Travere Therapeutics, Inc. Q2 FY2022 Earnings Call

Thank you, Caroline. Good morning, and welcome to Travere Therapeutics Second Quarter 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 Dube. Eric will be joined for the prepared remarks by Dr. Jula Inrig, our Chief Medical Officer; Peter Heerma, our Chief Commercial Officer; and our Chief Financial Officer, Laura Clague. 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 facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our Forms 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, August 4, 2022, and Travere specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, I'll now turn the call over to Eric.

Thank you, Chris, and good morning, everyone. Yesterday afternoon, we provided a comprehensive regulatory update on our sparsentan and pegtibatinase programs, which is where I will begin. First, the FDA recently communicated to us in our mid-cycle review meeting for the sparsentan NDA in IgA nephropathy that the review process remains on track for our PDUFA target action date of November 17. This strengthens our confidence that we are on the path to a potential approval of sparsentan for IgA nephropathy later this year. As such, we are continuing our efforts to ready the organization for the first launch of sparsentan, and I am very pleased with the progress we have made to date. The second update is that we completed our planned Type A interactions with the FDA to discuss the potential for accelerated approval of sparsentan for FSGS and we received the final meeting minutes. Following a collaborative interaction, rather than submitting for accelerated approval this year, the FDA has recommended that we pursue traditional approval based on 2-year eGFR slope data following the completion of the DUPLEX study next year. While it is disappointing that we will not be filing for accelerated approval this year, it does not change our belief that sparsentan has the potential to become a new treatment standard for FSGS as well as IgA nephropathy, if approved. Of note, while the FDA reiterated again that we should not disclose detailed data from the ongoing study in order to assure trial integrity, they did align with us on sharing a few important elements with stakeholders. The first is that the FDA recognizes the significant unmet need as well as the challenges in studying FSGS, given its heterogeneity. There have been a few clinical trials completed to date to provide insight into this disease. In many respects, we are leading the way, and our DUPLEX study is on track to deliver the largest controlled data set to date in the field. The second point is that the eGFR data since the interim analysis in the DUPLEX study was first reported in February of 2021, we have continued to progress in a manner consistent with the profile of sparsentan. And the third is that the FDA has indicated that the DUPLEX study as designed maintains the potential to support full approval pending completion of the study. And the FDA recommends that we pursue traditional approval based on 2-year eGFR slope. These are important points as they support the fact that sparsentan is acting consistently with what we know from the history of its development and that we have confidence that the DUPLEX study will ultimately enable us to pursue a submission for approval for FSGS. We expect to have the 2-year eGFR slope and additional data available in the first half of next year. Assuming sparsentan is approved for IgA nephropathy, and we see supportive 2-year results from DUPLEX, we will be in a position to submit a supplemental NDA or sNDA in the second half of next year. With this update in the U.S., we and our partners at Vifor Pharma have pivoted from a joint indication submission for both IgA nephropathy and FSGS in Europe to apply for conditional marketing authorization of sparsentan for IgA nephropathy on its own this year. Pending the completion and supportive data for full approval from the DUPLEX study, we are targeting an application for approval of FSGS in Europe by the end of next year. The last update that we provided yesterday afternoon was that the FDA has granted breakthrough therapy designation to our pegtibatinase program for HCU. This is an exciting achievement and meaningful step forward for our program, particularly as we work to establish the biomarker pathway for a pivotal study in the U.S. and abroad for this devastating disease.

Thank you, Eric, and good morning, everyone. I'd like to begin by recognizing the significant need for new non-immunosuppressive treatments for people living with IgA nephropathy and FSGS. We continue to hear from the nephrology community and from patients that the available treatment options are limited in their effectiveness, have a challenging side effect profile or have long-term safety concerns. As a result, many patients are left rapidly progressing to end-stage kidney disease. We also continue to hear that nephrologists are looking to the future and see promise for the evolution of the treatment paradigm in IgA nephropathy and FSGS. We believe that physicians will be looking to use a foundational treatment alongside other modalities to provide their patients with the greatest chance of sustained proteinuria reduction over time. We believe sparsentan as the potential first non-immunosuppressive therapy to be indicated for IgA nephropathy and FSGS will become this foundational treatment, if approved. I am proud of our team's execution in the second quarter. In our IgA nephropathy program, we were pleased that the NDA for sparsentan was accepted by the FDA and granted priority review. Furthermore, we were pleased with the outcome of our recently completed mid-cycle review meeting. In this interaction, the FDA indicated that the review process remains on track for our assigned PDUFA target action date of November 17, 2022, and they reiterated that they are not planning for an advisory committee to discuss the application. We have also successfully completed our on-site sponsored good clinical practice or GCP inspection. I’m very pleased with the high-quality standard that our clinical and operational teams have met throughout the PROTECT study. As such, we believe we are in a strong position as we continue moving towards the target action date in November. We know that medical education is a foundational point for enabling sparsentan to become a new treatment standard. In the last 6 months, we've expanded our medical team to effectively deliver IgA nephropathy disease state education more broadly to the nephrology community, and we're seeing strong engagement. Additionally, we continue to work closely with the incredible patient advocacy groups in the nephrology field. Through this collaboration, we're able to provide disease state education and develop important insights into the patient journey that will help us best meet patients' needs. We also recently received clear definition on our path forward for FSGS. As Eric mentioned earlier, the FDA has recommended that we pursue traditional approval following receipt of the 2-year eGFR data from the DUPLEX study of sparsentan in FSGS rather than pursuing accelerated approval. I'll go into some of the details of our interaction, but it's important to first highlight why we're in a situation where FDA supports accelerated approval and one indication for sparsentan, but not another. As we know, the bar for accelerated approval, which would be the first in FSGS, is high. We believe FDA is requiring a high degree of assurance with a limited data set in a patient population that's more heterogenous and challenging to study than IgA nephropathy. In essence, we're paving the way for FSGS with the DUPLEX study. We also have design differences between the DUPLEX and PROTECT studies that as we have historically talked about are important to consider. As many of you will recall, DUPLEX did not require a run-in period on max tolerated ACE/ARB and it had a 2-week washout of RAS inhibition before patients received study drug. Without specifically speaking to DUPLEX or PROTECT one would expect a larger change in initial eGFR with different background medications and a washout period. So this is important to note. We also know from the history of sparsentan in the Phase II DUET study and experience with other ETAs that there is an initial effect on EGFR with endothelin blockade over and above RAS inhibition alone. This means when you think about total eGFR float, which starts the measurement at baseline you'd expect to have a larger initial difference to overcome with the washout and no run-in on uniform background medication. In our interim assessment last February, we had already established a clinically meaningful difference in proteinuria reduction. So the goal of the planned type A meeting was to provide a more mature data cut of eGFR data and see if that met the FDA's threshold for accelerated approval. In our meeting with the agency, we shared the limited additional eGFR data that was pulled from the DUPLEX study, which was taken at a point when all patients had been in the study for at least 1 year and slightly less than half of patients have been observed for 2 years. In order to preserve alpha in the study, we did not do any statistical analysis on the eGFR data. The data were purely descriptive in nature. As Eric highlighted earlier, since the interim analysis and the DUPLEX study that was reported in February of last year, the eGFR data have continued to progress in a manner consistent with the profile sparsentan. This is expected and encouraging to us. However, the FDA indicated that the interim analysis conducted last year, together with the recent limited additional eGFR data do not meet their threshold to support an application for accelerated approval in FSGS. Importantly, the FDA noted in the meeting and the minutes reflected that the DUPLEX study as designed maintains the potential to support full approval pending completion of the study, and they recommended that we pursue traditional approval based on 2-year eGFR slope. We expect to have those data in-house in the first half of next year, and assuming sparsentan and is approved for IgA nephropathy to be in a position to submit a sNDA in the second half of next year. Finally, on sparsentan, we are working closely with our partner Vifor Pharma to align our regulatory strategies for the U.S. and Europe. Following the FSGS update from FDA, we're applying for conditional marketing authorization of sparsentan in IgA nephropathy in Europe. We anticipate a review decision in the second half of 2023 and the potential for a subsequent FSGS submission pending DUPLEX completion and supportive data potentially by the end of next year. Our pegtibatinase program continues to progress, and I'm very pleased that we recently received breakthrough designation from the FDA. This designation recognizes the significant need for new treatment options for people living with homocystinuria and the promising data that has been generated to date in the COMPOSE Study. In the coming months, we're aiming to complete our discussions with the FDA and EMA on utilizing total homocystine as an approvable biomarker endpoint. From there, we expect to engage in a multidisciplinary meeting afforded by breakthrough therapy designation to gain alignment on all aspects of our pivotal program. This approach is designed to enable us to construct a pivotal study with a high potential for success, and we look forward to the organizational commitment from the FDA, as we continue to make progress. In parallel, the COMPOSE study continues to progress with patients on the highest dose of 1.5 milligrams per kilogram in the open-label extension and with additional enrollment activities continuing for the 6 cohort. We also continue to focus on working through ongoing global supply constraints to scale CMC and manufacturing for the pivotal phase of pegtibatinase's development and ultimate commercial access.

Thank you, Jula. I am pleased with the commercial organization's execution during the second quarter. We have continued to make strong progress, both with the approved products and with our preparation for a potential launch of sparsentan for IgA nephropathy later this year. During the second quarter, we saw strong demand for Thiola, but as we have talked about earlier this year, we are seeing the impact of generic dynamics affecting net sales. We expect there will be a continued downward pressure through the balance of the year, as the market competition evolves, but I'm very pleased with how our team continues to identify, treat and support patients in the homocystinuria community. The bile acid portfolio led by demand for Cholbam performed well during the quarter and we continue to expect growth of the bile acid portfolio in the second half of the year. Supporting Cholbam is another great example of our team's ability to identify patients with rare diseases that are not always easily identified or understood. Our commercial organization, which has historically delivered year-over-year organic growth for 7 consecutive years, was able to achieve more than 85% utilization of the new formulation within the first 9 months of loss, and it has consistently been able to provide necessary services to support patients with rare diseases. We are building upon these strengths, and we are making great strides to be ready for a potential approval of sparsentan this year. As an organization, that is uniform alignment and belief in the ability to achieve our vision of making sparsentan foundational therapy for patients with IgA nephropathy and FSGS if approved. I am very pleased to report that we have completed the recruitment of our field force that will support sparsentan for IgA nephropathy at launch, if approved. I believe we have a world-class team and I'm pleased to note that they have an average of almost 20 years of specialty experience and nearly all of the clinical account managers have strong nephrology experience. We just recently had our kickoff meeting with the full field team, and I can tell you that there is great excitement about the opportunity that sparsentan may provide for patients, if approved. Team members expressed that it's not often they get to be involved in the launch of a product that has the potential to become a new treatment standard. In parallel to preparing the infrastructure and team to support sparsentan in the field, if approved, we are also increasing our understanding of the IgA nephropathy markets through research and payer engagements. As Jula highlighted earlier, there is a significant need for new treatment options that meaningfully reduce proteinuria, allow for potential combination and that do not have the long-term effects of immunosuppression. The results from our IgA nephropathy research and payer engagements are consistent with what we are hearing from the nephrology thought leaders, which adds confidence to our belief that the profile of sparsentan supports foundational use. Notably, proteinuria reduction continues to resonate as the top clinical parameter for nephrologists, and there is an increasing urgency to treat patients with IgA nephropathy, who are above 1 gram per day. This is largely driven by the belief that if a physician can get their patients below 1 gram per day of proteinuria, then there will be a benefit on long-term eGFR and better renal survival. Research also suggests that steroid minimization remains the key goal for nephrologists in treating their patients with IgA nephropathy and that they would use a product profile like sparsentan potentially in combination with other treatment options, if needed, to optimize the chance for their patients to reduce proteinuria and stabilize disease progression. Additionally, we are pleased with how the potential value proposition of sparsentan in IgA nephropathy is resonating in our payer engagements. There is a strong understanding of the utility of clinically meaningful reductions in proteinuria in IgA nephropathy, especially if they are introduced before significant progression of disease. The value proposition increases when combined with a comparable safety profile to current treatment standards such as ACE inhibitors and ARBs. Lastly, from a supply perspective, we are already positioned to ensure product availability for a strong launch. Overall, we believe that the external feedback from patients, nephrologists and payers, together with the internal strength of our recently expanded commercial team, will enable us to achieve our vision of making sparsentan foundational therapy for patients with IgA nephropathy, if approved. We are at a time now between the two potential launches for sparsentan that will allow us to be incredibly focused on the best start for IgA nephropathy and also apply these learnings and experiences from the IgA nephropathy launch to have a strong launch in FSGS in 2024, if approved.

Thank you, Peter. For the second quarter of 2022, we reported total revenue of $54.2 million, consisting of approximately $51 million in net product sales and $3.2 million in collaboration revenue from our European collaboration with Vifor Pharma. This compares to $54.6 million in net product sales reported for the same period in 2021. As we typically see in the second quarter, gross to net discounts narrowed following the insurance coverage changes that typically impact first quarter sales. We reported a GAAP net loss of $67 million for the second quarter of 2022. After adjusting for noncash expenses and income tax, we reported a non-GAAP net loss of $41.3 million for the second quarter of 2022. On a GAAP basis, R&D expenses were $59.7 million for the second quarter of 2022. The increase compared to 2021 is largely attributable to increased headcount as well as medical affairs activities to support the continued advancement of the sparsentan and pegtibatinase programs. On an adjusted basis, R&D expenses were $54.4 million for the second quarter of 2022. Relevant noncash expenses for the fourth quarter included $5.3 million of stock-based compensation and amortization. On a GAAP basis, selling, general and administrative expenses for the second quarter of 2022 were $53 million. The increase compared to 2021 is largely attributable to increased headcount and commercial launch preparation. On an adjusted basis, SG&A expenses for the second quarter of 2022 were $37.5 million. Significant noncash adjustments for the quarter consisted of $15.4 million in stock-based compensation and depreciation and amortization. From an operating expense perspective, we anticipate that our R&D expenses will increase from current levels, and it may be uneven quarter-to-quarter, as we continue to invest in ongoing clinical work and long-term supply for both sparsentan and pegtibatinase. Consistent with our planning from the beginning of the year, we expect increases in SG&A from second quarter levels, as we now have the full field force staff and continue to prepare for the potential sparsentan launch in IgA nephropathy. As we enter the second half of the year, we continue to be in a strong financial position to execute. We ended the second quarter with $553.2 million in cash and cash equivalents. Notable one-time payments made during the second quarter consisted of an $8 million milestone payment to Ligand for the NDA submission for IgA nephropathy. Importantly, we believe this cash balance can support our operations into 2024, which takes into account potential further competitive pressure on Thiola, investing in sparsentan launches for both IgA nephropathy and FSGS, as well as milestone payments we expect to pay related to regulatory achievements for sparsentan and pegtibatinase. As this will be my last call as CFO, I'd like to thank our incredible finance team and all of you for your continued support and engagement over the last 8 years. The future at Travere remains incredibly bright, and I look forward to working closely with Chris and the rest of the management team through early next year to ensure a smooth transition. Let me now hand the call back over to Eric for his closing comments.

Thank you, Laura. Overall, we continue to execute towards our vision of being a leader in the global rare disease community. We are doing this through the continued development of our pipeline with the objective of positioning it for sustainable diversified growth for years to come. And by strengthening our organization to support broad access to our medications and meet the needs of patients as our products become available. We are entering the second half of the year, having made significant progress towards our goal of sparsentan becoming a new treatment standard for rare kidney disorders. The review process for our NDA for IgA nephropathy remains on track, and we are in great shape preparing the organization, and we will be fully ready to launch come November, if approved. We now know that we will have to wait a bit longer for FSGS, but the fundamental value and our confidence in sparsentan has not changed. We believe it is a matter of difference in time, and we will put that to good use. While we are awaiting the results of the full 2-year eGFR data from DUPLEX, we will take the opportunity to focus even more sharply on the launch of IgA nephropathy, if approved, and applying those learnings to commercialization of FSGS in the future, if approved. Additionally, now with breakthrough therapy designation granted for pegtibatinase, we believe we will be able to efficiently align with regulators on a pivotal program that will give us the best chance of success in delivering the potential first disease-modifying therapy to a community in need of new treatments. I would like to extend one final thank you to Laura for her incredible service and leadership and also reiterate what she said earlier. The future is incredibly bright at Travere, and I look forward to continued execution through the balance of the year. Now let me turn the call over to Chris for Q&A.

Thanks, Eric. Caroline. Can we please go ahead and open up the lines for Q&A?

Congratulations Laura on all your work over the past years. I wanted to verify and be clear, what 2-year data from DUPLEX was the FDA able to look at? I know you had a little bit over half of the patients at 2 years. But I believe you mentioned to preserve alpha, you do not run stats on these patients for proteinuria. Also, now that you're expecting to launch in IgAN with the steroid therapy already on the market, can you talk about whether you expect the initial group of patients to start sparsentan post approval to be those who have already progressed on the predefined therapy?

Tim, thank you for your questions. I'll have Bill address the first question regarding the data available for the FDA. Then, I'll have Peter discuss our perspective on the early uptake of the product in IgAN once it receives approval.

Tim, thanks for the question. With our agreement with the agency, there was very little done with the EGFR data, and that was a deliberate strategy to preserve the alpha for the study. So what we provided was a descriptive look at the composite of all available eGFR data for the sparsentan arm and the irbesartan treatment arm. So it wasn't broken out specifically based on those that were at 2 years versus those that were at 1 year. It was combined together, and they looked at the aggregate of that eGFR data plan, if that helps you, but it wasn't divided into specific groups based on duration in the study.

Thank you for your question. Should I respond to your inquiry about the bolus so we can discuss another question?

No, I was hoping to hear from you, Peter, on the long-term versus the initial bolus of patients. What do you expect that they will be kind of failing budesonide or other steroid?

Excellent. Thanks for that, Tim. Thinking about like initial uptake, there are several elements that we are taking into consideration. And one of them is the relative conservative nature of nephrologists as a prescriber base in the adaptation for new treatment that we have seen it with recent introductions in nephrology. We know, for example, that they don't want to burden their office or their patients to obtain challenges. So that's something that we are planning for, and we have the experience to navigate that. So as we anticipate in launching during the holiday season, that require certain challenges as well. In the first full quarter that we will see for sparsentan, is expected in the first quarter of 2023. And that's usual also when the payers are resetting the insurance plan. So those are elements we take into consideration. We do anticipate a strong uptake once physicians gain patient experience and make it a foundational therapy for their patients. So I think the attractive profile of sparsentan that we believe resonates well with patient needs together with our talented and experienced commercial team gives me confidence that our mission to achieve sparsentan as a foundational therapy is feasible and reachable. But I think given what we have seen with other updates in nephrology, in particular, and given the timing of our launch, that may not be as a usual bonus that you're talking about, but I think a faster uptake later on once the physicians have experience with sparsentan.

Hi, good morning. Thanks for taking my question and my congrats to you, Laura as well a great working with you. And the question I had is you mentioned the bar for FSGS is high. Has FDA quantified what the threshold is for FSGS approval? And lastly, you mentioned you continue to see sparsentan consistently. Can you elaborate on what that means?

Sure. Maury, I'd say, first, I'll turn to Bill to articulate what we understand that bar is for accelerated approval with FSGS. I think it's important for us to really highlight what we've been saying historically around the differences between these two programs with regard to the disease, the trial design as well as the literature that supports that link and modeling the link between proteinuria and eGFR. I'll ask Bill to take your first question, and then I'll ask Jula to provide her perspective on that profile of sparsentan that we see consistently throughout the programs.

Yes, certainly. The FDA really hasn't set a specific threshold, but we do believe that, that bar is high. They also, in our discussions with them, have recognized the difficulty in studying FSGS in particular. There have been very few studies done in this disease. There isn't an existing precedent and DUPLEX is going to be the largest data set in a controlled study in FSGS once we complete it early next year, but we don't have a specific numerical threshold that they've enumerated to us. I will hand over to Jula for some of the additional color.

Yes. I'll comment that what's reassuring to us is sparsentan is acting consistently. And you, Maury, have heard the proteinuria reduction that we've seen consistently across all the trials to date, the consistent proteinuria reduction we saw in DUET in patients with FSGS, the consistent proteinuria reduction we saw in protecting patients with IgA nephropathy and in the DUPLEX trial that we saw in patients with FSGS. The consistency that we're referring to with regards to the eGFR profile, we can't release any data, unfortunately, in the PROTECT and in the DUPLEX trial. Obviously, the integrity of those trials, as they're ongoing but what we can refer back to is the historical data of DUET. And so we're only able to say that sparsentan is acting consistent with what we've seen historically. And what we saw historically with DUET, as we saw an acute decline in GFR and then a stabilization of GFR. And that's what we see, and that's the natural history that we see with sparsentan and that's the mechanism of action that you would expect to see with the dual combination of endothelin and RAS blockade. And that's what gives us the consistency that we see in the profile of sparsentan and what you would anticipate to see.

Got it. That's really helpful. And maybe one quick follow-up. Just digging into the FDA's threshold. Are they more focused on the magnitude of delta between control and treatment? Or are they more focused on what you see for the duration of treatment? And so that's why they want to see the 2-year data for FSGS?

Bill, I'll turn it to you.

Yes. I think it's all of those things. I think that it's effect size, it's variability, it's the duration of effect, it's the consistency of a data picture presented by all the elements of the study, proteinuria being a strong anchor on one end, but then looking at all of the data that's available. And recall that with accelerated approval, it's only a partial data set so they have less to go on, but it's not one specific element.

Thank you for your question, Maury. I want to emphasize that we believe that completing the two years will enable us to achieve the standard necessary for full approval in the sNDA next year.

Thanks very much, and I'd like to also pass along my best wishes to Laura; it was great to work with you. I was wondering if you guys could talk a little bit about the heterogeneity of the FSGS some more in the context of the patients that have been enrolled in DUPLEX? How representative of the overall population are these patients? And are there any particular market segments that naturally present themselves? And would some of these be expected to be early versus later adopters of sparsentan, if approved?

Joe, thanks for the questions. Jula, I will turn that one to you and then maybe Peter can share a little bit of the thinking as we look to ultimately the launch and what the patient population looks like.

Yes. So I mean, FSGS is a heterogeneous patient population, and we enrolled a wide spectrum of patients with FSGS and I think that's important to note. And this is the largest trial of FSGS patients to date. And we enrolled primary FSGS in genetic patients with FSGS and patients at risk for progression. And the spectrum included patients with a wide range of eGFR from 30, way above 90 with 20% of patients with the eGFR above 90. So earlier in their disease state with regards to eGFR, but still at high risk for progression. And additionally, we enrolled a significant proportion of pediatric patients. And I think that's really important to note as well with regards to the patient population that we're represented. And so just a wide range of patients and then significantly at risk for progression, I think that's an important thing to note as well. And I'll turn it over to Peter with regards to who we think we're going to be studying here.

Yes. Thank you, Joe, for the question. We have completed our segmentation for physicians. We are analyzing both the prescribing potential and the number of patients they are treating, as well as their behavioral aspects. In IgA nephropathy, unlike some other rare diseases that tend to have more centralized care, we find a wider distribution of nephrology care. This is something we have discussed in the past. However, as we examine the different deciles, we notice variations in the number of patients seen by nephrologists. We have a solid understanding of this, and it will guide our focus, particularly at launch, as we target specific centers and physicians for orders.

I can provide some additional context to your questions, Joe, which I believe is important for those who may not be closely following this area. Regarding market uptake, nephrologists are expressing a strong belief that sparsentan will see broad use across the diverse FSGS population due to its mechanism of action. Therefore, we don't perceive any specific trend in one direction or another in that segment. We firmly believe that sparsentan will be the foundational therapy for both FSGS and IgA nephropathy. I also want to highlight what Jula mentioned about pediatric patients and their relevance to the trial's diversity. Jula, could you elaborate on the eGFR profile commonly found in pediatric FSGS patients and its potential impact on the current status of that trial?

Yes, certainly. When we think about the broad spectrum of patients that we represented in this trial, we did have patients who are very early in their disease and pediatric patients have really normal kidney function, really in the high range of functioning well above 120. And within the pathophysiology of FSGS, you really want to correct that down to normal, and that's what you do when you give whether it's an endothelin antagonist or RAS blockade. And so you want to correct that hyperfiltration. And that's one of the common pathway injuries with FSGS that you want to correct.

Good morning. This is Hao calling in for Greg Harrison. I have a question about IgA nephropathy; have you considered pricing to balance patient benefit with value? I would like to understand your initial process and the factors you take into account when deciding on the pricing.

Yes. Thank you, Hao, for the question. We have not disclosed how we will be pricing specifically yet, but I will ask Peter to share a bit of his team's thinking as we prepare for the pricing and launch in IgA nephropathy.

Indeed, and thank you, Hao for that question. So yes, Eric mentioned, we have not disclosed any pricing yet. We won't do that price to launch as well, but we have studied quite a bit on the burden of disease of IgA nephropathy to make insight for payers like what the cost associated with this disease is today. And we know that's substantial, given the progressive nature of the disease, ultimately leading to end-stage renal disease for many of those patients, often needing dialysis. We've also been studying the value proposition for sparsentan, and we have disclosed some of that data earlier on what the potential value could be of reducing proteinuria with the level that we have seen with sparsentan. And we have started engaging with payers as well, in advisory boards as well as in field conversations. And I'm very pleased to see that there is a good understanding of proteinuria amongst the payer community. And there's a sole understanding as well of what the value proposition of sparsentan could be. So I think that gives me confidence. It's not answering your question on the price. That's something to count. But rather than price, it always starts with like what is the potential value that this product provides to payers and society, and I'm pleased with the conversations we're having on that.

Thank you, Peter. Additionally, I can share that our strategy will be to price sparsentan for broad access, as we plan to establish it as the new foundational therapy. To realize this vision, we need to ensure we have wide access. We are leveraging the excellent work that Peter's team is doing on modeling the health economic benefits, along with insights from payers and the early uptake and access among others in this space. I believe we will be well-positioned to achieve our vision with sparsentan.

Great, good morning. Thanks for taking the questions. Maybe just to switch it up for a second. Congrats on the pegtibatinase breakthrough therapy designation. I guess based on that, what should we read through to kind of sort of growing alignment between you and the FDA around the nature of that Phase III program and when that might be able to get started? And then you called it out during the prepared remarks around that you didn't perform stats on the eGFR data going back to sparsentan. I guess, I'm sure you guys considered that at some point and having gone through the discussion with FDA, do you think that would have helped to sway some of FDA's concerns here? Any thoughts on that would be helpful.

Thank you, Carter. Bill, I'll ask you to take both of those.

The breakthrough designation enables us to have more discussions with the agency. Once granted, the agency organizes a multidisciplinary meeting that includes various review divisions, which initiates targeted work on different parts of the development process. This structure is intended to provide support as we advance our development efforts. For us, this means we are currently defining a surrogate endpoint, and we will continue collaborating with them on the design of the Phase III trial, determining which specific data elements are necessary, how to include pediatric patients in that development, and addressing manufacturing aspects. It’s a progressive process, so we need to complete several steps before I can give you a clearer outlook on when we will begin the Phase III study. After we finish some of those steps, we will provide more detailed information. I apologize, I was taking notes while you asked your second question. Could you please rephrase it for me?

Sure. I believe you mentioned that no statistical analysis was performed on the EGFR data, which aligns with prior communications. I know there has been consideration of conducting additional statistical work on that data from various points in the past year. After discussing this with the FDA, do you think that having completed that work or being able to present more data in that area might have alleviated some of their concerns?

Yes. I think that's a tough one to answer. I'm not sure if it would or it wouldn't have. For us, the key was preserving alpha for the endpoint of the study. We wanted to maintain our highest probability of success at the confirmatory endpoint, seeing that as the primary goal. So we really made the decision to do it that way in order to ensure our best chance of delivering this for FSGS patients.

Good morning. Thank you for taking the question. I would like to clarify the study retention in both DUPLEX and PROTECT. Have the discontinuation rates progressed as expected in these studies since the interim updates? Additionally, I want to clarify that the mid-cycle review meeting regarding IgAN has concluded, and the agency has reviewed the interim FSGS data from DUPLEX. Could the FSGS data potentially lead to an amendment, and how might it affect the IgAN review?

Laura, thank you for your questions. Jula, can you please take the question on study retention in DUPLEX and PROTECT?

I apologize for that. The studies have continued to progress with very high quality. We're observing dropout rates within the expected range for nephrology studies of this duration. We have made significant efforts to ensure patient retention in both studies, and we are very proud of the work we have done regarding the retention rates we are seeing to date.

And Bill, would you like to take the question on the mid-cycle review and the data availability and how that might impact the FDA's review?

Certainly, the FDA throughout our development program has consistently pointed to evaluating these two programs independently. And this remains the case. There are different diseases. They are studied on their own, and they have trial designs that are different and there are key differences between them that we've highlighted. They did have the data sets and vision to both programs, the whole way through. So at the point of their mid-cycle review meeting, they were aware of the DUPLEX data, and there was no expression of concern on their part. As a result of those, the DUPLEX data, it was in that frame that they gave us very clear feedback and that we were on track that there was no plan for an ADCOM was reiterated and that we are looking forward to our action date in November.

Hi, thank you for taking my question. I appreciate the clarity regarding FSGS in the States and Europe. My question is specifically about Europe. It seems prudent to be cautious about waiting for the European filing on FSGS. I wanted to know if you are confident that a combined filing would lead to similar outcomes in Europe, considering the increased heterogeneity observed would necessitate data over two years. Additionally, does filing together pose any risk to the IgAN approval if both are submitted at the same time?

Ed, thanks for the question. I'll turn that one over to Bill.

Sure. I mean ultimately, our commitment here is to get sparsentan to patients as fast as possible. And that remains unchanged. While we believe there is a case to be made to putting the two together in combination, we felt that that would be adding a potential incremental risk to the probability of an IgAN approval, and therefore, risking our ability to deliver sparsentan to those patients as quickly as possible. If the EMA were to end up with the same view as the FDA. We're now strategically aligning with our partners, Vifor on the regulatory process so that we have the best probability of success for both applications in Europe, and we look forward to getting the first potential approval in IgAN next year.

There's no further questions at this time.

Great. Well, thank you, everybody, for joining us this morning for all of our updates. We have an exciting second half of the year ahead, and we look forward to sharing more updates along the way. Have a great rest of the day.

This concludes today's call. Thank you for your participation. You may now disconnect.