, but I'll turn the question to you on how we might expect to see the slopes for. or sparsentin, but also perhaps natural history, given that we didn't have long-term follow-up of an active comparator in that trial.

Yeah, I think the long-term data that we've released from DUET shows kidney preservation compared to what we would expect to see in long-term for patients who are at high risk of progression with primary FSGS. I would say historically, those patients can progress more at a rate of greater than 5 mils per minute, more like 7, 8, 9, 10 mils per minute per year, and we saw less than that in our long-term EGFR data that we presented last year at ASN. And then in particular in patients who achieved complete remission, we saw significant preservation in those patients with regards to long-term EGFR slope. I don't know if there's any additional granularity you'd like me to provide around that.

Just wanted to see how the slope is calculated. Do you look at the slope of the curve from the beginning of the study out to 108 weeks? I know it's not a difference of a moment in time at week 108, but just the overall slope of the curve.

You do look at the total data from the very beginning all the way to the study end. And that's what's so great about looking at a slope. you use every single data point for all patients to look at the trajectory of the curve. And we will look at both total slope, which is from the very beginning all the way to the end and weights all the data equally, as well as chronic slope, which looks more at after six weeks to the study end to minimize the effect of the acute hemodynamic effect.

Great. That's helpful. And a quick question for Chris. How will you account for the Phil Sparey, royalty to lag in the income statement.

Thanks, though, for the question. We'll be updating that when we report 1Q, so we're finalizing that now, but we'll be sure that it's clear out to you guys and being able to view the financial statements as to how exactly we're paying that.

Okay. Thank you. Thanks, Phil.

We will take the next question from the line of Lisa Beko with Evercore ISI. Lisa Beko, your line is now open.

Hi. I think most of my questions have been answered, but I guess I would just ask, what's your level of confidence for a good outcome in the upcoming FSJS final data? Maybe you can just explain, you know, Explain that level of confidence. Are you highly confident, kind of hopeful but moderate, you know, not so confident? Just curious on how you're thinking about it. We're getting a ton of questions on FSGS these days. Thanks a lot. Sure.

Yeah, Lisa, thank you very much for the question. We certainly are excited about this upcoming data readout next quarter. I would say that, you know, we remain confident in the outcome, and that's largely because the way that we designed the trial was based on showing a robust and statistically significant superiority on proteinuria that then would predict out to EGFR. And certainly, as we've looked at the way that the trial is conducted, the number of patients that we've retained in the trial, all of those things that we look at to ensure that the study is being conducted as we had hoped, is there. I'll turn it over to Jule and maybe, Bill, if you have any further thoughts on why we remain confident and really what does good look like coming out of the two-year results.

Yeah, I'll just continue on with what Eric was saying. We saw clinically and statistically significant separation and reduction in protein area with barcentin versus erbisartan. And I would say importantly, when we met with the FDA, they said the study is designed can support traditional approval. And so that's also what gives us the confidence that we will be able to achieve what we have set out. We powered the study appropriately. As Eric said, we continue to have a significant number of patients to be able to achieve our endpoint. And we had a separation to show the treatment effect on EGFR. And we'll also be going under, and maybe I can turn this to Bill, to talk about looking at an SNDA versus accelerated approval. It's a very different situation. Bill, do you want to add color around that?

Sure. I think that, you know, when you're in the position as the agency on accelerated approval, they've demonstrated that they approach it very deliberately and somewhat conservatively because you have a partial data set both for safety and for efficacy. At the end of a study, it's much more traditional approval. So that's helpful in that we aren't asking them at that point to take regulatory risk, and their ability to be more flexible is there in looking at the totality of the data. I think the other additional element is last Friday's approval of Pilspari means that we're now looking at an additional indication to a drug that's already approved. both safe and efficacious. So, I think that puts it in a different frame from a regulatory standpoint when compared with an interim analysis under subpart H accelerated approval.

That's a really good point.

Thanks for mentioning that. Thanks, Lisa.

We will take the next question from the line. of Kartra Gould with Barclays. Kartra Gould, your line is now open.

Great. Good afternoon. Thanks for taking the questions. I guess the first half is on the top line FSGS data in 2Q. I guess how much data is going to be in that top line release? Are we going to see enough data that we can assess the clinical significance of that, or are you going to prioritize saving that data for a medical meeting? And then I guess maybe alongside that, Peter and Jule, when you think about that data coming out, to what extent do you think nephrologists may read through from potentially positive EGFR data and FSGS to IGAN and potentially pulling forward some of the demand in that launch? Thank you.

Carter, thanks for the questions. Jule, why don't you take the top line, what the team is thinking, and any potential read-through, and then, Peter, you can add your thoughts.

Well, it's a great question. I mean, we'll have a trial that's completed, so we're not limited with regards to keeping data. However, it's a balance because we do want to have a very high-tiered publication and presentation at an important meeting, but we will be able to release the EGFR data, you know, our total. Whether we give you all the curves and all the additional data, we're going to have to make that decision probably pretty soon, but at least enough to give you confidence about the results of the trial. With regards to the nephrologist and the read-through, I would point through to the SGLT2 inhibitor data, where we don't necessarily see the same magnitude and treatment effect in one disease versus the other with regards to the endpoint of 40% decline in EGFR, kidney failure, dialysis, and transplant. Each disease is quite different, and even though the drug you might think should work across the board with regards to one or the other, it may not for a number of different reasons, whether it's the underlying disease, the heterogeneity, the patient population studied, and other things. So I wouldn't say that there's necessarily going to be carry-through from one or the other, depending on the magnitude of the treatment effect or what we see there. Peter, do you want to make other comments around that?

No, let me echo what you said. I think it's right. Those patient profiles are quite different. The way I think about it, Carter, is really exciting that we have that continuous data stream and have something continuously to talk about with the physician. And I think it only built the excitement for Phil's power. So it is, in that aspect, it's almost like a continuing launch with new data and new approvals coming in the next year.

Thank you. Congrats again.

We will take the next question from the line of Mohit Bansal with Wells Fargo. Mohit Bansal, your line is now open.

Thanks for taking our questions. This is Adamant for Mohit. Is it fair to say that EU prescribing information for filspari could have less specificity on UPCR and class effects compared to the FDA label considering past nephrology approvals? And then separately, could the EU prescriber base be better equipped to do any monitoring that they would conduct?

due to a greater share of dots practicing in academic centers. Adam, thanks so much for the question.

Let me clarify the first question around the label. Are you asking just the level of detail and data that we have on UPC in our label compared to others? I want to make sure that I answer the right question.

No, I'm asking for the approval in Europe that when you would ultimately get approved in that geography. Ultimately, you know, whether it have the same specificity on, you know, what UPCR ranges of patients you treat as well as, you know, some of the safety detail potentially could be heavier in the U.S. label relative to what past Europe labels have looked like.

Okay. Got it. Thank you. Bill, maybe we can turn that to you. I mean, certainly we won't be able to speak to specifics on the European label given that we're still in that process. But, Bill, maybe you can give some thoughts on how the labeling may vary across regions.

Yeah, no, thanks for the question. And you're right, Eric, it's a speculative answer because we're in process with the review with EMA. You know, it's important to realize they're looking at the same data set. The filing, for one, doesn't contain different data from the filing for the U.S. FDA NDA data. But they do have differences in how they present data, how they treat data. For example, there isn't such a thing as a REMS in Europe. They treat risks in a different fashion. I think it's, you know, we don't have indication at this point in the review of any great differences between the agencies, but it's too early to really be definitive on anything. So we look forward to that, updating you on that in the future.

Peter, do you want to take any thoughts on any difference in practice based on patients being seen more predominantly in academic centers in Europe and how that might play out?

Yeah, having had the experience to be in Europe as a European, I think that is generally right. I mean, it depends country by country. I think preventative care, I think generally it's more established in Europe. I think overall you see higher EGFR levels for patients that are being referred to nephrologists. I think that is generally right, Eric, but it depends very much market to market.

We will take the next question from the line of Laura Chico with Wedbridge Securities. Laura Chico, your line is now open.

Thanks very much for taking the question. I've got to one first on the clinical. And I guess, you know, our own market research has shown about 20, 25% of IGAM patients are now receiving SGLT2 inhibitors. And I'm not sure if Julia or Peter could comment. Of the patients that are on an SGLT2 inhibitor, What proportion of those remain over a gram on proteinuria?

All right, who would like to take that question? Peter? Yeah, I'm happy to kick that off.

And Laura, I think your market research findings are quite consistent to what we have found as well. I think one of the important things to mention is what Jule mentioned on the call earlier as well. FDLT2 has the outcome data, but does not have the profound proteinuria reducing effect as Filspari. And the nephrologist I have been speaking to, as well as what we saw in market research, they're very excited about the complementary mechanism of Filspari versus FDLT2. And they're excited about the novel and non-immunosuppressive combination approach that they may have now. And additionally, I think also, and Jo can talk more about it, is the complementary profile of SGLD2 with regards to sodium excretion and the diuretic effect. Jo, as a nephrologist, probably can speak in more detail about that.

Yeah, I would agree with that. Nephrologists are excited to use them in competition as the most expensive Interesting combination that they're interested in using together is SGLT2 inhibitors plus sparsentin due to the complementary mechanism of action of SGLT2s. We don't know how they're kidney protective exactly, but you do have the tubuloglomerular feedback that helps to enhance sodium excretion. And we know that sparsentin has a direct benefit on the glomerulus, the podocyte, the tubular interstitium to have that kidney protection reducing proteinuria. And the magnitude of proteinuria is significantly greater with sparsentan. I mean, all the proteinuria data that we have with SGLT2s, other than anecdotally, when you talk to nephrologists of where they get their patients, all the trials were done in patients with low levels of proteinuria, less than a gram. I mean, if you look at the DAPA CKD or empa kidney, you know, they were relatively low level. So they tend to be used in kind of later stage in general. So, we don't have the more high-risk patient profile to tell you what proportion get under a gram, but I think the vast majority, they're going to need combination therapy to really get them to where we want the less than a gram and even further, the complete remission patient where you can get them under than 0.3 grams to get them to that really lower-risk patient profile.

Okay, it might be worth you talking through to the Sorry, Laura, it might be worth, Jule, just speaking to some of the data that we would expect to have next year from the studies that we have. Because I think, Laura, it would be useful to be able to see those data in a clinical setting in the trials that we are doing.

Yeah, I think, Laura, we already do have a drug-drug interaction that shows that we can safely combine And then additionally, we're going to have two types of combination studies. One, where you've got patients on sparsentin and you add an SGLT2 inhibitor. And the other, the opposite direction, where patients are on an SGLT2 inhibitor and we add sparsentin. And we'll have safety data and we'll have proteinuria and efficacy and then EGFR data. And we'll have information on that next year.

Well, certainly looking forward to that. And then maybe one follow-up question on the financial. Chris, I heard you mention cash runway. well into 24, I believe I heard correctly. Could you talk a little bit more about the flexibility on the balance sheet for extending runway? I know there is a milestone payment due to Ligon and Bristol, but any other inbound milestones that we should be considering in terms of our modeling? Thanks.

Yeah, thanks for that question, Laura. So, when I think about the balance sheet and, you know, specifically to the milestones, Um, we have some that would be coming in potentially for things like regulatory approvals in Europe. Um, and then also we will have some coming out for, um, you know, things like advanced advancing. Right? So there may be a net effect to those. And when I think about the balance sheet overall, and we look at cash burn, there certainly is flexibility. There's a number of things that go into our estimate there. And we've commented in the past where we take a conservative approach, right? We're taking into into account the potential for further, um, generic erosion for Thiola. We're taking into account all the investments needed for positioning Phyllosporae appropriately for IGAN and FSGS launch, et cetera. So, there certainly is some flexibility in that, but we're trying to give you guys a good view as to what we expect to use for operations going forward.

Thanks very much, guys. Thank you, Laurel.

We will take the next question from the line of Alex Thompson from Stiefel. Alex Thompson, your line is now open.

Great. Thanks for taking my question. Just maybe a quick follow-up on, you know, SGLT2 inhibitors. I guess at this stage in the launch and based on some of your initial conversations with payers, what has been the receptivity with covering Filspari on top of SGLT2s prior to some of this clinical data you're going to generate next year? Thanks.

Alex, thanks for the great question. Peter, would you like to take that?

Yeah, I think, Alex, thanks for that. It's early days to comment on that, but I think we have had quite some pre-approval conversations with payers. What I took away from that is that payers are not anticipating to have like a step through with SGLT2. SGLT2 has a broad label. It's both for diabetic and non-diabetic CKDs. And it's kind of like off the radar for IGA nephropathy, particularly. So, we don't anticipate that to be a roadblock for reinversion for PhilSparry.

Great. Thanks. And then maybe a quick follow-up on sort of the base commercial business outside of PhilSparry. I guess with potential expansion of the Chenodal label, You know, how should we think about sort of the trajectory of that base commercial business over time? Is that a meaningful uptick in the potential opportunity?

How are you thinking about that over the next few years? Thanks. Sure. Peter? Well, we're certainly excited about that extension.

In particular, I think there may be more adult patients with CT except that we will have an opportunity to reach by educating physicians. We haven't given any guidance what the off-site potential is, and we may be in a better position once we see the data of the trial.

Great. Thank you. Thanks, Alex.

We will take the next question from the line of Ed Arcee with H.C. Wainwright. Ed Arcee, your line is now open.

Hi, great. Thanks for taking my questions. Some have already been asked, but I did want to follow up on a point made earlier, and that is on the upcoming readout next quarter, the two-year EGFR, just wanted to make sure I understood correctly the primary endpoint here. whether it was total slope or the other slope I think you mentioned started after the first six weeks. Both of those include interval data points throughout the period, and I'm just wondering what those intervals are as well.

Thanks. Sure. Jule, would you like to take that?

Yes, so we'll be looking at both.

And we have agreement with the regulatory agencies on looking at the chronic slope as well as total slope. And that's an endpoint from the beginning of the study to week 108.

And what are the measurement intervals throughout the period?

Are you asking when patients get labs? Is that what you're asking? I just want to clarify. Yes. Okay, so patients get labs at the beginning, and then there's a subsequent lab at, I believe, at two, four, and then eight weeks, and then it's every three months thereafter.

Okay. That's helpful.

And just maybe just one last one. I know this has been discussed before, but just wondering as you – start this launch and have some patients switch from their current therapy onto Filspare. Do you have a sense for the proportion of patients today that visit their nephrologist on a monthly basis as a routine?

Ed, thank you for the question. We certainly have looked into the patient journey and how frequently these patients are visiting. Peter, would you like to share a bit of that work?

Yeah, absolutely, Ed, and thanks for that question. I think there is, especially when you talk about rapidly progressing patients, those patients are being seen by the nephrologist at least quarterly, but it's not uncommon to see those patients actually on a monthly basis. If the heart of your question is, like, what does that mean from a REMS perspective, it is good to realize that for the REMS program, those patients don't need to be seen by the nephrologist on a monthly basis. They do the lab testing on a monthly basis, and the physician will see the results, but there is not an obligation for those patients to see their nephrologist every month, even though it is quite common for quite some patients to see their nephrologist that often.

Got it. Thank you for clarifying that. Thanks, Ed.

This concludes today's question and answer session. I will turn the call back to Naomi Eichenbaum.

Thank you everyone for joining us for our fourth quarter and full year 2022 financial results and corporate update call. We look forward to the exciting year ahead and providing updates on our progress along the way. Have a great rest of your day. Thank you for joining.