Q4 2024 Ardelyx Inc Earnings Call
Speaker Change: Will Fields, F. Harold Jordan, Michael Coppola, Allen Finley, Roger Waters, Harold Marbles, Kriss reconstruction, naïva see, queen of the arts, prima donna, Kim Claudia,
Speaker Change: [music].
Speaker Change: Welcome to the R <unk> fourth quarter and fiscal year 2024 earnings call.
Speaker Change: All participants will be in listen only mode.
Speaker Change: I would now like to turn the conference over to Kate Lowrey, Vice President of corporate Communications and Investor Relations Caitlin you may begin.
Speaker Change: Thank you good morning, and welcome to our fourth quarter and full year 2024 financial results call.
Speaker Change: During this call we will refer to the press release issued early earlier today, which is available on the investors section of the Companys website at <unk> Dot com.
Speaker Change: During this call we will be making forward looking statements are subject to risks and uncertainties. Our actual results may differ significantly from those described we encourage you to review the risk factors in our most recent annual report on Form 10-K that was filed today. It can be found on our website at <unk> Dot com.
Speaker Change: 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 change.
Speaker Change: Our president and CEO, Mike Raab will begin today's call with opening remarks, and an overview of the company's progress during the fourth quarter of 2024.
Speaker Change: Eric Foster Chief commercial officer will provide an update on the performance of its rollout in exposure, Justin Renz, Chief financial and operations Officer will conclude today's prepared remarks with a review of the Companys financial performance during the fourth quarter and full year ended December 31, 2024, before we open the call to questions with that let me.
Speaker Change: Pass the call over to Mike.
Speaker Change: Thanks, Keith and good morning, everyone I'm pleased to be here today to discuss our fourth quarter and full year 2020 for performance in.
Speaker Change: In the past year, our team's dedication to outstanding commercial execution led to numerous significant achievements.
Speaker Change: Its relative growth continued throughout 2024 with an acceleration in the fourth quarter as we began to see the positive impact of our expanded sales team.
Speaker Change: It is evident that patients are benefiting from its rollout.
Speaker Change: As important medication provides rapid and lasting relief from the symptoms of Ibs C. We can significantly disrupt patients' lives.
Speaker Change: Great.
Speaker Change: Our team successfully executed one of the best product launches in recent years and the first year of sales. We've demonstrated that exposure is a crucial medication for dialysis patients.
Speaker Change: Willing them to achieve and maintain target phosphorus levels.
Speaker Change: In the midst of this outstanding performance, we confidently tackle the challenging reimbursement environment.
Our commitment to prioritizing patient needs has never wavered.
Speaker Change: <unk> taken a strong decisive actions and we're dedicated to ensuring that patients continue to have access to expose it as they always have regardless of the coverage changes made by CMS.
Speaker Change: Our commitment to protecting patient access guarantees that at a minimum we will continue to serve dialysis patients as we aim to grow the business to at least $750 million before patent expiry.
Speaker Change: Building on the impressive performance buckets relative to those that we can successfully reinforced our cash reserves, finishing 2024 with a strong cash position paving the way for future growth.
Speaker Change: These accomplishments establish a foundation for our growth in 'twenty, five and beyond and we're poised to execute our strategic priorities with determination firmly anchored in our commitment to commercial excellence.
Speaker Change: Its relative growth momentum is continuing as a commercial team builds clinical conviction, among prescribers, which alongside our exceptional patient services team ensures the prescriptions are filled and reach patients.
Speaker Change: It is relevant is an outstanding product and patients deserve access to this treatment and the benefit it provides.
Despite the coverage changes the <unk> community is navigating preliminary evidence clearly indicates that our exposure strategy is effective and have patients across all access pass are successfully receiving treatment.
Speaker Change: We're extremely proud of our team's performance and a strong initial indicators, we are observing which Eric will share with you momentarily.
Speaker Change: Our exceptional commercial execution has demonstrated our ability to establish a sustainable and resilient company.
Speaker Change: Our corporate development team is focused on building a robust pipeline and are actively identifying and evaluating a range of internal and external opportunities.
Their efforts leverage our proven strength in development regulatory affairs, and commercial excellence to drive our next phase of growth.
Speaker Change: Our focus on serving our patients and driving exceptional commercial and financial performance is at the core of who we are and what we do.
Speaker Change: We're extremely proud to generate over $330 million in revenue last year and finished the year with robust $250 million on our balance sheet.
Speaker Change: This strong financial position empowers us as we build our company for the future rest assured we will be diligent stewards of our capital strategically investing in areas, where we have confidence in our ability to generate significant value for shareholders.
Speaker Change: We are building an exceptional company one that stands out in the industry, our future's incredibly promising and we are poised for great success.
Speaker Change: I will now hand, the call to Eric to share an update on our commercial performance Eric.
Eric Foster: Thank you Mike it's great to be with you all again across our portfolio, we had a great fourth quarter driven by strong demand from prescribers for these two first in class medicines that are demonstrating the clinical benefits. They can offer patients every day, we hear success stories of patients with Ibs C is quality of life has improved thanks to a trailer.
Eric Foster: For <unk> patients, who have struggled for years to achieve target phosphorus levels are now coming into range. Thanks to exposure.
Eric Foster: We had a strong momentum throughout 2024 and will look to maintain that momentum in 2025 with strategic investments in areas, where we believe we can drive further demand and sure let me start with <unk>.
Eric Foster: We reported an incredibly strong quarter with more than 32% growth quarter over quarter from Q3, we completed our sales force expansion at the end of Q3 and they were trained and in the field for all of Q4 driving that accelerated growth importantly, we saw growth from all our key indicators in the fourth quarter, including new.
Eric Foster: And repeat writers and new and refill prescriptions, we particularly saw a notable increase in the growth of new riders. We are pleased to see that because it aligns with the expanded targeting that we implemented with the growth of our sales team not only has the team focused on high writing gastroenterologist, but we've been able to expand the number of high writing non Gis.
Eric Foster: As well as a number of advanced practice providers or <unk>, which includes nurse practitioners for PFS or heavily involved in Ibs C management for patients.
Eric Foster: We're excited about the exit trajectory coming into 2025, and as we look to maintain the momentum we're focused on maximizing our pull through across the patient journey star.
Eric Foster: Starting with the top of the funnel our sales team will continue to focus on driving clinical conviction and patient identification among our expanded HCP list at the same time, we are thoughtfully, increasing our investments in omnichannel communication to engage and drive action among prescribers and patients initially our marketing efforts focused on the.
Eric Foster: And we saw early on that they were highly responsive tubes real is safety and efficacy profile and our marketing messages. We have also learned that Ibs C. Patients are incredibly engaged seeking new information and connecting with patients alike. While also exploring options to manage their condition.
We will be increasing our investment in direct to patient communication in 2025 to empower patients to learn more about their condition and the different options to treat their symptoms of Ibs C. At.
Eric Foster: At the same time that we're driving more patients at the top of the funnel, we will be increasing our focus on pulling those patients through to the bottom of the funnel. So more patients can access in Australia. We've got an incredible patient services program with our <unk> assist and it performed phenomenally in the fourth quarter. We believe that we can do more and so in 2025.
Eric Foster: Investing in our patient services programs, and notably expanding our access manager team.
Eric Foster: This is a field based team that is part of our Delek success that will focus on pulling through those appropriately identified patients. This team will work with physician offices to help understand the process for prior authorizations and make sure that barriers are addressed so patients can have access to our medicines. We have always had pull through rates that are in line with our industry.
Eric Foster: We recognize that we can do more and we have the unique ability to address this opportunity because of the <unk> assist program that helps connect health care providers pharmacies patients and Payors I am excited about the incredible potential that umbrella has to help many more patients with Ibs C and the continued growth we expect in 2025.
Eric Foster: Yes.
Speaker Change: Moving onto exposure the performance that we delivered in 2024 demonstrates just how important this medicine is for patients exposes differentiated mechanism of action and strong safety and efficacy profile, we're attractive to prescribing physicians since launch in late 2023, but the real world experience that physicians have with <unk>.
Eric Foster: Further demonstrates the significant impact that it can add.
Eric Foster: More patients are now able to achieve target phosphorus levels. Thanks to the addition of exposure to their treatment regimen for Hypophosphatasia and innovation that came nearly 50 years after the introduction of phosphate binders.
Eric Foster: We recognize that the question everyone is asking is what is going to happen to expose in 2025. This is what we know today.
Eric Foster: First and most importantly, dialysis patients who are in need of exposure to lower their serum phosphorus levels have access to treatment today exposes available as it always has been as a prescription written by a health care provider. The only thing that has changed is that exposure is no longer covered by Medicare part D.
Eric Foster: Second our commercial approach is unchanged from last year as with Israel are exposed the team is focused on driving clinical conviction in patient identification and Poland prescriptions through to the patient at the same time, they're helping the nephrology community and care teams to understand that their ability to prescribe exposure remains.
Eric Foster: Changed and that for the best experience prescriptions should be sent to the <unk> specialty pharmacy. Most importantly, we do not want physicians to change their prescribing habits based on patient coverage. Our message is to prescribe as you always have based on the patient need and we will adjudicate patient access and affordability on.
Our in that directive will ultimately support our long term growth expectations.
Eric Foster: For us insurance, ensuring patients have access to therapies is both a moral obligation and a strategic opportunity. We have seen the benefit that expose offers and we are fortunate at the business, we've structured and the approach that we have taken allows us to ensure access to our medicines, regardless of payer with this approach we.
Eric Foster: We are confident that we can deliver significant growth on our path to $750 million at peak it.
Eric Foster: It is too early for us to share any meaningful commentary on the first quarter, but I can share a few thoughts the first thing that I look for when we entered January was if our processes. We're operating as planned and there are four key patient path that we have been monitoring first is an existing patient who is covered by Medicare still on therapy through our <unk>.
Eric Foster: Patient assistance program in 2025, if they qualify.
Eric Foster: <unk> is an existing non Medicare patients still receiving a revenue generating script.
Eric Foster: Third is a new qualifying Medicare patient able to access exposure through our patient assistance program and fourth is a new non Medicare patient receiving a revenue generating script. The answer in all four of these scenarios is yes.
Eric Foster: So the systems and processes that we put in place in anticipation of this change are working as designed at.
Eric Foster: At this point, we're staying very close to all the stakeholders quickly learn and address any concerns that may arise. We are connecting with prescribers do every avenue, we can to reinforce our message that the access path for exposure is unchanged. Our early indicators are in line with our expectations and we will share more in the months ahead as we have additional data.
Eric Foster: I have a.
Jeff: Tremendous amount of confidence in our team's ability to deliver on our priorities for this year. They are focused empowered and a high performing team we are investing across the commercial organization to strengthen our position in the market support patients along their journey and accelerate our growth momentum in the years ahead, I will now turn it over to Jeff.
Eric Foster: Justin.
Speaker Change: Thank you Eric earlier in January we announced our product revenue and cash position.
Speaker Change: So I'll use this as an opportunity to review that material and highlight additional key financials from both the fourth quarter and full year 2024, as well as offer some thoughts on 2025.
Speaker Change: We had total revenues of $116 1 million in the fourth quarter of 2024 <unk>.
Speaker Change: Driven by growth in product sales.
On a full year basis, we reported total revenues of $333 6 million in 2024 compared to $124 5 million in the prior year.
Speaker Change: Our performance was driven by strong year over year growth for <unk> and the exceptional launch of exposure.
Speaker Change: During the fourth quarter of 2024, we recorded <unk> net product sales revenue of $53 8 million nearly double the same period of 2023, and an increase of over 32% quarter over quarter from Q3.
Speaker Change: Our growth was driven by several factors, including strong patient demand the completion of our field based sales team expansion and an improvement in our gross to net deduction, which was 28, 5% for the fourth quarter.
On an annual basis, we recorded $158 $3 million of EPS ROE and net product sales revenue in 2024 compared to $80 1 million in the prior year.
Speaker Change: We also recorded $57 2 million and net product sales relative exposure in the fourth quarter. The increase of 11% over Q3, driven by continued demand for this first in class medicine.
Speaker Change: Our gross to net deductions remained consistent at 23% for the fourth quarter.
Speaker Change: On an annual basis, we recorded $169 million of U S. Net exposes sales in 2024 compared to $2 5 million during a partial fourth quarter of 2023 falling watch.
Speaker Change: In addition to product revenue, we also had $4 $2 million in product supply and licensing revenue in the fourth quarter and $11 $7 million for the full year 2024, compared to $3 $8 million during the fourth quarter and $41 9 million for the full year of 2023.
Speaker Change: As a reminder, we received nonrecurring regulatory milestone payments from our collaboration partners in the fourth quarter of last year.
Speaker Change: We also recorded just over $900000 in noncash royalty revenue during the fourth quarter of 2024, and $2 7 million for the full year 2024.
Speaker Change: Research and development expenses were $13 7 million for the fourth quarter of 2024 compared to $9 5 million for the same quarter the prior year.
Speaker Change: In 2024, and 2023, R&D expenses were $52 3 million and $35 5 million respectively.
Speaker Change: The increase in R&D expenses reflects increased medical engagement with scientific communities and pediatric clinical trial activities.
Speaker Change: Selling general and administrative expenses were $76 1 million for the fourth quarter of 2024 compared to $47 8 million that we reported for the same period in the prior year.
Speaker Change: On a full year basis total SG&A expenses were $258 7 million compared to $134 4 million in 2023.
Speaker Change: The increase was related to commercial activities for <unk>, including the aforementioned sales force expansion as well as growth of the overall corporate infrastructure to support our strategy.
Speaker Change: We had net income of approximately $4 6 million or <unk> <unk> per share in the fourth quarter of 2024 compared to a net loss of $28 8 million or <unk> 12 per share the same period of the prior year.
Speaker Change: The net income for the fourth quarter of 2024 included $10 $8 million in combined noncash expenses from share based compensation and net noncash expense related to the monetization of Hypophosphatasia sales royalties in Japan.
Speaker Change: Our net loss for the full year 2024 was $39 1 million or <unk> 17 per share, which included $41 8 million for noncash expenses from share based compensation and net noncash expense related to the monetization of Hypophosphatasia sales royalties in Japan.
Speaker Change: Yeah.
Speaker Change: As of December 31, 2024, our total cash cash equivalents and short term investments increased to $251 million as compared to $184 3 million at the end of 2023.
Speaker Change: This includes $49 $7 million in net proceeds that we drew in October from our term loan agreement with SLR capital as well as operating cash flows generated during the second half of the year.
Speaker Change: Before I close I want to share some of our financial expectations for 2025 and beyond.
Speaker Change: From a revenue perspective, we anticipate continued long term growth for both its relative and explosive.
Speaker Change: We continue to expect a relatively achieved greater than $1 billion in net product sales annually prior to patent expiry as we announced in January we expect to deliver between 240 and $250 million and net product sales revenue for <unk> in 2025, driven by our expanded sales force.
Speaker Change: As well as investments in patient pull through and our Omnichannel communications efforts.
Speaker Change: We also expect our gross to net deduction to follow a similar trend that we've seen over the past two years, being 30% plus or minus 5% and west favorable in the first quarter and more favorable by the fourth quarter.
Speaker Change: As it relates to exposure as you've heard from Mike and Eric We continue to have significant expectations for exposure driven by the clear unmet need for <unk> patients to have another option to lower their serum phosphorus to target levels. We expect a disposable achieved $750 million in annual net sales revenue prior to patent expiry.
Speaker Change: As I think we are demonstrating the past we provide guidance that is thoughtful and reflects our expectations of the business.
Speaker Change: We also only give information we feel that we are in a position to give an accurate view.
Speaker Change: As such we will not be sharing 2025 expose our revenue guidance at this time.
Speaker Change: One thing I can share is that we expect to expose those gross net deduction in 2025 to be less favorable than we saw in 2024 due to the change in our payer mix.
Speaker Change: We will also be increasing our SG&A expense by approximately $10 million per quarter in 2025 as compared to the fourth quarter of 222024, its run rate to grow both a thriller and exposure.
Speaker Change: Those investments include the additional market access team members and the Omnichannel Communications, Eric spoke to as well as increased cost associated with our patient assistance program. Following the elimination of Medicare part D coverage for exposure.
Speaker Change: You should note that our royalty obligation payable to Astrazeneca is expect to be fully satisfied in 2025, which should generate some gross margin favorability in the second half of this year.
Speaker Change: We are excited to be making these investments to grow our business and we will do so based on our strong cash position of over $250 million. We feel very confident we are in a position to fund our expected operations from our current cash position.
Speaker Change: We are building a great company and expect to create significant shareholder value. This year by delivering on our key strategic priorities and with that I'll hand, it back to Mike.
Mike Raab: Thanks, Justin.
Speaker Change: Since our founding in 2007 every year no matter. The challenges we've encountered has made us better and more resident in our mission.
Speaker Change: 2024 was an incredible year for our Dallas and the patients we serve are benefiting from our medicines.
Speaker Change: We protected patient access to expose.
Speaker Change: We doubled down on our commitment to Ibs C patients with its rollout we strengthened our financial foundation to ensure future growth and most importantly, we never deviated from our values.
Speaker Change: The path ahead is clear and filled with promise we are fully committed to our priorities driving its relative growth executing on exposure strategy building, a pipeline of impactful medicines and achieving strong financial and commercial performance.
Speaker Change: Im truly excited about our future and we'll keep you informed about our progress in the quarters ahead.
Speaker Change: I will now open the call to questions operator.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now.
Speaker Change: It will be placed into the queue in the order received please be prepare to ask your question when prompted.
Speaker Change: Once again, if you have a question. Please press star one on your phone.
Speaker Change: And our first question comes from Yugo at Citigroup.
Yugo: Oh, great. Thank you very much.
So my question relates to the.
Yugo: Israel our guidance so $240 to 50, if you do the math.
Yugo: <unk> seems quite.
Yugo: <unk>.
Yugo: 5% or on quarter growth at the midpoint.
Yugo: I mean, I can understand the low end being conservative.
Yugo: High end and even if you were assume.
Yugo: Moderate modest decrease versus what you saw in <unk> 'twenty for the 32%.
Yugo: It seems like the.
Yugo: The upper end of the guidance could be.
Yugo: Quite a bit higher so I'm just curious if you could comment on the thinking around that.
Yugo: 240 to 250, yes, no. Thanks for the question you'd all totally understand I think as we've seen this business grow and the overall contraction that we've seen the Ibs C market writ large in the first quarter, we want to see the impact of that historically, if you look at ICSC scripts that go down about 10%, we have not experienced that.
Yugo: Historically, and that's probably more due to volume compared to the growth that we have now so we really want to navigate that first before we give you anything that's any different than the $242 50 again as Justin said in his comments and I think you've experienced with our guidance in the past we will give you the numbers that we're confident that we're going ahead.
Yugo: Okay understood and then on the on the 750 with exposure. So can you just clarify is this based on easing.
Yugo: Using 2033 hatch Waxman 14 years from 2019 approval or is it based on an earlier date without tax Waxman, just based on the core IP can you just clarify what.
Yugo: What timeline you are referencing there please.
Yugo: The extension.
Yugo: With that platform.
Yugo: Okay.
Yugo: Alright, and then last one on the on the BD front.
Yugo: Should we have an expectation that we could see some sort of.
Yugo: In licensing of a new a new product this year.
Yugo: To be determined.
Yugo: To be determined.
Yugo: We're going to bring in the team that we built.
Yugo: Talks about my color on the team that is established and what they're looking at now certainly our objective is to continue to build the pipeline for the right opportunity. If it's here. This year, we certainly would announce that.
Yugo: Okay.
Yugo: Alright, thanks, so much thank.
Yugo: Thanks Scott.
Yugo: Yeah.
Speaker Change: And our next question comes from Dennis Yang of Jefferies.
Dennis Yang: Hi, good morning, Thanks for taking our questions. We have one on exposure and another follow up on new Charlotte. So for exposure. Thanks for your comments in the prepared remarks, it's very encouraging to hear so we're seeing scripts potentially bottoming out, but curious where you're seeing real time in the field.
Speaker Change: Now that we're towards the end of February and as doctors are broadly prescribing expose.
Dennis Yang: In the same way as they did in 2024.
Speaker Change: I guess the key question is from a volume perspective do you think we are at the bottom and then I have a follow up.
Dennis Yang: Sure.
Dennis Yang: Brief comment from me.
Dennis Yang: Comment is.
Dennis Yang: Entire phosphorus management market is has been challenged disrupted as we as buyers move into the bundle.
Speaker Change: And how maybe that operates within the does getting to the patients all those things. So we're working within that context, right. So think about that and the messages Eric said in his comments that we're trying to enforce with physicians. The directive that keeps doing what you've been doing historically and we will adjudicate an RN, albeit you that coverage.
Dennis Yang: For Medicare patients.
Speaker Change: Whether or not we're at the bottom.
Dennis Yang: I think I certainly wouldn't be in a position to.
Dennis Yang: That we feel really good about the performance and I think American comment a little bit more on the sort of four areas of Houston tracking to ensure.
Mike Raab: That confidence continues yes, yeah. Thanks, Dennis I agree it's Mike I mean, I think it is it is too early to say whether or not we've been at the bottom what I can say is our message has certainly been well received with regards to access continuing for exposure for these patients and again it was really important that we make sure that we were confident.
Mike Raab: That the plan that we have and as for patient groups and pathways that they were being able to kind of flow through and receive access.
Mike Raab: Very early on we saw that those four patient paths.
They were successful in that patients were able to to have access. So we're continuing to see that as we saw from the beginning part of this quarter and which continued to be encouraged that that we're continuing to see that flow through as Mike said you know there is a lot of activity right now with regards to the binders being.
Mike Raab: In the bundles and the D. O is having to work through that so we're certainly empathetic to the challenges that they are going through and we just continue to remain focused on ourselves and making sure that physicians are confident that there continues to be access for exposure in those patients out there in need can have access to it. So we're encouraged by seeing that and we're just going to be.
Mike Raab: Continued to push forward from there.
Mike Raab: Okay, Great and then my follow up on it's really.
Mike Raab: A three parter, so I apologize for that but.
<unk> started two phase II trials in Parkinson's and CF associated constipation, when you talk about the rationale behind those two very specific populations.
Mike Raab: They are part of your $1 billion peak sales guidance or if these are incremental opportunities.
Mike Raab: Perhaps help us size those markets for us. Thank you sure.
Mike Raab: Those are investigator sponsored trials, which are certainly common in the industry. So those are not ones that we sponsor and I think as you look at it constipation is.
Mike Raab: Many different etiologies, Parkinson's being one that's common.
Mike Raab: And we're excited to see what those results will look like.
Mike Raab: And no that's not part of $1 billion.
Mike Raab: Okay perfect. Thanks, so much.
Speaker Change: Our next question comes from Laura Chico of Wedbush Securities.
Okay.
Speaker Change: Hi, good morning, Thanks, very much for taking the question one on exports and apologies if I missed this are there any quantitative metrics that you could share.
Speaker Change: Sure just with respect to kind of the retention of patients now in 2025 and.
Speaker Change: Any possibility you can kind of frame context around the.
Speaker Change: The quantification of on free drug in the quarter so far.
Speaker Change: Yes, I think to the latter question, it's too early to that Laura.
Speaker Change: And as people are going through this process that we described in our prepared remarks.
Eric Foster: I think I'll ask Eric to talk about sort of the first two.
Eric Foster: Groups of patients that came in from 24% to 25 and seeing that there are still on therapy, that's probably the only thing that we can comment on at this stage.
Eric Foster: Yeah. So.
Eric Foster: As Mike said, we're not going to be able to get into specifics in terms of quantifying it but I can confirm that we had patients that were on exposure in 2024 covered by Medicare part D and as they came into 2025, and obviously, we re verify their benefits.
Eric Foster: And they are able to qualify for our patient assistance program. They have been given access to expose it. So those patients that were receiving it through Medicare part D. In 2024 now have access through our patient assistance program. If they qualify and are continuing to have access in 2025, and then those patients that then we're receiving it.
Through their commercial or Theyre, non Medicare benefit again going through that re verification process in the January timeframe.
Eric Foster: If their coverage does continue we've been able to confirm that they still continue to have access to exposure in 2025.
Speaker Change: Okay, and then maybe just one for Jonathan and I think I missed this.
Eric Foster: The SLR term loan draw I think it was about $50 million.
Eric Foster: Where are the primary proceeds going to be applied is more for infrastructure SG&A expansion any other commentary there.
Eric Foster: Sure.
Eric Foster: As you know we've always been.
Eric Foster: Very prudent in our in our capital raising strategies and so we had an opportunity with.
If SLR capital in October to add debt $49 7 million to our balance sheet to give us over $250 million. So we are very well resource. It's at a very competitive interest rate and so we want to take advantage of that as well as extend the runway of our interest only period until July of 2028. So it's somewhat of a strategic move to give us plenty of opportunity.
Speaker Change: To give Eric the ability to do what he needs to do to expand the team to grow our business and to give.
Speaker Change: Our company the opportunity to build a pipeline, which we've touched on in the past, but we're gonna be methodical and patient, but again with a strong balance sheet now with plenty of runway.
Speaker Change: We have that flexibility to to build a great company.
Speaker Change: Thanks, guys.
Joseph Tovey: And our next question comes from Joseph Tovey.
Speaker Change: TD Cowen.
Hi, there good morning, and thank you for taking my questions maybe on the first one.
On expose I guess, just how familiar are the treating physicians with the bundling dynamics I guess when we do our cable calls some physicians are acutely aware of reimbursement dine.
Speaker Change: Dynamics in other seemingly arent at all or they just kind of rate the prescription that goes off so how often are you finding that you are having to correct.
Speaker Change: Physician behaviors and kind of remind them just kind of keep doing things as normal.
Speaker Change: Maybe second on the BD piece, what what sort of assets are you looking for or you have had good progress with the prior authorization.
Speaker Change: Commercially with some of your assets would you look for a commercial agent or where you want to expand outside help with my pleasure. Thank you.
Thanks for the question, let me address the second one person ask Eric to speak to what you just articulated in terms of the terminal that we see out there is exactly what you're pointing to.
Speaker Change: But in terms of what we're looking at obviously staying within our therapeutic areas. The first strategic.
Mike Raab: Consideration that Mike and the team are looking at.
Mike Raab: And whether the specific types of it what are we looking at I think it's premature to address that we're going to look at something that makes sense within our team with the skill sets that we have across the organization and the commercial team, but building a broad and robust pipeline is the objective.
Mike Raab: Yeah, and then with regard to your first question, Joe I think I think it's a good one you know what we have what we have learned is the vast majority of the physicians are aware of the bundle situation, but to your point, it's really the deals that have absorbed.
They really have absorbed this as we moved into 2025 and for us.
Mike Raab: Really allows us to keep a very simple message to the physicians, we know that they know they do not discern between Medicare and non Medicare or based on payer coverage. So for us our message continues to be simple and straightforward as it was in 2024 that regardless of coverage that they can feel confident that they will have access to exposure and thats exactly what were seeing in two weeks.
Mike Raab: Sure.
Mike Raab: Thank you.
Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your phone at any time.
Speaker Change: And our next question comes from Rowenta Ruiz of Leerink partners.
Rowenta Ruiz: Hey, good morning, everyone.
Rowenta Ruiz: So quick one on <unk>, given the new reimbursement dynamic I was curious what factors could allow you to meet or even exceed the $750 million peak sales guidance for this product.
And also wanted to know if you can elaborate a bit more on some of the strategies and resources youre using to make sure Medicare patients continue to stay on exclusive therapy, if they qualify.
Rowenta Ruiz: Sure.
Eric Foster: The last part first as you know that is up to the physician right and the strong messaging that Eric has been talking about keep doing what youre doing in the clear clinical benefit.
Eric Foster: <unk> therapy has demonstrated and helping patients reach their target levels, which is previously many have not been able to do but with exposures. They are.
Speaker Change: And in terms of the first part of your question I'll ask Eric to to address that yes.
Eric Foster: So we.
Speaker Change: As we think about the patient's journey, we're very proud of our delek since his team and the services that they are able to provide for physicians and for patients out there and thats one of the reasons why we decided to expand that to be more of a field facing team in 2025. So we think about the levers for US again, it's very simple messaging that we continue to have access regardless of.
Speaker Change: Payer coverage or patients continue to have access regardless of a payer coverage. We continue to make sure that we've got a solid marketing plan, we're out there with physicians where in the community peer to peer programming meeting them at conferences, where we know that that they like to receive information and they like to engage with the teams and then again, the our Dallas assist to be able to work with the <unk>.
Speaker Change: Offices to help triage those patients as they work through their journey to be able to have access and we're confident that that works and we're seeing a lot of traction there and the access is flowing through in 2025. So that's what's really giving us the confidence that we'll be able to achieve that whether it's.
Speaker Change: Having access in the non Medicare segments, and then also patients being able to qualify for a patient assistance program.
Speaker Change: They are their Medicare patients.
Speaker Change: Got it and last one from me and I noticed you are getting solid traction with their recent <unk> sales force expansion. Just thinking ahead are there any triggers or milestones that might encourage you to do additional field force expansion either for its trailer or expose.
Speaker Change: We always consider all opportunities to do and deliver more and better to our patients.
Eric Foster: I think as Eric mentioned.
Eric Foster: Increasing the access team and the field based access managers.
Eric Foster: A critical next step.
Eric Foster: You can talk a little more about better with upholstery, yes. So and also just to just to recognize that we just completed at the end of Q3. The expansion. So we're still fairly early on in that expansion Q4 was the first full quarter, having the team. There. So we still feel like there's plenty of opportunity based on the sizing that we have to to get to the 124 that's out in the field.
Eric Foster: Now so we have plenty of opportunity there.
Eric Foster: And then for US it's really about how do we pull through those patients and make sure that the teams are focused in terms of their core areas of responsibility and really felt like we could do more with regards to the filled access manager team and so we're excited to be able to expand that team thats, taking place in Q1, and they will be out there in the field working with there.
Eric Foster: <unk> partners on the on the sales side starting in Q2, so feeling very confident that we've got the right resources across the patient journey, whether it's through driving clinical conviction patient identification with the hcp's or pulling through those patients with the offices and the payer teams.
Eric Foster: Got it thanks.
Eric Foster: Yeah.
Eric Foster: And our next question comes from Julian Harrison.
Eric Foster: T J.
Julian Harrison: Hi, good morning, Congrats on the really strong quarter and for taking my questions on.
And expose I'm wondering if you're able to share the approximate public versus private reimbursement split for the fourth quarter was at approximately 60 40 or was it notably different than that.
Julian Harrison: And then also curious if private payer access is where you want it to be for 2025 or maybe there's some near term opportunities to grow the coverage on that side. Thank you.
Speaker Change: Thanks for the question.
Speaker Change: What I think is a confident number that we can say is that 60 40 split between Medicare and non Medicare and non Medicare is more than commercial Medicare Medicaid commercial Tricare VA Native American Affairs.
Speaker Change: So that go to the five pillars of non Medicare.
Speaker Change: In terms of expanding access on the commercial side remember that we don't have rebates, we don't have discounts and that's why we've embraced the prior off process. So any specificity around expanding that and it's certainly something that we would always consider but don't see that as a strategy in the short term priority anything you.
Speaker Change: I'd add to that I would just say I mean to your point following on from a prior authorization standpoint. The PAA approval rate is very high and I think you can see that with the with the uptick that we had in 2024 and certainly reflects the innovation and really the real value that it provides to patients.
Speaker Change: Yes.
Speaker Change: Excellent. Thank you.
Speaker Change: Our next question comes from Ryan Deschner of Raymond James.
Ryan Deschner: Good morning.
Ryan Deschner: I wanted to ask about.
Ryan Deschner: The level of promotion sensitivity for exposed it looks like compared to what you are seeing it ebbs railroad at this point in the launch and then I have a follow up.
Ryan Deschner: Sure.
Ryan Deschner: Yes, right now.
Ryan Deschner: I would say the team is very focused we have not expanded the team we feel like we've got the right number still continued to focus on the same targets that we did in 2024.
Ryan Deschner: And continuing to get receptivity as Mike mentioned, obviously, a lot of activity in the market and so the team continues to be focused on working with Nephrologist, obviously, working with the dialysis organizations as well and right now from a promotional sensitivity standpoint, we feel like it's just as it was in 2024 and we still have the same confidence that we had coming into the year.
Ryan Deschner: Got it and then how are you thinking about expectations for gross to net.
Ryan Deschner: Further down the line at steady state for exposure now that you are four full quarters into the launch.
Ryan Deschner: Thank you Ryan it's still relatively early as you might imagine the launch and with the payer dynamic change that we're seeing in 2025 and expect to see prospectively be truly to give precision we try to give information when we have it so as I said in my prepared remarks, we expect it to be.
Ryan Deschner: The less favorable in 2025 compared to 2024 because.
Ryan Deschner: The medic keyed and commercial related discounts. If you will are higher than Medicare, but we will give more color as things progress. It's just too early for us to give guidance.
Ryan Deschner: Got it thank you very much.
Ryan Deschner: Okay.
Ryan Deschner: Okay.
Ryan Deschner: And our next question comes from Ed Arce of.
Ryan Deschner: H C Wainwright.
Speaker Change: Hello. Good morning, everyone. This is Thomas Yip asking a couple of questions for me I think it's so much for taking my questions.
Speaker Change: So first question are also exposed so I just wonder if you can discuss the estimated bottom line impact.
Speaker Change: Exports are now being so treacherous turbofan the CSS loess.
Speaker Change: Our patient assistance program.
Speaker Change: Perhaps after work Savage.
Speaker Change: Net sales and also will this be reflected.
Speaker Change: Cost of goods sold starting in the first quarter.
Speaker Change: Yes.
Speaker Change: I believe I understand your question transition pharmacy is the art delegates to pharmacy, we have a closed distribution network with expose as compared to its rollout. So there is no change that is different with transition things the pharmacy with whom we work. So I wouldn't expect a change in that I don't know Justin can.
Speaker Change: The address that as well, but as Justin just said in a previous question. We do anticipate some change to gross to net due to the change in payer mix.
Speaker Change: Which would be different that you will see going forward and we'll give you more clarity as things evolve just Mexico.
Speaker Change: Just to really.
Speaker Change: Reiterate what both Mike and Eric said earlier that our patient mix was approximately 60% Medicare 40% non Medicare in 2024, and so that is again with patients losing Medicare part D benefit coverage in 2025 that will be a change and we are working through in 2025, but still believe is a <unk>.
Speaker Change: <unk> population that we will build from and then on the I believe you may be referring to the cost of our patient assistance program. So as a reminder, cost related to our patient assistance program do not run through cost of goods sold but rather are part of our SG&A expenditures and again, there is somewhat modest and thats been included in the <unk>.
Speaker Change: Guidance that we gave where we believe SG&A will increase approximately $10 million per quarter over the course of 25% compared to Q4 of 2024.
Speaker Change: Got it.
Speaker Change: And then perhaps one more question from us.
Speaker Change: Railroad.
Speaker Change: Based on based on your <unk> guidance $2 40 to 402025.
Speaker Change: Yeah.
Speaker Change: A number of initiatives this year.
Speaker Change: Are there.
Speaker Change: Programs strategy.
Speaker Change: Please.
Speaker Change: All reports are able to reach towards the 1 billion net sales goal.
Speaker Change: Sure I'll ask Eric to comment a little bit more but as you said in the prepared remarks. The omnichannel efforts that we have underway patient communication that is going to expand a number of other initiatives like our government channel efforts.
Speaker Change: As we come into 2025, when we got to continued expansion of the sales force. We've got a full team in place there. The team the marketing team has done a great job. We've had the evolution of the campaign in Q4 of last year and now continue to expand our patient initiatives and our patient marketing efforts. This is a devastating devastating disease.
Speaker Change: For these patients and we need to continue to amplify the impact of the disease and the patient voice. We know we've got an engaged patient population and we want to meet them, where they are to make sure that they feel empowered and confident when they run and when they get into the office and the marketing team is working very hard to really pull that through in 2025, and then from an access standpoint, we talked a bit about the field.
Speaker Change: S managers. So again as you think about that patient journey really from coming into the physician's office talking about their disease and the impact on their life.
Speaker Change: Raising their voice and being impactful with the physicians to be able to get the right treatment for them. We feel that we've got the right insights and we've got the right strategy and we're going to be able to amplify that in 2025, and then again with the field access management team to really help those patients to be able to pull through so that they can continue to have access to Israel.
Speaker Change: Understood. Thank you again for what the kind of questions looking forward to working with <unk>.
Speaker Change: For our progress.
Ed: Thanks, Ed.
Speaker Change: Okay.
Speaker Change: And our next question.
Speaker Change: It comes from Chris Raymond of Piper Sandler.
Chris Raymond: Hey, Thanks, guys just on the on the commercial pay market for exposed there I know it's early but.
As you guys have done scenario planning with such a large segment of the market getting free drug going forward have you thought about.
Chris Raymond: When you might start to see private payers coming back to you for more discounts.
Chris Raymond: If at all.
Chris Raymond: Asked another way I know expos or already has a decent discount off of list price, but is there a point in time, where maybe you will feel comfortable that you won't see any more significant pricing pressure from the commercial market.
Chris Raymond: Thanks.
Chris Raymond: Chris Thanks for the question.
Chris Raymond: We actually don't discount to payers.
Chris Raymond: That's the whole decision that we made to embrace the prior authorization process.
Chris Raymond: And if and when they come to us that means that we have come to their radar and generating sufficient revenue that were.
Chris Raymond: Youre going to ask those questions when or even if that happens I think it's hard to predict on American thoughts Yeah, I would say our primary objective is access to expose and into current market patients can have access.
Chris Raymond: Seeing that certainly on the commercial side and the other non Medicare.
Chris Raymond: Segments should that change and should we start to engage in communications again, our primary goal is access to exposure and we will engage in those conversations and if we need to shift and pivot then we certainly have the flexibility to do so but right now we continue to see the access is maintained in those non Medicare segments, and we're going to continue to push forward.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session.
Speaker Change: I would like to turn the conference back over to President and CEO, Mike Raab for any closing remarks.
Speaker Change: Thank you all for joining us this morning, and a special Shout out goes to Kmart, Alex who I know is listening your hard work is invaluable and in bringing our central medicines to patients and we wouldn't be where we are without you.
Speaker Change: I also want to acknowledge our shareholders for their support on this journey. We're building significant company, having successfully developed our medicines from initial concept through development and now into commercialization. This achievement is not just noteworthy is a testament to our capabilities and we're excited to seize the opportunity and to do it again with that we can conclude the.
Speaker Change: Thank you operator.
Speaker Change: This concludes today's conference call. Thank you for attending.
Speaker Change: Okay.