CALT - Calliditas Therapeutics: Good Long-Term Data Could Boost Tarpeyo Sales

2023-04-12 06:34:14 ET

Summary

• Calliditas Therapeutics recently reported positive long-term data of Tarpeyo (Nefecon/budesonide) in patients with IgA nephropathy.
• The results confirmed the previous positive findings from the phase 3 trial and indicate a potential disease-modifying effect of Tarpeyo.
• The data should be sufficient to secure full approval for Tarpeyo next year and could also provide a sales boost in the rest of 2023.
• Calliditas is well-capitalized to grow Tarpeyo sales and potentially reach profitability.

Calliditas Therapeutics ( CALT ) recently reported positive long-term data of Tarpeyo (Nefecon/budesonide) in patients with IgA nephropathy. The results confirmed the previous positive findings from the phase 3 trial and indicate a potential disease-modifying effect of Tarpeyo considering the preserved eGFR benefit and reduced proteinuria 15 months following treatment cessation.

The pivotal NefIgArd study was designed to have a treatment period of 9 months and a follow-up phase of three months to complete part A of the trial which the company used to secure accelerated approval for Tarpeyo and part B followed patients for another 12 months off the drug to collect additional efficacy and safety data to potentially confirm the benefits observed during the initial treatment period.

A single treatment course of 9 months has slowed the loss of kidney function by more than 50% compared to placebo at 24 months. Over two years, eGFR was on average 5.05ml/min/1.73 m2 higher with Tarpeyo compared to placebo. The absolute decline in the Tarpeyo group was 2.47ml/min/1.73 m2 and the absolute decline in the placebo group was 7.52ml/min/1.73 m2.

The percentage of eGFR changes at 9 months and 24 months are also supportive of Tarpeyo’s treatment benefit.

Interestingly, Tarpeyo’s proteinuria reduction at 9 months was nearly completely preserved at 24 months despite patients being off the drug during those 15 months. Although it should be said that placebo patients were relatively stable as well in those 15 months, but without the benefit of reduced proteinuria in the Tarpeyo group in the first 9 months.

There were no new safety signals in the follow-up period, and none were to be expected since patients were not taking the study drug.

I have not written about Calliditas before, but I did mention the relatively slow launch of Tarpeyo in my September 2022 article on Travere Therapeutics ( TVTX ) and that it will likely miss the already reduced $45 million revenue consensus for 2022. And it did as net sales in 2022 were $36.8 million.

However, the patient starts have improved and so have net sales – from just $1.9 million and $6.6 million in the first two quarters on the market, to $12.1 million and $16.1 million in Q3 and Q4 of 2022, respectively. The company also expanded the sales force toward the end of 2022 and management noted on the Q4 2022 earnings call that they are already seeing an impact from the expansion. There was also a 6.8% price increase at the end of January of this year that should positively impact Tarpeyo’s net sales growth trajectory going forward.

For 2023, the company provided a wide $120-150 million U.S. net sales guidance for Tarpeyo. The patient and revenue growth rates in the second half of 2022 point to sales trending toward the lower end of the guidance range, but the 2-year results of Tarpeyo should provide an additional boost to prescription and sales growth in the second half of this year. Whether that will be enough to push the net sales above the company’s guidance range is yet to be determined and we need to see at least how Tarpeyo did in the first quarter of 2023 to have a better idea.

Royalties outside the United States should start flowing in the following quarters:

• Stada is in charge of the commercialization of Kinpeygo (the trade name for Tarpeyo in Europe) in the EU, UK, and Switzerland. The agreement was signed in 2019 and Calliditas received $24 million upfront and was entitled to an additional $91 million in milestone payments and low twenties to low thirties royalties on net sales. Kinpeygo was approved by the EMA in July 2022 and Stada launched it in Germany in October. Calliditas said approximately 70 patients in Germany were on Kinpeygo at the end of the year.
• In China, partner Everest Medicines expects to receive approval in the second half of the year. Everest is also in charge of commercialization in Singapore, South Korea, Hong Kong, Taiwan, and Macau. The deal was also signed in 2019 and Calliditas received $15 million upfront and is entitled to up to $108 million in additional milestone payments and high single-digit to mid-teens royalties on net sales.
• In Japan, Calliditas partnered with Viatris in December 2022 and received a $20 million upfront payment and it can receive up to $80 million in additional milestone payments and royalties on net sales in the mid-teens.

The potential complicating factor for Tarpeyo in the United States this year is the launch of Travere’s Filspari (sparsentan). It has gone through the same accelerated approval pathway as Tarpeyo, but the label looks worse than I anticipated with a black box warning for hepatotoxicity, and embryo-fetal toxicity and it needs to be distributed through a REMS (Risk Evaluation and Mitigation Strategies) program. Such a label will make the launch of Filspari more challenging.

And Filspari still lacks the eGFR data as Travere is being tight-lipped about the drug’s effect. We do know from the FSGS trial that Filspari has an acute hemodynamic effect that causes a temporary decrease in eGFR, and this puts Tarpeyo in a potentially better position given its robust eGFR data after nine months of treatment and especially now with 15 months off drug data.

But overall, I believe the presence of Travere and Filspari will expand the IgAN market rather than negatively impact the trajectory of Filspari.

Conclusion

The recently reported two-year data of Tarpeyo put Calliditas in a good position to execute the commercial launch in the following quarters, and also in a position to potentially secure full approval for the product in 2024.

I should also mention setanaxib, the company’s first-in-class NOX1/4 Inhibitor, in development for the treatment of primary biliary cholangitis (‘PBC’), squamous cell carcinoma of head and neck (‘SCCHN’), and Alport syndrome. However, setanaxib failed in a phase 2 trial in PBC, but the company is pushing forward with a phase 2b/3 trial based on antifibrotic activity observed in that failed trial. And the other two trials are in earlier stages and with no supportive clinical data to date. As such, I do not expect Calliditas to receive any credit for setanaxib until it shows good data in any of the three targeted indications.

The company is well-funded with $119 million in cash and equivalents at the end of 2022. Based on the relatively modest cost structure and increasing revenues and royalties along with potential milestones from partners, it is reasonable to expect Calliditas to reach profitability without needing to raise more cash.

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