TVTX - Travere: Sparsentan Approval Is Likely But Future Is Uncertain

Summary

• IgA Nephropathy (IgAN) is a chronic autoimmune disease that affects the kidneys and leads to end-stage kidney disease. Current treatments for IgAN are limited in their effectiveness.
• Sparsentan, developed by Travere Therapeutics, is an experimental drug that targets both the endothelin and angiotensin pathways involved in IgAN.
• The results of the PROTECT study showed that sparsentan significantly reduced proteinuria and was well-tolerated, with a safety profile consistent with previous findings.
• Travere Therapeutics submitted a New Drug Application to the FDA for accelerated approval of Sparsentan and received Priority Review status, with a target action date of February 17, 2023.
• Travere's high short interest implies the market is anticipating its risks to actualize, but there is little evidence to support this. Stock of Travere is a "hold" heading into FDA decision.

Introduction

Travere Therapeutics ( TVTX ) is a clinical-stage biopharmaceutical company focused on the development of innovative treatments for serious and life-threatening diseases. The company has been making significant strides in the field of kidney disease, and is now making headway in the treatment of IgA Nephropathy (IgAN), a chronic autoimmune disease that affects the kidneys. IgAN is a leading cause of end-stage kidney disease and affects millions of people worldwide. Travere Therapeutics has developed an experimental drug called sparsentan, which has shown promising results in early-stage clinical trials for the treatment of IgAN. Sparsentan is a dual endothelin receptor antagonist that targets the underlying pathological processes involved in IgAN. The drug has the potential to provide a new treatment option for patients with IgAN.

The following article will focus on sparsentan's prospects ahead of the FDA's decision on accelerated approval for IgAN.

Financials

Before we begin, let's take a look at Travere's most recent financial report. The company had a net product sales of $50.8 million in Q3 2022, a decrease from $54.2 million in Q3 2021. The decrease was mainly due to a decline in Thiola sales, but partially offset by an increase in sales of the company's bile acid products. The net product sales for the nine months ended September 30, 2022 was $148.2 million, a decrease from $156.2 million for the same period in 2021. The research and development expenses increased to $59.3 million in Q3 2022 from $48.4 million in Q3 2021. The selling, general, and administrative expenses also increased to $57.5 million in Q3 2022 from $36.1 million in Q3 2021. The total other expenses decreased to $1.4 million in Q3 2022 from $3.9 million in Q3 2021. The net loss for Q3 2022 was $69.7 million, compared to a net loss of $35.6 million in Q3 2021. The company had a cash balance of $506.3 million as of September 30, 2022. As of writing (February 13, 2023), Travere is valued at $1.3 billion (market capitalization) with $407 million in total debt.

IgAN pathophysiology & treatments

IgA Nephropathy (IgAN) is a chronic kidney disease caused by the buildup of IgA immune complexes in the kidneys, leading to inflammation and scarring. This disease is marked by ongoing proteinuria, hematuria, and loss of kidney function, often resulting in end-stage renal disease for many patients. Despite the current use of angiotensin-converting enzyme inhibitors or angiotensin receptor blockers, these treatments have limited success in slowing the progression of renal disease.

There are current treatments for IgAN, such as medications for managing symptoms like high blood pressure, swelling, and too much protein in the urine. These include ACE inhibitors, ARBs, immunosuppressants, and steroids. When the disease reaches end-stage kidney disease, dialysis or a kidney transplant may be necessary. However, current treatments have their downsides, like ineffectiveness and harmful side effects from long-term use. The slow progression of IgAN over many years also presents difficulties in managing the disease. The lack of effective therapies to halt or reverse IgAN progression highlights the need for better treatments.

IgAN market

The market for IgAN treatment is significant. It is estimated that around 50,000 to 100,000 people in the United States have IgAN. Despite the current standard of care, many patients still experience progressive loss of kidney function and progression to ESRD, creating a significant unmet need for more effective treatments. Sparsentan, with its unique mechanism of action, presents a promising alternative for patients who are not responding to or unable to tolerate current treatments.

Sparsentan for IgAN

Enter Sparsentan, an experimental drug developed by Travere Therapeutics for the treatment of IgAN. Sparsentan is a dual endothelin receptor antagonist and angiotensin receptor blocker that targets the endothelin and angiotensin pathways, both of which contribute to the progression of IgAN. The endothelin pathway plays a key role in regulating renal blood flow, glomerular filtration rate, and tubular transport, and its overactivity has been linked to IgAN. Meanwhile, the angiotensin pathway regulates blood pressure, fluid balance, and electrolyte balance, and its overactivity contributes to renal fibrosis and inflammation in IgAN.

Sparsentan blocks both the endothelin and angiotensin II pathways, reducing oxidative stress, inflammation, and fibrosis in the kidneys. This leads to decreased proteinuria, hematuria, and renal fibrosis, and slows the progression of IgAN. Additionally, Sparsentan has been shown to improve blood pressure control, fluid and electrolyte balance, and renal blood flow, all of which are important for maintaining kidney function and preventing the progression of IgAN.

In August 2021, Travere Therapeutics announced the results of the PROTECT Study, which showed that sparsentan significantly met its primary efficacy endpoint. After 36 weeks of treatment, patients taking Sparsentan saw an average decrease in proteinuria of 49.8% from their baseline, compared to a decrease of 15.1% in patients treated with irbesartan, an angiotensin II receptor blocker (p<0.0001). The company believes that these preliminary data suggest that Sparsentan may have a clinically meaningful impact after two years of treatment and has been well-tolerated thus far, with a safety profile consistent with previous findings. The study is fully enrolled and topline results are expected in 2H 2023. Travere anticipates traditional approval following topline results.

Accelerated approval hopes

In March 2022, Travere Therapeutics submitted a New Drug Application to the FDA under Subpart H for accelerated approval of Sparsentan as a treatment for IgAN. The following May, Travere announced that the FDA had accepted the NDA and granted it Priority Review status. The initial target action date assigned by the FDA through the Prescription Drug User Fee Act was November 17, 2022. During late-cycle interactions, the FDA requested the expansion of the proposed REMS plan to include liver monitoring, similar to other approved endothelin receptor antagonist products. In response, Travere submitted an updated Risk Evaluation and Mitigation Strategy (REMS) plan in October 2022, and the FDA extended the target action date for the Prescription Drug User Fee Act to February 17, 2023.

Travere's risks inspire short interest

The stock of Travere Therapeutics has a short interest rate exceeding 10% , with many speculating on the potential failure of its dual endothelin angiotensin receptor antagonist drug, sparsentan. This is due to several reasons, including concerns over the company's reputation (it was formerly known as Retrophin and co-founded by Martin Shkreli , also known as "pharma boy"), uncertainty over whether the FDA will accept proteinuria reduction as a sufficient surrogate endpoint for accelerated approval, and concerns over the potential for liver toxicity associated with sparsentan. The first reason, related to the company's past reputation, will not be addressed further as it is not substantive.

Proteinuria reduction is a valid surrogate endpoint for IgAN

The Kidney Health Initiative sought to find markers that could predict long-term kidney outcomes for patients with IgAN. Proteinuria was identified as the most commonly known risk factor for these patients to progress to end-stage kidney disease. Results from 13 trials indicated a relationship between treatment-induced proteinuria reduction and a combination of factors, including time to doubling of serum creatinine, end-stage kidney disease, or death. As a result, proteinuria reduction can serve as a surrogate endpoint for drug approval for serious conditions like IgAN in the US, but its effectiveness must be confirmed in post-marketing trials.

In December 2021, the US Food and Drug Administration (FDA) approved the use of Tarpeyo (budesonide), a steroid drug, for adults with primary IgAN who are at risk of rapid disease progression based on its ability to reduce proteinuria. This was granted under accelerated approval, but its continued use may be dependent on further clinical trials to confirm its clinical benefits.

Sparsentan's demonstrated efficacy in reducing proteinuria in patients with IgAN can be expected to lead to accelerated approval from the FDA.

Liver toxicity associated with prior use of ERAs not yet associated with sparsentan and mitigated through REMS

Endothelin receptor antagonists (ERAs), such as sparsentan, are drugs that target endothelin receptors and are used to treat various medical conditions like hypertension, heart failure, and pulmonary arterial hypertension. However, the use of these drugs has been linked to the risk of liver toxicity , which can range from mild elevations in liver enzyme levels to severe liver injury and failure.

The exact cause of liver toxicity with ERAs is not fully understood, but it is thought to be related to the regulation of liver blood flow and metabolic enzymes. Some studies suggest that liver toxicity is more likely to occur in patients with underlying liver disease or those taking multiple drugs metabolized by the liver.

ERAs that contain sulfonamide, such as sparsentan, may carry a higher risk of liver toxicity compared to those without. However, this risk may vary depending on the specific ERA, its chemical structure, dose, and duration of treatment.

One example of an ERA linked to liver toxicity is bosentan . Bosentan is used to treat pulmonary arterial hypertension. There have been reports of bosentan causing liver injury, including liver enzyme elevations, cholestasis, and, in rare cases, liver failure. However, such cases are rare and bosentan has a well-established safety profile in the treatment of pulmonary arterial hypertension. The FDA requires close monitoring of patients taking bosentan through its REMS program.

So far, sparsentan has not been associated with serious liver toxicity, but, like bosentan, the FDA will require a REMS program to detect any signs of liver toxicity.

Conclusion

Sparsentan, an experimental drug developed by Travere Therapeutics, presents a promising alternative for patients with IgAN who are not responding to or unable to tolerate current treatments. Sparsentan is a dual endothelin receptor antagonist and angiotensin receptor blocker that targets the endothelin and angiotensin pathways, both of which contribute to the progression of IgAN. In August 2021, Travere Therapeutics announced the results of the PROTECT Study, which showed that sparsentan significantly met its primary efficacy endpoint. In March 2022, the company submitted a New Drug Application to the FDA for accelerated approval of Sparsentan as a treatment for IgAN. The FDA granted the NDA Priority Review status and the target action date was assigned for February 17, 2023. The stock of Travere Therapeutics has a short interest rate exceeding 10% due to concerns over the company's past reputation, uncertainty over the FDA's decision, and potential for liver toxicity associated with sparsentan. However, proteinuria reduction has been recognized as a valid surrogate endpoint for IgAN and may serve as a predictor of long-term kidney outcomes. Furthermore, the REMS program will serve to mitigate concerns of ERA-associated liver toxicity.

Travere Therapeutics is on the brink of receiving accelerated approval for its experimental drug, sparsentan, for the treatment of IgAN, barring unpredictable CMC-related issues, etc. However, its long-term prospects are less certain. Ultimately, sparsentan must demonstrate its effectiveness in halting the progression of IgAN and may face competition from other drugs such as Chinook's ( KDNY ) ERA, atrasentan, which may show greater efficacy and fewer safety concerns. For the short-term investor willing to take a calculated risk, Travere may be a speculative buy. However, for the long-term investor, it may be wise to hold off on investing until a clearer picture emerges.

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