Tvardi Therapeutics, Inc. Q3 FY2023 earnings call

• Royalty Deal: Cara entered into a royalty interest purchase and sale agreement with Healthcare Royalty, receiving an initial $17.5 million payment, with additional payments tied to milestones. The arrangement excludes KORSUVA in the US and oral difelikefalin internal development programs.
• Late-Stage Programs:
  • KIND 1 trial in atopic dermatitis: Approaching Part A top-line efficacy and safety data readout in mid-December. 80% of enrolled patients have mild to moderate skin lesions with severe itch.
  • KICK 1 and 2 trials in advanced CKD: Enrollment progressing well, expected top-line results in second half of 2024.
  • KOURAGE 1 trial in notalgia paresthetica: Tracking to first data readout of Part A in second half of 2024.
• KORSUVA Performance: Net sales $4.4 million in Q3 2023. Wholesaler shipments to dialysis clinics up 36%, but CMS rejection of TDAPA extension and flawed add-on adjustment methodology impact commercial potential.
• Financials: Cash, cash equivalents, and marketable securities totaled $83.3 million as of September 30, 2023, sufficient to fund operating plan into 2025.

In the third quarter of 2023, net sales for KORSUVA were $4.4 million, translating into $1.9 million of profit recorded as revenue to Cara. Total revenue for the quarter was $4.9 million, consisting of $1.9 million from collaborative revenue related to KORSUVA, $1.4 million from a milestone payment from Maruishi, $1.3 million from commercial supply revenue, and $167,000 from royalty revenue. The KORSUVA segment contributed significantly to revenue, with wholesaler shipments to dialysis clinics totaling 91,000 vials, a 36% increase from the prior quarter.

• Cash Runway: Non-dilutive royalty deal extends cash runway into 2025.
• KIND 1 Part A: Expect to release top-line efficacy and safety data in mid-December.
• KICK 1, 2, and KOURAGE 1: Expect top-line results in second half of 2024 for KICK trials and Part A data for KOURAGE 1.
• Oral Difelikefalin: Confident in potential of wholly-owned oral difelikefalin pipeline to reach value inflection points.

• CMS Rejection: CMS rejected request to extend TDAPA period for KORSUVA and maintained flawed add-on adjustment methodology, meaningfully lowering KORSUVA's commercial potential.
• Reimbursement Challenges: Unique capitated dialysis reimbursement system in US hinders KORSUVA uptake and innovation in related markets.
• Clinical Trial Risks: Uncertainties around study outcomes, enrollment metrics, and patient response in late-stage programs could impact milestone achievements.

Q: On KICK 1 and KICK 2, can you provide more detail on enrollment metrics, screen failure rates, and plans to open additional target sites?

A: Joana Goncalves stated they are on track with study readouts next year but wouldn't comment on specific metrics like screen failure rates or additional sites.

Q: What is your commercial strategy post-TDAPA and ways to extend cash runway beyond royalty deal?

A: Chris Posner mentioned limited promotion from CSL Vifor next year due to diminished sales potential. Ryan Maynard noted current cash runway allows reaching value inflection points and no comment on future financing needs beyond current plan.

Q: Confidence in commercial potential for non-dialysis CKD and internal prioritization of dollars for indications?

A: Chris Posner expressed bullishness on advanced CKD due to traditional retail pharmaceutical market and significant unmet need. Stated all three programs (AD, NP, CKD) are valuable with sizable addressable populations and no FDA-approved treatments.

Q: Expectations for KIND 1 Part A report, clinically meaningful improvement in pruritus, and go/no-go thresholds?

A: Joana Goncalves said they intend to report top-line efficacy and safety data. Internal thresholds vetted by KOLs will guide go/no-go decisions. Clinically meaningful improvement is assessed based on 4-point Responder Analysis and internal thresholds informed by KOLs and derms.

Q: KORSUVA injection inventory burn and monetizing oral DFK?

A: Chris Posner discussed inventory reallocation and downward pressure on demand/sales due to CMS funding lack. Ryan Maynard mentioned not standing up ex-US sales force for oral difelikefalin and looking to find a partner for ex-US rights.