Q2 2022 Ardelyx Inc Earnings Call
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Good afternoon and welcome to the ARDALICS second quarter 2022 conference call. At this time, all participants are in a listen-only mode. There will be a question and answer session after the prepared remarks. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised.
As a reminder, today's call is being recorded. I would now like to turn the call over to Justin Renz, Chief Financial Officer of Ardellics. You may begin.
Thank you and good afternoon everyone and welcome to our second quarter financial results call.
During this call, we will refer to the press release issued earlier today, which is available in the Investor section of the company's website at our dellux.com.
On the call with me today are Mike Robb, President CEO and Susan Rodriguez, Chief Commercial Officer with prepared remarks.
Dr. Laura Williams, Chief Medical Officer, Dr. David Rosenbaum, Chief Development Officer.
And Rob Blanks, Chief Regulatory Affairs and Quality Assurance Officer, will join us for the question and answer period.
During this call, we will be making forward-looking statements that are subject to risks and uncertainties.
Our actual results may differ materially from those described.
We encourage you to review our risk factors in our quarterly report on Form 10Q file today, which can also be found on our website at our deluxe.com.
While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our views should change. And with that, I will pass the call over to Mike.
Thank you, Justin, and good afternoon, everyone. It is a great pleasure that I provide you an update on our progress in our last call.
First, for Israel, I'm pleased for report that we continue to make great progress in our launch, laying the foundation for growth and meaningful market penetration of this important product.
During these first three months of launch, the commercial team has made significant inroads in building demand for Zarella. Physicians are enthusiastic to have a novel drug added to their IVA treatment armament, and a responding favorably to the Zarella first in class mechanism and clinical data.
Integration of IZRELLA into already established processes across GI offices is driving favorable prior authorization approval rates, thus enabling patient access towards IZRELLA.
Awareness and intent to prescribe the drill is growing with well-coordinated scientific engagement in education, our high-impact Salesforce efforts, and broad reaching on the panel initiatives.
Susan will provide more details on the momentum we are building and why we are excited about the important role that we believe is releable play in the treatment of IBSC.
Turning briefly to expose on. As we announced in June , we received notification from the FDA that they will can be in a cardio vascular and renal advisory, drug advisory committee, technically scheduled for November 16th to gain additional insights into the clinical meaningfulness of the post date lowering effect observed in our Phase III clinical program for expose up.
We welcome this advisory panel as it will allow the FDA to receive input from treating clinicians to get a better understanding of their perspective on the clinical meaningfulness and significance of the phosphate lowering effect observed in our clinical trials of EXPOSA.
There is strong support within the nephrology community for Exposa bolstered by their belief in the importance of the need for novel mechanism therapies for the treatment of hyperphosphatemia.
We are preparing for the outcome with a goal of demonstrating important role exposed to the cancer play in advancing the management of high-propositina for patients with CKD on dialysis. L
We are driven by our limitations and stockholders and know that execution and operational excellence is imperative to our success.
We take great pride in our accomplishments across our programs, especially in such a tough environment.
We continue to exercise cash management and we've undertaken multiple steps to bolster our balance sheet and raise not diluted capital.
In April , we announced an amendment to our license agreement with Kiron or KHC, our partner in Japan, type of Lusitania, which may provide us up to an additional $40 million payable in two tranches in return for reduced royalties.
The first branch is expected within the second half of this year, following KKC's mission of its applicator thing to market to Napa, and Orange, Japan.
The second tranche is expected with the second half of 2023, following KKC's receipt of regulatory approval to market to the half-the-northographic policy team in Japan.
In addition, last month we announced that we had further monetized
significant.
Under the remaining royalties due to us from KKC, under which we may receive up to an additional $20 million.
Under the agreement, we receive a $10 million upfront payment, and additionally, we expect to receive $5 million following KKC's receipt of regulatory approval to markets in Athens or for hyperposter team in Japan.
And 5 million in the event net sales in Japan exceed a certain annual target level in 2025. Exit a certain annual target level in 2025.
In return, healthcare royalty partners will receive the royalty payments from commercial sales milestones that may become do us under our agreement with KKC. comparing to financial theft.
In summary, we see ourselves as a highly differentiated, revenue-generating biopharmaceutical company.
We are in the early phases of launching Azrela, an important advancement for the treatment of IVSC.
We have an opportunity ahead of us within November 16th advisory committee meeting to advance our formal dispute resolution process and demonstrate to the committee of the meaningfulness of the exposed phosphate reduction.
We have a pipeline of two internally discovered candidates which include RDX-13 for hyperclemia, and RDX-O2O for metabolic acidosis. And we have a strengthening cash position. And we have a strengthening cash position.
This unique position is a result of our dedicated, inclinatorial and talented teams across the company.
It is evidence of our vision, our science, and our belief in the drugs that we've created, coupled with persistence and a laser focus and the execution of our strategies. We are looking at the execution of our strategies. We are looking at the execution of our strategies.
Now I'd like to pass the call to Susan to provide an update on the launch of the ZOLLI. Susan?
Thanks Mike. We are three months into the launch of a D'Adriela and I'm pleased to report early and solid progress across a number of key launch parameters that are good proxies for future market penetration and revenue growth. Our on-market experience is confirming the need for new options to treat IVFC, the role of D'Adriela can play to address this need and the extent to which a significant subset of currently treated IVFC patients are seen.
as candidates that can benefit from Israel therapy.
First, our access and reach with prescribers. Our sales force is mobilized and making good headways to carrying face-to-face meetings with top prescribers. These sales efforts are further amplified by omnichannel tactics targeting new type prescribers, leveraging the rapidly advancing marketplace dynamics on how and where HCPs receive information.
As of month three, our Salesforce has reached 56% of the highest writing GI, with 87% of our target GI's reach at high intensity levels through our Army Channel Digital Tactics.
Second, positions are responding favorably to the availability of its DRAWLA and confirming that a meaningful subset of their existing patients are in need of a novel treatment approach. We are positioning its DRAWLA as a first-in-class NHEE-3 inhibitor with a triple action to treat IBSC, emphasizing its differentiated mechanism of action and clinical data that demonstrates significant improvement of domino pain, loading a constipation.
with a quick onset of action, sustained efficacy, and an acceptable safety and tolerability profile.
In addition to the ramp up our promotional effort, visibility of the Drell across scientific forums during our launch quarter is also noteworthy. SLIDE
The American Gastroenterological Association announced their updated clinical practice guidelines on the pharmacological management of the Irritable Phallacinthoral with constipation in May. Within a month of our launch, the updated guideline includes umbrella for the treatment of IBSC. In addition, our deluxe at a strong commercial and scientific presence digested disease week, the largest annual gastroenterology meeting that was held in May in San Diego.
The meeting included poster presentation of long-term data, demonstrating the impact of Israel on abdominal pain and other abdominal symptoms, effective Israel on treatment satisfaction, degree of relief and quality of life, and early onset of action and treating symptoms of irritable bowel syndrome with constipation.
Isrella is gaining visibility across the medical community and the product's favorable reputation is growing across the GI community.
Finding reported by the Independent syndicated launch tracking research published monthly by Spherex Global Insights, who has selected it, Drellah, as one of the key launches in the GI space to follow. Indicate that our promotional efforts and medical prepists is having an impact.
FERICS report set as a month three, 66% of PIs report unated awareness of its DRELA. 41% report use of its DRELA, and 92% of those survey rate its DRELA as either a substantial or moderate advance over currently available therapy. FERICS report set as a month three, 66% of those survey rate its DRELA and 92% report use of those survey rate its DRELA. FERICS report set as a month three,
Percent of patients considered to be candidates for treatment with a Zrella was reported at 31%. Percent of patients considered to be candidates for treatment with a Zrella was reported
A third came launch parameter centered on the office submission of prior authorizations to enable patient access to a Zrela. Offices are integrating a Zrela into their practice processes, working through their already established preferred specialty pharmacies or through our DELICS assist, our patient services program, to access the Zrela for their patients. To access the Zrela for their patients.
Our early results demonstrate that we are altering IBSC prescribing habits, practice by practice, based on the fact that treatments have been limited and Adrela, as a differentiated therapy option, addresses an important patient need.
HCPs in their office teams recognize the need to submit prior authorization when they prescribe the umbrella and are motivated to do so since the patients they believe can benefit have already been treated with existing treatments and meet the prior authorization requirement.
Our distribution networks further support office practices for handling specialty product prescription.
We are pleased to report a newly established agreement with BioRidge, a specialty wholesale distributor with a comprehensive network of over 200 specialty pharmacies to support the distribution and dispensing of Ibsrella. Additionally, Ibsrella is stocked across all major wholesalers who also supply independent specialty pharmacies.
The Curing Direct Agreement with large GI groups in-house pharmacies is also ongoing.
Turning to a fourth key launch parameter, market access, I'm pleased to report that outcomes in our first quarter of launch have exceeded our expectations. We are finding early in our launch that there are many patients who have been treated with the limited therapies available have been in need of alternative mechanism options. And until the launch of the Dredla have had none available. As a result, we are finding the patients who have described aseven reported documentation by altriag Lagigs. Talking about the first routized test craze, We leave.
Pair step-edit prior authorization requirements, and therefore are yielded favorable PA approval risks.
Additionally, our copay assistance program that can be accessed by patients with commercial insurance
combined with the reasonable out-of-pocket requirements for certain segments insured by government payers makes Idrella affordable for many patients.
And those who cannot afford E
The access and affordability dynamics you are seeing early in this launch are promising early signs that will build uptake moment. The access and affordability dynamics
The SIT and LAP key watch parameter I would like to highlight is among the most important.
Physicians are reporting positive feedback regarding their early treatment experience with Israel. Telling us that Israel is working well and provided a much new, a much needed new option. A much needed new option. A much needed new option.
The Month 3's phirics readout states that 41% of the physicians that have used Dizrella report moderate satisfaction and 59% report high satisfaction.
In summary, our first launch quarter was characterized by advances on multiple fronts that made deep inroads in laying the groundwork for revenue growth. Physicians are recognizing patient need for Abrella where there have been limited options historically. Physician offices are motivated, willing, and experienced in navigating prior authorization requirements.
The pool of patients who meet the prior treatment requirement is sizable, patients are gaining access to
We look forward to keeping you posted on our activities and progress toward realizing the market potential for Istrella. I will now turn the call over to Justin to review our Q1 2022 Financials. Justin?
Thank you, Susan. At the end of the second quarter of 2022, we had total cash, cash equivalence, and short-term investments of $81 million, as compared to total cash, cash equivalence, and investments.
of $116.7 million as of December 31, 2021.
In our first quarter of launch, net product sales of Ibsrella were approximately $1.6 million.
When combined with our once pre-stocking revolutions we made in late March, we're at just over $2 million net product sales of June 30.
Research and development expenses were $9.7 million when the quarter ended June 30, 2022, a decrease of $16.3 million, or approximately 63%, compared to $26 million for the same quarter last year.
This decrease in our R&D expenses is primarily the result of lower clinical study costs from the optimized study, lower to nap-norma manufacturing expense as we have begun to capitalize costs associated with a Vrella inventory.
and lower expenses following the elimination of our research function in the fourth quarter of 2021.
Selling, general, and administrative expenses were $18.9 million for the quarter ended June 30, 2022, a decrease of $1.3 million, or approximately 6%, compared to $20.1 million for the quarter ended June 30, 2021.
The decrease in selling, general, and administrative expenses is primarily due to the timing of costs associated with preparing for and carrying out the commercial launch of Israel.
The net loss for the quarter ended June 30, 2022, was $26.9 million or 19 cents per share compared to $45.2 million or $45 cents per share to the same quarter last year. The net loss for the same quarter last year.
We recognize the importance for us to maintain a strong balance sheet and cash position.
We are pleased to have completed important transactions in the second quarter, such as the KKC License Agreement Amendment and the HCR Royal Detail Financing that have the potential to provide us a significant non-deluded capital.
We will continue to pursue all efforts to strengthen our balance sheet and exercise your vicious cash management.
As a follow-up reminder to Mike Scowier comments, we now have the opportunity to receive up to an additional $70 million in non-diolutive capital over the next 16 months based on the potential advancement of Tenov North for hyper-sonsatimia in Japan. Tenov North for hyper-sonsatimia in Japan.
We have confidence in our ability to continue to fund our operations.
I will now turn the call back to Mike for some concluding comments before we open the call up for questions. Mike? Election Day 2
Thanks Justin. In our first quarter call, I highlighted the exciting and transformational time for our deluxe, where we are evolving into an impressive growth story with many opportunities ahead. Thank you.
As we report on our significant progress in the momentum in the second quarter, those words could not have been more prophetic.
Before I open the call to questions, I'd like to emphasize the number of points.
We are committed to our efforts to drive significant progress on a commercial front with Israel.
Our continued focus on launch execution supports and is facilitating the market's embrace of this new treatment option and is already driving change in the treatment practices for patients with IBSC.
The positive response we hear from early adopters of its umbrella and the role it can play in treating patients with IVSC further convinces us of the importance of this critical new medicine.
As is the case in the launch of any new product that continues to be work ahead on continuing to build upon the spiritual event.
I want to emphasize that I have tremendous confidence in Israel. What it can bring to patients with IVSC and a spectacular commercial team that Susan has built and their ability to meet our corporate objectives.
The opportunity for us with Ibsbrela is significant, as it provides clear line of sight to financial breakeven.
Finally, as we look forward to making the case where it's done, the FDA is advised to come in meeting in November , as we believe that it will be an essential treatment for patients with CK on dialysis with high-positiv tiniest.
We look forward to keeping in surprise of our progress. And with that, I will now open a call to questions. Out again.
Thank you. As a reminder to ask a question, you will need to press star 1-1 on your telephone. Please stand by. This will be compiled to Q&A roster. This will be compiled to Q&A roster.
Our first question.
Our first question comes from the line of Chris Howerton with Jefferies. Your line is open. Sorry!
Great. Well, thanks so much for taking the questions and congratulations on the strong numbers so far from the launch.
I think maybe just a few questions as it relates to the launch and then one on the pipeline, if you don't mind. With respect to the launch itself, wondering if you could describe to us the nature of the scripts that you're seeing thus far. I mean, are they, my assumptions would be that they would mainly be from patients that are dissatisfied with currently available treatments. So like second line or refractory patients, perhaps we would call them.
And then as it relates to the doctor's offices, how often are you seeing instances where there's multiple scripts or patients being treated with Ibsrella by the same doctor or office?
And then a third just kind of housekeeping question as it relates to the launch would be, how well do things like IQV attract everything thus far?
Sure. So first, I think we're, as I said, and even in the first quarter discussion, as we're still in the anecdotal phase of this, but I got to tell you some of the stories that we hear coming from the field of, sure there's playing in patients that are tough to treat who have been trying to find relief for years and had been unsuccessful with the therapies that are out there. And we get these comments of, patients when the physician comes in after the trial.
and multiple scripts written and sort of how that experience is beginning to emerge.
Thank you, Mike. Thank you, Chris, for the question. I think one thing to point out, you've used the term second line of refractory. But what we're really seeing on the ground as we, in our first three months of launch, is that physicians are feeding back that they have really had a need for an alternative approach for novel mechanism approaches. What we hear from them is that they consider the IVFC to be a condition of multifactorial pathopathy theology.
And I think people haven't realized truly when you look at the IVFC market to date, it's actually a market with rather limited options. It's an uncluttered market. There's a really limited number of options, all that work through basically the same mechanism. So what we're finding in terms of the patients that are being selected is that physicians are telling us that these are all highly symptomatic patients. They communicate their symptoms to the physician.
and they've been doing that for quite some time. So those are the patients that are being treated with this journal of patients that the way the physician's character is to us are patients that are in need of novel approaches. And what's very encouraging in terms of the early signs in our launch is that this group of patients really seems to be quite sizable. As I noted in the narrative, the pharynx data tells us that the physician survey report Singh is further around.
31% of their patients are considered to be candidates for treatment with a drillup. I think in terms of the, in freaking out, the repeat scripts and refills, et cetera, we are clearly seeing some nice refill rates moving forward, but it's still very early. I think what's important to know is, just in these first three months, you really hit some key parameters in terms of integrating into office, prior authorization practices.
get, you know, they're having early favorable experiences prior authorization approval rate. And they're having early favorable experience with the treatment of Israel. So all these things are happening as we speak. It's still early. And clearly, we see opportunity moving forward for these practices where we have built a foundation and were established to grow the number of patients that they're using at Israel with. And I think your last point around Iqiy Asimstonian, it is very interesting. You know it's always challenging early.
and launched based on the capture rates and the projection methodology. It actually differ between IQD and Symphony NR are not completely transparent, but what we find, they have got directionally to give us some sense of our growth trajectory, but really...
One probably, you know, which one is closer to the actual, we really can't tell you right now, but they, directionally, they are somewhat important. But they, directionally, they are somewhat important.
Okay, very good.
I guess maybe I'll hop back in the queue to give others a chance. I really appreciate it. Thank you.
Thanks, Chris.
Thank you.
Our next question comes from Matt Kaplan, with Gladden for Talmin Carolina's Ohkin quality. the flattened first, come in, your line is open.
Hi guys, good afternoon. Thanks for taking the questions. I guess focusing on the Israel launch, are you doing any sampling or is there any pre-drug that you're giving away at this point?
Yeah, Susan.
Yes, we are sampling all of our T-target offices, so that is typically...
How the physicians like to trial, it's drought, they start with the samples before they and see that they're responding well and move forward with the friction. So we are having, you know, the smooth uptake process from that perspective. And the other thing we offer, our patient services program, to the extent there is a delay in air approval of the PA, which we're actually seeing them go through pretty quickly, but in the event with any delay, we can offer patients from bridging products. But that is, that's where we does the total.
you know, it could be a shorter two months. No, we don't have an endy on file. We have to refile. It could be two months or it could be six months of the outcome would be for the trial. Rob, anything to add?
Not really, Mike. This is part of our appeal process once we have the ad com and the.
The OND then has 30 to respond to us. If a appeal is granted, as Mike has said, we will have to submit the NDA. The OND then has 30 to respond to us.
Okay. And as I imagine, Matt, work is being done on that now. We're as prepared as possible to resubmit that once we hear back from the FDA.
Okay, and at that point, either graduate you a two month or six month review as well, you say.
That's it.
Okay, great. Thanks for taking the questions guys. Thanks for taking the questions guys.
Thanks Matt.
Thank you. As a reminder to ask a question, please press star 11 on your telephone. Please press star 11 on your telephone.
Our next question comes from a line of Peyton Bondtech with Counting Company. The line is open.
this is Payne or Joe. Congratulations on the strong launch. I guess the first one from us would be the four-knife in terms of the eighth row launch. How many of them?
Once you get to a certain number of these high level prescribers that you guys have first parted in with the sales force, is there another Toronto driver that you would go for and be like the key metrics that you would look at to kind of go onto the next branch? And then I guess kind of more ought to be, what is kind of like the other main thing that you're looking at, kind of determines the customer's cost. Thanks.
Yes, excuse me.
So yes, as we had mentioned for our in our whole go-to market strategy, we're very much centered on a targeted approach because there is a concentration of writers that account for 50% of the children IBSC and that is where we're focused with opportunity for Zrel and that is a population of less than 10,000 HTPs. So if you had mentioned in our early skin and watch, we're very both highest writing.
positions in that context. However, we are continuing as we get if Drilla that was in the practices and the right of Drilla demonstrating the favorable access rates, you know, definitely expanding reach across our good audience. So that is the intention over time can continue, you know, when ready to add resources. We are finding early in the launch that the truth is that promotion sensitive is where it went.
Our sales reps have the safe to safe time and work with these offices as we are seeing productivity of prescriptions. So we are paid to hit the target we talked about and with an understanding that we can continue to earn out and build our recipe targeting. We are paid to earn out and build our recipe targeting.
Great, thank you. I guess kind of just following up on that, how many of those positions that you've already reached on, do you know, or how many of them have actually been constructed for all of them?
Yes, yes, I don't want to misquote the number because I went in so many different ways, but yes, we are seeing that, I mean the SPHEREX data itself is reporting that 41% of GI writing Abrella and I mentioned we're reaching 6% of GI. So we are seeing response in Abrella prescriptions and getting the message out to the target.
Great, thank you. Thanks for taking a question.
Thanks, Peyton.
Thank you.
We have a follow-up from the line of Chris Howerton with Jefferies your line is open
Awesome. Yeah, I just wanted to follow up with one question with respect to the copay assistance programs. Could you describe to us what type of patient would be eligible for that? And I guess, did you articulate what percentage of your targeted patient population you think that could comprise?
Sure, I think what's been interesting, Earl Nunn is that we are having patients fill prescriptions across all types of parodies commercial, my aromatic aid. So the strategy that Susan, the team put in place for market access, including co-paysons for commercial has been working on anticipated. Susan.
Sure, you know, I think what's been interesting, Erlin, is that we are having patients fill prescriptions across all types of paries, commercial, Medicare, and Medicaid. So, you know, the strategy that Susan and the team put in place for market access, including co-pays for commercial, has been working on and anticipated. Susan? I'm sorry, Mike. Can you repeat the question?
Chris was just wondering about copay assistance, you know, that's looking and Ryan.
Is it meaning sort of the expectations of what we have?
Thank you very much, Chris. Thank you, Mike. So, yes, actually, things are going extremely well with our co-pay assistance program. We're finding that some nice redemption rates, which really just is affordable for patients with commercial payers. But we're also finding that patients, our Medicare patients or MediPatients, we're finding that they have affordable pays associated with their benefit plans. And we're seeing those prescriptions get filled well. So and reflected overall in our mix.
A script, it's still very early, however, if you look at the mix of our early scripts in our first three months, we see, you know, a mixed commercial patient, my care and Medicaid patient. A mixed commercial patient, my care and Medicaid patient.
Okay, very good. And then I guess what the, what lots and translations was just, what could you anticipate what percentage of the patients that would be eligible for a co-assistance, a comprised, your targeted market?
Yes, yes, yes, I understand, Chris. So the general profile of the ISD market is 50-50-some commercial patients, and the other 50% are government payer patients. For more information, visit www.isd.gov.au
So, so half of the patients across the market be eligible for the co-fist and program and we're seeing nice utilization of that program those with commercial pair. But important to that, we're also finding that Drela is affordable for patients commercial, who are government pair patients. So, we're also finding that the co-fist and program are also affordable for patients for patients.
Okay, excellent. Thank you very much for taking the follow-up by a previous.
Thank you very much.
Thank you. I would now like to turn the conference back to my Rob for a quick comment.
Thank you all for joining our call and staying abreast of our transfer progress as we watch Israela for patients with IVFC and continue to navigate the inventory process with ExoZone.
We look forward to keeping you apprised of our press in the coming months. Abigail, you may now end the call.
Thank you. This concludes today's conference call, seeing for participating, you must connect. Thank you.
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