Calliditas Therapeutics AB

STO:CALTX

Earnings Call Transcript 2023-Q1

[Renée Aguiar-Lucander, executive]

Thank you very much, and welcome, everybody, to this Q1 2023 report. With me today, I have Fredrik Johansson, Chief Financial Officer; Richard Philipson, our Chief Medical Officer; and Andrew Udell, President of North America.

Next slide, please. I'd like to just draw your attention to the disclaimer page. It relates to any forward-looking statements, and I would like to refer you to the company's reports and other filings, including those which contain risk factors and other relevant information.

Next page, please. So some highlights for Q1. In February, we received conditional marketing authorization from the MHRA for Kinpeygo, which thus became the first-ever approved treatment for IgA nephropathy in the U.K. In March, we obviously had our main event for the quarter. We read out top line data from the global placebo-controlled randomized Phase III study known as NefIgArd, which met its primary endpoint of kidney function expressed as eGFR. The trial was very successful and met the primary endpoint with a highly significant statistical p-value of 0.0001.

With regards to TARPEYO, Q1 saw a record number of new enrollments, reflecting growth of over 30% over Q4. And in addition, the quarter also saw the largest ever increase in unique subscribers, resulting in a total 918 unique nephrologists prescribing TARPEYO since launch.

Revenues for the quarter amounted to SEK 191.4 million, with net sales from TARPEYO representing SEK 185.7 million of that or just under $18 million for the quarter.

Our outlook for the year remains unchanged, and we're very excited about the initial reaction we've had from KOLs and with select nephrologists with whom we had the opportunity to share the Phase III data with. And yes, we really look forward to being able to share that data a bit broadly with the nephrology community going forward.

Next page, please. So about the NefIgArd trial. So actually, Richard will shortly provide you with the details from our top line readout from the Phase III trial. As I mentioned, though, we're extremely excited about the results as really this focus on the top of the disease cascade. Targeting this presumed origin of the disease seems to generate not only an immediate kidney protective benefit, but really actually also have long-term durability. And these strong results, we believe, will further support our thesis that TARPEYO is indeed disease-modifying in IgA nephropathy. And it's even more exciting, obviously, this effect has been seen irrespective of baseline UPCR levels.

We do believe that this data, once it does become more familiar in the nephrology community, is going to be -- have a very significant impact on treatment paradigm of IgA nephropathy.

In addition to the eGFR data, we also saw a dual-UPCR response where UPCR levels remain below 30% reduction for the -- also for the entire observational period of 15 months for initial treatment period of 9 months.

On the basis of these data, we plan to file for full approval with the FDA for the entire study population of NefIgArd in July, with a regulatory decision to be expected in the first half of 2024. And the exact timing of that decision is dependent on whether that regulatory process will be conducted under a priority or standard review.

Next slide, please. A quick pipeline update. We are on track to report out our biomarker data for the setanaxib head and neck cancer trial around midyear this year, as we previously disclosed. We are still experiencing some challenges in terms of recruitment of the TRANSFORM study in PBC. The IPF -- the [indiscernible] IPF trial is still recruiting on plan.

In terms of the biomarker data, we're super excited about reading that out. And we hope, obviously, that this proof-of-concept study will provide us with information that will be very helpful across all of the kind of different rare disease trials, which are presently running.

In addition, we've decided to expand our clinical pipeline with the study in Alport syndrome. That's an orphan renal disease, whereas of today, there are no FDA or EMA approved drugs. And we will, on the basis of extensive preclinical work, launch a clinical trial in Alport involving approximately 20 patients, and we hope to start then second half of this year. And we also continue to explore the whole NOX inhibitor platform for other renal diseases, which we may be in a position to pursue later on.

Next slide, please. So with that, I'm going to hand over to Richard Philipson, who will take you through the top line data.

[Richard Philipson, executive]

Thanks very much, Renee. Next slide, please. So I'll start by briefly reviewing the Phase III study trial design, the NefIgArd study enrolled patients with biopsy-proven IgA nephropathy, proteinuria of 1 gram per day or higher and an eGFR of 35 to 90 mls per minute and with well controlled blood pressure whilst on optimized RAS inhibition. Immunosuppressive therapy was not permitted during the study, and changes to anti-hypertensive medications were discouraged. Patients were randomized to receive TARPEYO at a dose of 16 milligrams per day or placebo for a 9-month treatment period. An interim analysis of change from baseline in proteinuria in the first 199 patients enrolled and treated for 9 months formed the basis for accelerated and conditional approval in the U.S. and Europe, respectively. The final analysis of the NefIgArd study is based on 364 patients full analysis sector efficacy treated for 9 months and followed up for a further 15 months without investigational treatment with a primary endpoint of average change from baseline in eGFR over the entire 24-month period of treatments and observation.

Next slide, please. In total, 395 patients were randomized into the study. This includes an additional 29 Chinese patients require a local Chinese regulatory purposes only. The safety analysis set of 389 patients includes all randomized patients who received at least one dose of study medication. The full analysis set comprising 364 patients is the way to set useful efficacy analyses performed for the [indiscernible] study. Please note while these are only just over 10% of patients with approven study at any time, indicating a group rate of retention of patients in the study and the early discontinuations are broadly similar in the Nefecon and placebo treatment groups.

Next slide, please. Moving on to demographics. Overall, the enrolled patient population clearly represent state of the intended primary IgA nephropathy population. Disease characteristics describe a clinically relevant high-risk population. Treatment groups of balanced with [indiscernible] baseline characteristics and that note blood pressure was well controlled for study entry.

There's been an increase in the proportion of Asian patients in the study population since the use of data from the interim analysis reflective of the active recruitment of patients in China.

Next slide. Primary endpoint of time-weighted average change from baseline in eGFR during 9 months of treatment and 15 months of observation was, on average, during 2 years of treatment and observation, the loss of eGFR was 2.47 mls per [ Audio Gap ] the Nefecon 16 milligrams versus a loss of 7.52 mls net for placebo. So therefore, an average treatment difference 5.05 mls per minute favoring Nefecon a result that was highly statistically significant.

Next slide, please. Several different supportive analyses of eGFR total 2-year slope were performed. These are all statistically significant with improvements in slope estimated to fall in the range of approximately 1.8 [indiscernible] per minute per year. The differences in 2-year total slope observed between Nefecon and placebo are considered clinically relevant since all of the estimates are well in excess of the difference [indiscernible] required to predict [indiscernible] treatment effect for composite endpoint of end-stage kidney disease, eGFR less than 15 mls per minute or a sustained doubling of serum creatinine as published by [ Audio Gap ] in 2019.

Next slide, please. When we look at the eGFR outcomes in placebo-treated patients at 9 months, there was a decline in eGFR of approximately 8%, corresponding to a loss of approximately 4.6 mls per minute, which increased a decline of 21.5% or 12 mls per minute by 24 months. In contrast, in patients treated with Nefecon and eGFR was essentially stable compared to baseline at 9 months. And by 24 months, there have been a decline in eGFR of 11%, corresponding to a loss of approximately 6 mls per minute. So in summary, 9 months of dosing with 16 milligrams of Nefecon in 364 patients resulted in 50% or less loss of kidney function compared to placebo at 24 months.

Next slide, please. So turning to proteinuria. We've seen a cumulative improvement in proteinuria in patients treated with Nefecon versus placebo during the 9-month treatment period, which continued to improve at 12 months. At month 24, proteinuria levels in patients who had received Nefecon was still at a reduced level, similar to that observed with the 9-month time point.

Next slide. So in summary, the primary endpoint of average change from baseline in eGFR over the 2-year treatment and observation period was met and was highly statistically significant. Supportive analyses of 2-year eGFR slope were also statistically significant and are clinically relevant. All estimates are well in excess of the threshold required to predict clinically meaningful treatment effects.

The treatment benefit on eGFR was apparent and cross baseline UPCR subgroups. And sustained proteinuria effect and long-lasting EGFR treatment benefit was observed even after 15 months of treatment supporting disease [indiscernible].

So now next slide refers to safety. When we look specifically here at the 9-month treatment period, overall, we saw a pattern of adverse events and the safety analysis set that was similar to the interim analysis, which has previously been described in our publication in Kidney International and which is also described in product information. The most frequently occurring adverse events occurring in 5% or more Nefecon treated patients and 2% or higher than placebo or peripheral edema, hypertension, muscle spasm, acne, upper expiratory tract infection, face edema, increased weight, dyspepsia arthralgia and increase in white cell death.

It's important to note that any ongoing adverse events typically resolve at the end of treatment and common adverse events occurring during the 15-month follow-up period are generally unremarkable with a similar frequency of reporting in Nefecon versus placebo treatment groups.

So next slide. So in summary, overall, the adverse event profile was similar to that reported in the interim analysis. The most commonly reported adverse events observed with an increased frequency compared to placebo were peripheral edema and potential muscle spasms and acne. The majority of these events were mild or moderate in severity, and adverse events led to discontinuation of study drug in fewer than 10% Nefecon treated patients. And when we looked at objective measures of mean weight and blood pressure these show unclinically relevant fully reversible changes.

I'll now pass over to Andy Udell.

[Andrew Udell, executive]

Thank you, Richard. Next slide. While our $17.8 million in net sales were impacted by the typical end of year early patient refills and patient insurance changes at the beginning of the year, the first quarter of the year saw substantial enrollment and new prescriber growth, which are both key leading indicators for future net sales growth.

March was a record month in sales and enrollments, pushing the quarter total to 408 patient enrollments, representing a 30% growth over Q4. In addition, we had 276 new nephrology prescribers prescribed TARPEYO during the quarter, which is also a record, and as of this report, now totals over 1,000 unique prescribers during our first 14 months of promotion.

We also continue to grow the number of patients and are improving the speed at which they are receiving TARPEYO. During the quarter, 85% of patients enrolled in TARPEYO Touchpoints, excluding those still waiting for an insurance decision, received TARPEYO. This conversion rate is consistent with the rate reported for full year 2022.

As time goes on, we have more and more patient success stories and patients that have reached 9 months of treatment with TARPEYO. While treatment length can be variable, as we see more patients completing 9 months on treatment, we observed that the majority of those that completed 9 months remained on therapy beyond this. We believe this reflects the risk/reward profile of the product as more and more of these patients will benefit from the consistent clinical results demonstrated in our trials.

Next slide, please. Commercial and promotional efforts regarding the full data from the NefIgArd phase 3 clinical trial won't take place until after regulatory filing and approval. However, as announced earlier this month, we have several late-breaking oral presentations and posters accepted for the European Renal Association Congress coming up in June next month. These presentations and posters will provide further information and build upon the impressive results that Richard just reviewed with us. As you would suspect, the peer-to-peer conversations and reactions to the data by advisers and investigators is extremely positive. The next 3 quarters have additional key nephrology meetings and conferences providing opportunities for further data exchange and presentations as we continue to assess the results of the NefIgArd Phase III study.

And with that, I will turn it over to Fredrik to provide our financial results.

[Fredrik Johansson, executive]

Thank you, Andy, and good afternoon and good morning, everyone. I will now present to you the financial overview for the first quarter of 2023. And as always, all numbers presented to you are in SEK million, unless otherwise stated.

To start with, we reported SEK 191.4 million in net revenues for the quarter. For the same period last year, we reported net revenues of SEK 49.7 million. TARPEYO net product sales for the first quarter amounted to SEK 185.7 million or $17.8 million. In addition, we also recorded SEK 5.7 million for the period revenues related to partners primarily from Kinpeygo royalities from STADA.

Our total operating expenses for the first quarter amounted to SEK 362.4 million compared to SEK 257.5 million for the same period last year. Compared to fourth quarter last year, our OpEx decreased by $26.3 million in Q1. And in comparison, if we remove the effect in the quarter from a weakened SEK and increased social secured accruals from auction programs due to increase in our share price in March, we would have decreased the OpEx by additional SEK 21 million for a total increase of SEK 47 million between Q4 and Q1.

The cost for research and development increased by SEK 13.4 million in the first quarter to SEK 126.7 million compared with SEK 113.3 million for the year -- previous year. Increase in R&D expenses originates primarily from the ongoing operations for the Setanaxib trials and the preparations for the start of the Alport trial.

The cost for sales and marketing increased by SEK 73.3 million to SEK [ 167.3 ] million compared to SEK 93.9 million for the same period previous year. In Q1, we now have the cost for the full extended commercial team, which would be compared to the same period last year, which we were in the first quarter of commercialization. The above led to an operating loss of [ Audio Gap ] for the first quarter compared to SEK 208.4 million for the same period last year.

In the first quarter, cash used in operating activities was SEK 231.9 million compared to SEK 194 million for the same year previous year. This leaves us with a net decrease in cash in the quarter of SEK 237.8 million, and we have a very healthy cash position at the end of the quarter of SEK 1.013 billion, which we believe is sufficient to take us to profitability.

That was all for me. Thank you. And now back to you, Renee.

[Renée Aguiar-Lucander, executive]

Thank you, Fredrik. So just some key kind of summary takeaways to finish up the presentation. After which, we will take questions.

So as you heard from Richard, we had very strong eGFR data, really showing a kidney protective effect and a positive readout from Phase III NefIgArd trial, which we believe support disease modification from the treatment of Nefecon in which are branded is TARPEYO in the U.S. and Kinpeygo in Europe. We will be filing for full approval for the entire study population, which is planned for July this year. And STADA is expected to file with EMA for full approval also in the second half of this year.

As you heard from Andy, we had record numbers of enrollments for the quarter and the highest ever growth to date of new prescribers in Q1. We also -- which resulted in revenues of SEK 191 million in total and TARPEYO sales of SEK 185.7 million. We also got MHRA conditional approval of Nefecon, which provided the first and only approved medication for IgA nephropathy in the U.K.

So with that, I'm going to hand over for any questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Yigal Nochomovitz from Citi.

[Unknown Analyst]

This is Ashiq Mubarik on for Yigal. Just the first one on the TARPEYO guidance. It seems like you're assuming some significant acceleration of growth in the remainder of 2023. Can you talk about some of the dynamics behind that and what you think the key drivers will be? Seems to hit the midpoint, you're going to need to achieve some pretty significant growth rate. So just wondering what your thoughts on how that might appear quarter-over-quarter for the next 2 or 3 quarters.

[Renée Aguiar-Lucander, executive]

Sure. And I'll have -- I'll start, and then Andy can fill in with any other additional details. So in terms of what we've seen, obviously, this quarter already is really a high level of enrollment together with significant growth in kind of new prescribers. And as we've kind of mentioned before already in the kind of Q4 report, we are talking about the fact that we're hearing more and more kind of success stories from patients, and there's more and more kind of peer-to-peer recommendations amongst nephrologists. This obviously provides leverage into the entire system. And we also believe that in addition to that, we will, by actually kind of getting this kind of Phase III data out into the nephrology community, not in a kind of commercial fashion, but just merely from kind of abstracts and oral presentations at conferences or manuscripts, et cetera, we believe that this data truly is groundbreaking. And we've certainly had the feedback that we've had from KOLs who have -- we've been able to share some of this data with really support the fact that this is truly disease-modifying, and we believe we'll have a significant impact on the treatment kind of paradigm. So that's really, I think, would be the driving force from my perspective. Andy, do you have anything to add?

[Andrew Udell, executive]

Yes. So I mean I would just echo everything Renee said. I think that you're going to start to see, beginning with ERA-EDTA, the full trial results hit the podium. And I think then people will enjoy and see the reaction to the data as we have with advisers and people that have been brought in to assess the data with us. So I think that that's one -- certainly one catalyst as well as more and more successes.

Patients that were started late in 2022 -- we'll start to see a lot more of those success stories with new prescribers. You heard about the large number of new prescribers at the beginning of this year in the first quarter. So I think that these things will build on itself during the launch growth year.

[Unknown Analyst]

Got it. That's super helpful. And if I can ask one more. You alluded to patients at this point, the majority of the patients on TARPEYO staying on treatment longer than 9 months. Are you able to give us any more detail on that, maybe how much longer than 9 months they are staying and if there are any challenges with the reimbursement associated with that?

[Andrew Udell, executive]

Sure. So just to be clear, length of treatment can be variable, okay? But what we are seeing is -- and it is still early for -- to talk about long and length of treatment here, but what we are seeing is those that have completed 9 months seem to stay on a little longer in the majority of those patients, okay? But we are -- there are success stories of patients that have -- that are more mild, let's just say, that may stop after 7, 8 months, and those are deemed as successes. So that's -- we just want to provide that feedback in the sense that it's panning out almost exactly how market research since for the last 5 years has told us, which is the nephrologists are going to treat this disease based on the patients, okay? And they're going to treat if it's patient starts and is a much more severe patient and they're doing well and they're avoiding dialysis, they're going to stay on treatment if they're tolerating the medication, okay? And if not, if they are a more mild patient or earlier in the disease and they're doing well and their proteinuria is well below the threshold for them considering them at risk, they would stop, but they continue to see these patients. And should the patients start to progress again, they would treat again.

And the last part of your question, just as far as payers, no, we have not seen any issues or concerns as far as coverage with that. And if there are requirements, we would certainly make sure a patient didn't discontinue or have any interruptions of treatment. So I think that, that provides it.

I can't -- your last question -- actually, you had a point about how long, it's way too early for us to tell how long they go on for these patients.

[Operator]

The next question comes from the line of Maury Raycroft from Jefferies.

[Maurice Raycroft, analyst]

As a follow-up to the earlier guidance question, I'm wondering how does your latest commercial data shape your assumptions for upper or lower ends of revenue guidance for this year. Are you relying more on keeping patients on drug or getting new patients on drug?

[Renée Aguiar-Lucander, executive]

I mean I think that in terms of what we're kind of confident, I mean, obviously, it's both. I mean, obviously, I think that there's going to be a -- as Andy mentioned, there's going to be a combination of shorter duration treatment -- actually, the physicians have achieved their treatment goal. And there also seems to be, I think, a higher number than what we were initially expecting to actually are staying on drug longer than the 9-month kind of initial treatment cycle would indicate. So I think that there will be -- clearly, there's kind of a combination there.

I think in terms of -- from our perspective, I think our role really is to educate the market and to actually kind of just get this information as well as the data that we published fairly recently in October, November, really from the interim analysis, even getting that kind of truly kind of penetrating the community so that there is sufficient information about the drug out there. So I think that's really what we are kind of focused on.

So in terms of the guidance, I mean, I think it's certainly kind of easier from this particular quarter to say that it's clear that hitting the upper end of that guidance might be kind of somewhat challenging. But I do think at the end of the day, the reactions that we are getting again from nephrologists relating to this data, I think, is very, very important and quite unique. So I still think that we'll have to wait a little bit longer then from Q1 to be able to kind of give you a proper answer to that question.

[Maurice Raycroft, analyst]

Got it. That's really helpful. And one other question. Just wondering if you can elaborate on next steps for pursuing full approval. Do you need to have another round of a pre-NDA regulatory feedback in order to file? And what are your expectations for the review time line?

[Renée Aguiar-Lucander, executive]

So obviously, I think that with this data, which is extremely clear, I mean, both in terms of statistical significance and, clearly, also in terms of clinical relevance if you look at kind of what's being published and what's out there. We are not planning to have any kind of clarifying meeting with the FDA. It's a very consistent response across the entire study population and, as I said, a very kind of clear and crisp data. So we would file, and the timing for filing really that we're targeting in July.

And in terms of the -- we will request priority review as this is kind of a supplemental filing. But obviously, it's always up to the regulators to, based on the workload that they have and other considerations, to decide whether they will do the priority review of the standard view. And the difference there is obviously 6 months review time for priority and 10-month review time for standard procedure.

[Operator]

The next question comes from Sushila Hanandus from CLK.

[Unknown Analyst]

This is Shushila for Suzanne. Do you already see an uptake in prescriptions after the top line Phase III results? And also, could you elaborate on how you expect your operating expenses to develop over the quarters? And what will be the driver?

[Renée Aguiar-Lucander, executive]

Sure. I mean I think that obviously, this is really between -- so the first quarter would be way too early to see any impact from that. Really, I mean, the real impact really is going to be in 2024 because we are not really able to commercially promote on the basis of the new data until there's been a regulatory approval and an updated label.

I think the only kind of benefit that I think we will have is just, as I mentioned before, that through kind of oral presentations, at conferences, at abstracts, at other kind of manuscripts, et cetera. I think that will start making its way into the kind of nephrology community really from the -- in the second half of this year, so that will really start with the ERA-EDTA, which takes place in the middle of June.

Fredrik, I will hand over the second question to you.

[Fredrik Johansson, executive]

Yes. We don't give any guidance on the operating expenses. But looking at the start of the last year's OpEx of SEK 1.25 billion, we of course, also see an inflation effect in our operations. And this year also, we do have the extended sales force on board for the full year. We'll also start getting program in Alport. So I think that is the drivers of what we will see in addition to last year.

[Operator]

The next question comes from the line of Rami Katkhuda from LifeSci Capital.

[Rami Katkhuda, analyst]

Two quick ones for me. First, has the expanded sales force been fully deployed? And when do you expect to see the impact of that on TARPEYO sales? And then do you plan on running any post-marketing studies with Nefecon and IgAN to evaluate longer-term dosing, retreatment combination with SGLT2s, et cetera?

[Andrew Udell, executive]

So I guess I can handle the first part about the sales force. While they certainly have been deployed, meaning they're in the field working, this takes time to build relationships and establish your routes and who you're seeing and priority calls and learning your territory, while they come with -- most of them come with nephrology experience, you're going to see more and more uptake as the year wears on. So they were in the field deployed in November, all of them. And I think you're going to start to see them hit their stride soon.

As far as the other stuff, I'll let Renee comment or Richard.

[Renée Aguiar-Lucander, executive]

Sure. So with regards to additional studies, that is something that we are looking into. And so we are having kind of internal discussions with regards to what type of studies may be most useful from the kind of nephrologist and patient perspective and also whether those potential studies are best run -- kind of managed by the company or whether there is some investigator-led studies, which would be -- would better serve that purpose. So we are discussing that. But at this point in time, we haven't made any decision with regards to any additional studies, but it's certainly something that we're looking into on the basis of having read out the full Phase III data.

[Operator]

The next question comes from Dan Akschuti from Pareto Securities.

[Dan Akschuti, analyst]

One question would be regarding the mentioning that you saw a record enrollment in December. How did that translate into sales? Or some of that's maybe not booked them in January? And could you comment if you see the same growth as you have seen now in March also in April and May?

[Renée Aguiar-Lucander, executive]

Why don't you clarify the first [indiscernible], Andy, and I'll take the second.

[Andrew Udell, executive]

Yes. No. Just -- we did not see a record enrollments in December. And December, in -- the record enrollments was for the quarter, for first quarter. Typically for us, if you get an enrollment in 1 month, you start to see later -- if it's at the beginning of the month, it's -- usually, our fill is right around or less than 30 days. So it takes a little bit to realize the income from an enrollment. But the record enrollments, just to clarify, was during Q1 and March was in particularly strong.

[Renée Aguiar-Lucander, executive]

And in terms of kind of continuing, I think we're very encouraged by the level of enrollments that we are seeing post Q1.

[Dan Akschuti, analyst]

Okay. And then another question. How is Everest Medicines planning for launch? Assuming approval in the second half, are they ready to launch directly? Or do we need to assume a few months until they launch after approval?

[Renée Aguiar-Lucander, executive]

I think that it will be a similar situation as the one we had in Europe because, obviously, we are the market authorization holder as we actually were -- was the sponsor in that trial. So there will be a requirement to do -- kind of a handover from a market authorization holdership perspective. So that may very well result in a couple of months of delay between kind of the actual approval and the first kind of shipment of product.

[Dan Akschuti, analyst]

Okay. And the last question -- you reached around 2,000 prescribers now. They are around 10x as many around there in the U.S. What are your plans to accelerate the pace of reaching them and educating them? And do you see a change now with the full data since March?

[Renée Aguiar-Lucander, executive]

Do you want to take that, Andy?

[Andrew Udell, executive]

Yes. Sure. So just to be clear, while there may be over 10,000 nephrologists, there's really not -- many of them don't treat IgA nephropathy patients, and they're not in the clinics and -- that see these patients. So we believe that, that number is in the 4,000 range to cover the vast majority of nephrologists treating these patients. So over 1,000, you can do the math. And these typical markets are 80-20, and 80% of the load comes from about 20% of the targets. So that gives you a better sense of the size of the market as far as prescribers.

And as far as the data and those kind of things, as we keep saying, I mean, you're not going to see the impact of the full data from NefIgArd trial. You guys are more in tune, those on this call listening to it than many of the nephrologists because it hasn't hit their inbox yet. And as Renee said, we're not permitted to promote on this. This will come out in peer-to-peer meetings, congresses. And the first one of those is next month, in the middle of the month in Milan at ERA-EDTA.

[Operator]

The next question comes from Ingrid Gafanhão from Brian Garnier & Co. Then we'll move to Vamil Divan from Guggenheim.

[Unknown Analyst]

This is [indiscernible] on for Vamil. Maybe expanding on some of the prior questions about these new prescribers translating in sales. Have there been a new shift this quarter in the gross to net or the Medicaid channel contribution or any other factor besides the way from enrollment to shipment that kind of impacted sales this quarter?

[Andrew Udell, executive]

No. I would say no, there's no change on gross to net or anything like that this quarter.

[Unknown Analyst]

And then maybe one more. So dramatic growth in the number of new prescribers. How should we think about the rate at which the old prescribers are enrolling new patients? Because based on the numbers this quarter, it looks like the majority of new enrollments obviously came from the new prescribers. So kind of...

[Andrew Udell, executive]

Yes. I think it's variable depending on their patient mode, and some see more patients than others, and some are faster adopters than others. And some nephrologists may try a product on a patient or 2 and do their own kind of clinical trial, meaning to see the success. So sometimes it takes a few months before they start to write their next patient or the patient after that. So there's no real set answer. We may have a new prescriber now that becomes one of our big fans that writes a lot of it. It's just -- there's no set answer to that. Sorry.

[Renée Aguiar-Lucander, executive]

I think it's just worthwhile pointing out, obviously, that there are -- this is a rare disease. And a lot of these physicians don't have a huge number of solutions necessarily. And so that's obviously why it is important to kind of continue to penetrate the actual prescriber universe as well as obviously continuing to support those prescribers who have already written prescriptions and you have patients on drug. And obviously, we do that by having our hub services and providing a lot of these additional support to the community as well as education.

[Operator]

The next question comes from Arthur from H.C. Wainwright.

[Unknown Analyst]

This is Arthur from H.C. Wainwright. So I guess my first question is for Nefecon in the Japanese market. When could we hear more regarding the development strategy and time line for Nefecon in Japan?

[Renée Aguiar-Lucander, executive]

So I don't have an exact time to provide to you. There are quite a lot of ongoing discussions and collaborations with regards to kind of establishing the most effective way to kind of design that kind of program. And so I have to get back to you once I actually -- that's been a little bit better established, but it's certainly being worked on very actively. But obviously, it'll have to kind of be after we hear back from the regulators in terms of their acceptance of the proposed development program, and we have not yet done that. So I'm going to have to come back to you about that when we have more information.

[Unknown Analyst]

Sure. No issue. And my second question is, could you give us a little bit update on the enrollment for PBC study? And remind us what's the date that we could expect for the initial update or interim readout.

[Renée Aguiar-Lucander, executive]

Sure. So in terms of the interim readout, so that's -- that interim readout is a biomarker readout. It's a subset of the patients. This is in the head and neck cancer trial. So a subset of those patients we will have matched biopsies, and we will actually then be able to have a biomarker-related readout, which really looks at the microenvironment of the tumor. And we're doing this, obviously, to really do this as a translational study from what we've observed in the preclinical models that we have, obviously, with a view to seeing a similar effect in the clinic. So that's really something that is still expected to be around midyear, kind of July-ish probably. And so that's still on track, and I think this will be something that we really look forward to. We think it'll be very exciting to see if we can actually kind of show that translational effect, which we believe will have an impact and be very helpful across kind of the different rare disease programs that we're presently running.

In terms of PBC, this is obviously a larger study. And at the moment, we're running the Phase IIb portion of that adaptive design. And so we're recruiting patients. And the view is that the target is for the first half of next year to actually then select the dose, which would be the kind of the dose level for the Phase III portion of that trial.

[Operator]

The final question comes from the line of Johan Unnerus from Redeye.

[Johan Unnerus, analyst]

It's a follow-up. Of course, unique subscriber is a prerequisite and very important, but the ratio between enrolled patients and unique subscribers seems to be fairly steady, slightly north of 1.5. Should we expect that to pick up going forward?

[Renée Aguiar-Lucander, executive]

Andy, do you want to take that?

[Andrew Udell, executive]

I think it's hard to answer that question in the sense that, as I said before, there's going to be -- like any market, there are people that see a lot more patients and treat a lot more patients than some others. So there's value obviously in someone that even writes a few prescriptions as a few patients. But obviously, there's more value in a prescriber that has a larger patient load. So it's -- yes, I would expect it to grow. But at some point -- when the denominator keeps growing with ones at the beginning, it's hard to change that ratio. But we have plenty of prescribers that write for several, several patients.

[Johan Unnerus, analyst]

Yes. You pointed out that's the sort of 80-20 rule applies in this area as well. And do you recognize an element that some of the specialists sort of go ahead with the first patient and then wait for experience -- and clinical real-life experience before moving ahead?

[Andrew Udell, executive]

Absolutely. Absolutely. You see that everyone is different as far as their level of adoption, but we do see prescribers, certainly nephrologists that, will try it and wait for results. And this is not something that you see 24 hours later, that the patients substantially different. So that -- those kind of trials -- those individual trials by prescribers sometimes take a few months. So absolutely see that.

[Johan Unnerus, analyst]

And a few short ones, the COGS is slightly higher in the quarter. Should we expect it to come down a bit? Not that it's a major point, but it's an important point.

[Renée Aguiar-Lucander, executive]

Fredrik, do you want to take that?

[Fredrik Johansson, executive]

Yes, I can take that. I think in the quarter -- first quarter of last year, we had extremely low cost of goods sold and also in the remainder of 2022. So I think we are at a normal level now.

[Johan Unnerus, analyst]

Okay. [indiscernible] clarification. And what about the breakeven? You alluded to that earlier. I think you mentioned perhaps midyear '23. Is that still feasible?

[Renée Aguiar-Lucander, executive]

I mean I think what we've kind of guided to kind of a couple of quarters ago is actually obviously our whole -- we are clearly targeting to become profitable this year. We have not -- actually, we don't want to speak in that -- to a particular quarter or a particular kind of time because it is very dependent on this kind of acceleration and the curve -- what the curve from the revenue perspective actually looks like. And so I think that we will probably -- I think it'd be highly unlikely that we will do that in Q2. And so I think it's -- but it's definitely something that's a core focus for us and that we continue to drive towards. And we certainly think that that's still possible as we sit here today.

[Johan Unnerus, analyst]

Do we expect to breakeven on run rate during '23?

[Renée Aguiar-Lucander, executive]

Yes.

[Operator]

There are no more questions from the telco at this time. So I hand the word back to you, Renee.

[Renée Aguiar-Lucander, executive]

Well, thank you very much for listening to our Q1 2023 report, and we look forward to catching up again when we report our Q2 numbers. Thank you.