Tvardi Therapeutics, Inc. Q2 FY2023 earnings call

Management Statement and Operational Highlights

• KORSUVA U.S. Launch: Positive feedback from providers/patients; FMC clinics show increasing reorders and patient dosing; DaVita and midsize/independent DOs show growth in orders and reorders.
• ESRD PPS Proposed Rule 2024: Cara engaged with CMS to address limitations in proposed methodology, seeking payment to follow patient, rational 35% discount, clarity after 3 years, and extension of TDAPA period.
• Kapruvia International Rollout: Progressing well in Europe; NICE recommendation, Japan regulatory decision expected in H2 2023.
• Pipeline Progress: Phase III programs in pruritus associated with atopic dermatitis and advanced CKD; KIND 1 AD trial expected internal readout Q4 2023, final top line H1 2025; KICK program in advanced CKD expected top line 2024; COURAGE trial in notalgia paresthetica commenced Q1 2023, internal readout H2 2024, top line H1 2026.

Segment Performance

• KORSUVA Injection in U.S.: Net sales were $11.4 million in Q2 2023, with $5.4 million profit to Cara. Wholesaler shipments to dialysis clinics totaled ~67,000 vials, a 46% increase from prior quarter. 67% of vials shipped to FMC clinics; FMC orders grew >50% Q-to-Q to 45,000 vials, with over 700 FMC clinics (27%) placing reorders and 1,300 (50%) dosing at least 1 patient. DaVita orders up 43% Q-to-Q to 11,000 vials, with over 400 clinics (15%) ordering and 73% repeat orders. Midsize/independent DOs orders up 28% Q-to-Q to 11,000 vials, with 17% of clinics ordering and 68% repeat orders.
• Kapruvia in Europe: Net sales $1.2 million in Q2 2023, $123,000 royalty revenue to Cara. Launches in 7 EU countries; NICE recommended Kapruvia for moderate to severe CKD pruritus in adult hemodialysis patients. Japan expected regulatory decision in H2 2023, triggering $2M milestone.

Guidance

• Financial: Current cash, cash equivalents, and marketable securities ~$101.7M as of June 30, 2023, sufficient to fund operating plan for at least next 12 months.
• Commercial: Confident in KORSUVA's commercial potential, Kapruvia's growth in Europe, and pipeline's upside.

Risks

• CMS Reimbursement Proposal Limitations: Proposed methodology may not follow patient, 35% discount may not account for first-in-class drugs like KORSUVA, and lack of clarity after 3 years post-TDAPA.
• Capitated System Challenges: Dialysis facilities may need to reallocate funds within bundled rates, potentially affecting KORSUVA's uptake if not properly resourced.

Question and Answer

• Q: How do you think about the trajectory in the second half and state of launch curve? A: Encouraged by accelerating trends in vials ordered, increasing clinics dosing patients, and positive feedback. Growth seen in early Q3, commercial partner CSL Vifor continuing promotional efforts.
• Q: What are you looking for in CMS final ruling? A: Payment to follow patient, rational 35% discount, clarity after 3 years, and extension of TDAPA period to ensure proper funding and patient access.
• Q: How are you thinking about potential monetization of IV KORSUVA revenue stream? A: Focused on ex-U.S. royalty revenue, exploring nondilutive financing options, with Europe and Japan as potential cash-generating assets.
• Q: When will you have better handle on steady-state utilization of KORSUVA IV? A: Depends on CMS final rule later this year; currently in 60-day comment period, engaging with CMS to address reimbursement concerns and request TDAPA extension.
• Q: Connection between manufacturing supply revenue and IV KORSUVA revenue? A: Commercially supply revenue is based on QA releases to CSL Vifor, disconnected from short-term demand; IV KORSUVA revenue is based on Vifor's shipments to wholesalers.