Calliditas Therapeutics AB

STO:CALTX

Earnings Call Transcript 2023-Q2

[Operator]

Welcome to the Calliditas Therapeutics Q2 2023 report. [Operator Instructions] Now I'll hand over the conference to speakers; CEO, Renee Aguiar-Lucander; CFO, Fredrik Johansson; Andrew Udell, President of North America; and Richard Philipson, Chief Medical Officer. Please go ahead.

[Renée Aguiar-Lucander, executive]

Thank you very much, and welcome, everybody, to this Q2 report of 2023. I would just like to draw your attention to the disclaimer page related to forward-looking statements in the meaning of the Private Securities Litigation Reform Act of 1995 as amended. And I refer you to the company's reports and other regulatory filings including those which contain risk factors and other relevant information.

So I want to take you through some of the Q2 highlights. So in June of this year, we filed our supplemental NDA with the FDA, which is based on the full data from the NefIgArd Phase III trial. The trial successfully made its endpoint of kidney function as measured by eGFR which was supported by durability of proteinuria reduction, reduction in microhematuria in the treatment arm and a highly significant benefit for Nefecon over placebo in terms of total slope.

The first data from the trial was presented to the nephrology community during the ERA EDTA Congress in Milan in June, and the reception was very positive. And we've also received very positive feedback from advisory board meetings held with U.S. nephrologists regarding the Phase III data. And we're obviously very excited about the recent publication in The Lancet, of the data.

So in the second quarter, we saw a record level of 422 new enrollments for TARPEYO. So we're seeing a continued growth of the franchise. The number of prescribers also continue to grow with [ Q2 ] seeing over a total of over 1,100 prescribers of TARPEYO compared to only around 300 or so in Q2 of 2022.

Total revenues of SEK 269 million or about $25 million, out of which TARPEYO net sales represented SEK 259 million, which reflects a 39% growth over Q1 and over 270% growth over Q2 2022. Based on our experience to date, as you know, we are pioneers in this whole area sector. So based on the limited label, continued market access friction and potential seasonality impact from the summer period, we've decided to revise our '23 outlook to $100 million to $120 million of net sales for TARPEYO for 2023.

In terms of post-period events and pipeline updates, we recently shared some exciting data from the interim readout of our head and neck cancer trial, which Richard will cover a bit later in some detail. And in light of recent clinical and biomarker data advances in the liver area and regulatory interactions. We decided to implement a revision of the trial design of TRANSFORM, which is our clinical trial in PBC, which will enable us to report out -- read out the Phase IIb data, which is targeted for the first half of 2024.

Most importantly, enable us to make the most appropriate decision regarding the program going forward, including exploring potential different indications as well as partnerships which we have been having conversations regarding.

As previously mentioned, our Phase III data was published in The Lancet very recently. And obviously, as you may know, obviously, The Lancet is one of the top medical journals in the world, all referred to as one of the big 5. And so we're certainly very excited about the recent publication and we believe that this really will kick off the dialogue with the nephrology community in the U.S. with regards to the data that we saw in our Phase III trial.

So with that, I'm going to hand over to Richard Philipson, our Chief Medical Officer, to take you through some of the clinical data.

[Richard Philipson, executive]

Thanks very much, Renee. I'll begin by reviewing some of the outcomes of the NefIgArd final analysis. So just as a brief reminder of the Phase III study design, the NefIgArd study enrolled patients with biopsy-proven [ IgA ] nephropathy, proteinuria of 1 gram per day or greater and an eGFR of 35 to 90 ml 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 in the full analysis set for efficacy treated for 9 months and followed up for a further 15 months without investigational treatment with the primary endpoint of average change from baseline in eGFR over the entire 24-month period of treatment and observation and with eGFR slope based secondary end points.

As previously reported, the primary endpoint of average change in eGFR over the 2-year period of treatment and observation was met with a highly statistically significant difference between Nefecon and placebo. And all additional supportive analyses of eGFR 2-year total slope were also statistically significant.

When we look at the effect of Nefecon treatment on eGFR 2-year total slope, we see a difference of approximately 1.8 to 3 ml per minute per year in favor of Nefecon compared to placebo, depending on the analysis method used. All estimates are well in excess of the difference per year and 2-year eGFR total slope required to predict clinically meaningful long-term effects.

Specifically, comparison with the met analysis by increased hours has shown that all estimates of the Nefecon treatment benefit on 2-year eGFR total slope are well in excess of the threshold of 1.23 ml per minute per year required to predict with a high degree of confidence, clinically meaningful treatment effects on the composite clinical endpoint of kidney failure, eGFR decline to less than 15 ml per minute or sustain doubling in serum creatinine.

An evaluation of microhematuria was also included as a secondary endpoint in the final analysis of the NefIgArd trial. This was measured using dipstick testing at each visit during observational follow-up. A baseline in patients included in this analysis, the proportion of patients with microhematuria was 66.5% and 67.8% in the Nefecon and placebo groups, respectively. In other words, the proportion of patients with microhematuria was very similar in the 2 treatment groups at baseline.

During observational follow-up, the proportion of patients with microhematuria decreased to 40.5% in patients previously treated with Nefecon. Whereas in patients previously treated with placebo, the proportion of microhematuria doing observational follow-up was only slightly lower than at baseline at 61.2%. These observations with respect to microhematuria further support the potential disease-modifying effect of Nefecon.

I'd like to take a moment now to discuss our evolving understanding of the long-term outcomes in IgA nephropathy. A recent published registry analysis of a representative cohort of patients with IgA nephropathy underscores the poor outcomes observed in patients with the disease and provides evidence that proteinuria levels traditionally considered benign or low-risk are, in fact, associated with increased risk of kidney failure.

This analysis showed that most patients progress to kidney failure within 10 to 15 years, irrespective of age of diagnosis with a median kidney survival of approximately 10 years. The analysis also showed that all patients diagnosed with IgA nephropathy before the age of 40 years and with an annual eGFR decline of 3 ml per minute would progress to kidney failure in their lifetime. But even an annual rate of eGFR decline as small as 1 ml per minute would lead to a significant proportion of patients reaching kidney failure within their lifetime.

The analysis confirmed our understanding that proteinuria is a clear risk factor for kidney disease progression in IgA nephropathy with higher time average proteinuria being associated with greater likelihood of progressing to kidney failure more quickly. However, what was particularly striking in the analysis was the increased risk of kidney failure in patients with levels of proteinuria traditionally considered to confer a low risk of progression to kidney failure.

Specifically, and when considering time average proteinuria levels, 30% of patients with proteinuria of 0.44 to 0.88 grams per gram, and approximately 20% of patients with proteinuria less than 0.44 grams per gram, developed kidney failure within 10 years. This further emphasizes the importance of intervention to reduce proteinuria levels early in the disease course. Indeed, the manuscript commented that disease-modifying therapies that specifically target the immune system are more likely to be effective early in the natural history of IgA nephropathy before the kidneys accumulate significant irreversible fibrosis.

I'd like to move on now to discuss our interim review of data from the ongoing head and neck cancer study. As a brief reminder, the ongoing Phase II study of setanaxib in patients with recurrent or metastatic squamous cell carcinoma of the head and neck will evaluate the effect of setanaxib or placebo in conjunction with pembrolizumab on clinical and biomarker outcomes.

Patients with recurrent or metastatic disease and tumors characterized by moderate or high levels of cancer-associated fibroblasts, or CAFs, are randomized to receive setanaxib or placebo on top of pembrolizumab, with tumor biopsies taken prior to enrollment and again after 9 weeks of treatment corresponding to 3 cycles of pembrolizumab. Treatment continues until disease progression, unacceptable toxicity or patient and/or investigator decision and patients have followed up for progression-free survival.

The planned interim review of clinical and biomarker data are scheduled to occur after 12 patients with paired biopsies. Tumor had completed at least 9 weeks of study treatment. The data cutoff of this data review was the 26th of May of this year. 20 patients contributed data on clinical outcomes, and 12 of these 20 patients had paired tumor biopsies for a review. We evaluated clinical outcomes such as change in tumor size and disease progression and biomarker changes, including histological and transcriptomic assessments. We did not perform a review of safety data since this is done separately by an IDMC, which reviewed safety data and identified no concerns earlier this year in March. Second IDMC meeting is planned for next month.

At the cutoff for this data review, 7 of the 16 evaluable patients were progression-free with either stable disease or partial response. Of these 7 patients, 6 were in the setanaxib treatment arm and 1 was in the placebo arm. 6 of the 7 patients were still on the study drug at the time of the data readout. Of these 6 patients, 5 were in the setanaxib treatment arm and the longest period on drug was reported as 21 weeks in a patient in the setanaxib arm.

Turning to the biomarker analysis. And again, at the cutoff for this data review, transcriptomic analysis indicated that downregulation of gene expression in the idiopathic lung fibrosis and hepatic fibrosis pathways was more significant in the patients receiving setanaxib compared to patients receiving placebo. There was also a potentially favorable effect of setanaxib treatment on the immunological activity of the tumor observed through Foxp3 staining and the combined positive score.

So in summary, at the time of the cutoff of the interim review of data, we saw a numerical difference in progression events and patients remaining on randomized treatment in favor of setanaxib and detected a preliminary signal suggesting greater down regulation of important genes in the idiopathic lung fibrosis and hepatic fibrosis pathways in patients treated with setanaxib versus placebo, which is consistent with the mechanism of action of setanaxib. Detecting changes in tumor staining was more challenging because of the small size of tissue biopsies. But nevertheless, we saw some evidence of an increase in the immunological activity of tumors in association with setanaxib treatment.

So that completes my part of the presentation. I'll hand over to Andy Udell.

[Andrew Udell, executive]

Thank you, Richard. Next slide. So during the second quarter of 2023, Calliditas commercial team continued to build on the achievements from the previous quarter, further reinforcing the position of TARPEYO as a transformative and foundational treatment option for IgA nephropathy. Net sales of $25 million in Q2 represented a 39% growth over Q1. In addition, our specialty sales force generated 422 enrollments during the quarter, which represents further growth coming off of Q1 record of enrollments and brings the 2023 total to 831 at midyear.

This strong 85% growth compared to the first half of '22 and the addition of 232 new prescribers during the quarter underscore the growing recognition of TARPEYO's clinical value among health care providers. In the second quarter, over 90% of the patients enrolled in TARPEYO touch points, excluding those still waiting for the final insurance decision received TARPEYO. In addition, compared to the first quarter, we saw a 14% improvement in the average time to fill, reflecting our continuous investment in supporting providers and patients in accessing TARPEYO.

Next slide, please. During the second quarter, our medical and commercial teams had a robust presence at major nephrology conferences, including the National Kidney Foundation Spring Clinical Meeting and the European Renal Association Congress held in Milan in June. ERA EDTA proved instrumental in Calliditas' scientific exchange efforts with NefIgArd pivotal data receiving recognition as a late-breaker presentation. This marked the scientific community's first encounter with these critical findings capturing the interest level of nephrologists around the globe. Additionally, abstracts with valuable data on proteinuria and hematuria were presented from the full NefIgArd study population, which further demonstrated the uniqueness and benefits of TARPEYO in the treatment of IgAN.

Discussions at ERA EDTA centered around the evolving IgAN treatment landscape and the importance of immunomodulatory therapies to suppress pathogenic IgA production and control glomerular inflammation, highlighting TARPEYO's pivotal role in the treatment paradigm. Calliditas has and will always remain dedicated to IgA nephropathy patients and caregivers. Our patient and advocacy support is unwavering.

Early in Q3, we led the sponsorship and support of the IgA Nephropathy Foundation second annual in-person patient summit called SPARK. This event is extraordinary and special. It's filled with approximately 200 patients that are eager to learn, connect, support, smile, cry, and even dance together. Attendance at the event is motivation and confirmation to our team members that focus on access, availability and education of IgA nephropathy on a daily basis.

Next slide, please. We've seen very rapid and significant growth from the launch of our product delivered by a dedicated team with great execution capabilities, however, due to primarily 2 factors our indication and label during accelerated approval and the market access friction that while it's typical for specialty products is new to many in the nephrology specialty, we are revising our guidance.

As you are aware, our indication during this accelerated approval period is based on proteinuria reduction and describes rapid disease progression as generally a UPCR of greater than or equal to 1.5 grams per gram. While this is not a cutoff, some payers do manage more strictly to the 1.5 grams per gram, which has skewed the initial usage of TARPEYO towards patients with a higher UPCR level, which has reduced the addressable market size compared to the population represented in our pivotal trial, which aligns with how rapid progression is defined in the KDIGO guidelines.

As it relates to market access, as we've mentioned previously, at a given time, approximately 15% to 20% of enrollments are still in process. This typically means that the enrollment requires more information or they are going through the approval or appeal process with payers, which can require some back and forth between payer, nephrology office, and our hub. While TARPEYO coverage is broad, with over 90% of U.S. lives having coverage, we are seeing that between 5% and 15% of enrollments do not ultimately convert due to a variety of reasons.

This is most often due to payer management, which, while is typical once again for a specialty drug, has several inexperienced and under-resourced office staff unwillingness to go through the process, which can include appealing initial payer decisions. This is different from other disease categories such as oncology or rheumatoid arthritis, where a payer management is expected and integrated into the office workflow and providers generally understand how to navigate payer management using clinical rationale.

While we have many patients that have received longer than 9 months of therapy, the average duration of therapy over the last 12 months is approximately 8 months long, as we've heard from some of the top KOLs that are familiar with our product and the full study results that were published in The Lancet this week, TARPEYO works differently than any other product. And this requires education and time to disseminate to prescribers and change long-lasting habits and how they've treated IgAN in these patients for many years.

Next slide, please. We continue to center efforts and resources on education and market access support and remain confident that we will demonstrate continued growth and enhanced sales trajectory following full approval in the broader population due to the following: first, full approval reduced payer limitations and would, on the basis of approval in the full trial population substantially increase the size of the addressable market.

Market access friction will continue to decline with the additional resources we put forth and also be supported by our full trial results from NefIgArd being published and the expanded scientific exchange of information that is anticipated with payers and nephrologists while we move towards full approval and a new label. Physicians will gain further confidence with continued use, patient success stories as well as familiarity to the data of both NefIgArd trial as well as our open-label study -- extension study, which will conclude in the middle of 2024.

Once again, I want to reiterate our strong anticipation of substantial growth from our full approval in a broader population and the general confidence in the differentiated and ground baking benefits of our product and the caliber of our team as we move to the second half of '23 and beyond.

So please move to the next slide as I turn it over to our Chief Financial Officer, Fredrik Johansson.

[Fredrik Johansson, executive]

Thank you, Andy, and good afternoon and good morning, everyone. I will now present to you the financial overview for the second quarter of 2023. And as always, all numbers presented to you are million SEK, unless other was stated. To start with, we report SEK 269.4 million in net revenues for the quarter. For the same quarter last year, we reported net revenues of SEK 64 million.

TARPEYO net product sales for the quarter amounted to SEK 259.2 million or $24.7 million which is an impressive 39% growth from Q1 and a 275% increase over the same quarter previous year. In addition, we also recorded SEK 10.1 million for the quarter in revenues related to partners primarily from Kinpeygo royalties from STADA.

Our total operating expenses for the quarter amounted to SEK 330.3 million compared to SEK 271.5 million for the same quarter last year. The cost for R&D decreased by SEK 7.3 million in the quarter to SEK 89 million compared with SEK 96.3 million for the same quarter previous year. The decrease in R&D expenses origins primarily from the, in all essence, completion of the NefIgArd study in the first quarter 2023, reducing the trial cost in Q2 compared to the same quarter prior year.

The trial design in a study in PBC, TRANSFORM, is currently under review, and the shorter study has the potential to significantly reduce the planned R&D cost for the trial for both 2024 and 2025. The cost for sales and marketing increased by SEK 78.2 million to SEK 191.5 million compared to SEK 113.3 million for the same quarter previous year. The increase is primarily related to the cost for sales and marketing of TARPEYO in the U.S., where the marketing activities has been intensified and the sales force has been increased compared to the corresponding period of the prior year.

The above led to an operating loss of SEK 75.2 million for the quarter compared to SEK 209.8 million for the same quarter last year. And we did continue to reduce the operating loss quarter-over-quarter as our TARPEYO sales are growing. In the second quarter, cash used in operating activities was SEK 163 million compared to SEK 225.2 million for the same quarter previous year. This leaves us with a net decrease in cash in the quarter of SEK 167.1 million. And we have a very healthy cash position at the end of the quarter of SEK 866.2 million, 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 very much. We're ready to take questions, if there are any.

[Operator]

[Operator Instructions] First question comes from Vamil Divan, Guggenheim Securities.

[Vamil Divan, analyst]

Just a little bit around the guidance and some of the assumptions you have around when the market access friction and some of the points you mentioned will resolve. I know you filed now for the full approval assuming you get that early part of next year. When do you expect some of these friction time points to kind of ease? Would that be first half of next year? Is it more like second half of next year? Or is it more 2025? Just trying to get a sense of the timing there. And then I have one quick follow-up.

[Renée Aguiar-Lucander, executive]

Sure. So I guess the interactions with payers, obviously, can be initiated I would say, kind of as of this period of time when there is kind of a peer reviewed journal kind of manuscript out there that's been published. But obviously, these processes do take a while and ultimately, payers are going to be guided not just by kind of published data, but obviously also what the ultimate label will say. And that, obviously, they will have to take into consideration. So my assumption is that we will start -- definitely start seeing this in 2024. But obviously, it will be kind of over time, this will build in 2024 as more and more payers have the opportunity to kind of take this through their process.

I don't know if you have anything to add, Andy?

[Andrew Udell, executive]

No, I agree. I think it's over time and experience from those that don't have the staff to support, and that's what we've improved on. That's somewhat of that's something that we can assist with. But as it relates to payers and their decisions and formulary for that, which will also ease it, It's as Renee said, once a label has changed or guidelines come out, these are kind of important pieces of information in how a payer decides to manage a product.

[Vamil Divan, analyst]

Okay. Great. And then one quick follow-up. Just in terms of -- sorry if I missed this on the call, but just in terms of the duration you're seeing of treatment, is there any comments you can give there in terms of sort of the 9 months that was studied what are you seeing in the real world now in terms of how long patients are generally staying on therapy?

[Renée Aguiar-Lucander, executive]

Yes. I think as we've said before, I mean, obviously, it's a variable time that people stay on treatment. But obviously, as we've also mentioned, for those patients to reach 9 months, the majority of them actually stay on beyond 9 months. But I think that's why we really needed to have a slightly longer time series where we could look at this because it does vary. And I think that's why we kind of today would say that the best kind of estimate to use for right now is probably 8 months. But obviously, we would expect that to kind of to be extended to longer periods of time as kind of physicians have more experience of the product, more data comes out, et cetera.

Andy, anything you want to add to that?

[Andrew Udell, executive]

No. I think that that's right. We have many patients on greater than 9 months now, but that's just to assist with the overall average seems to be around 8% if we look back the last 12 months or so.

[Operator]

The next question comes from Christopher Uhde, SEB.

[Christopher Uhde, analyst]

So a couple first on TARPEYO. So are you seeing any signs now that we're, I guess, a little more than halfway through this quarter, of any pickup enrollments -- in enrollments since the data was presented? Or is it too soon?

And then in terms of the clinical program, would it be wise to consider a trial in patients with low levels of proteinuria given the data that you presented at the conference and today. And if so, what can you tell us about the impact of dose level on proteinuria decline in patients at the lower end of baseline proteinuria in the [ Nefecon ] , so the Phase IIb trial? And then I have a couple on -- one on setanaxib as well, but I'll wait for that.

[Renée Aguiar-Lucander, executive]

So I think it is too soon. To your first question, I think it's too soon to kind of draw any conclusions from that. I think we're going to have to wait for that. In terms of your second question, I think that this is -- we haven't seen in terms of the trial, any kind of difference in terms of the effect of people having lower or higher levels of proteinuria. It is quite consistent across kind of baseline UPCR levels.

But what we are seeing, and I think this is something that you bring up, which is an excellent comment, which is obviously part of what is being done in this whole sector is that there is I think, building slowly perhaps, but they're certainly building more of a sense of urgency. And that is coming from the fact that there is now reported data. There's actual eGFR data, there is placebo data. And I think that all of these things will contribute to the fact that what we're hearing is more and more that actually it's becoming more of an impetus to treat early and specifically with something that has the ability to really significantly impact eGFR and eGFR trajectory.

So it is moving away to some extent from kind of symptoms to actually more hard data because that data is now becoming available. And yes, I think it is moving towards physicians actually realizing that this is something that you can't just kind of wait for and potentially just have a benefit in proteinuria. You really need to treat this in order to keep kind of patients out of dialysis, hopefully. So I do think that, that is something that we're going to see more and more of. And I think, yes, it will -- it wouldn't surprise me if the kind of levels will move down in terms of which patient population should be considered for treatment compared to kind of where it's been previously.

[Christopher Uhde, analyst]

Okay. And then if I could quickly just throw in a couple more. So setanaxib in head and neck, how many evaluable patients were there in each arm? And then for NefIgArd, so some experts have written that in part A the placebo group outcomes underperformed versus outcomes in other trials like testing. What's your view about that? And any potential causes?

[Renée Aguiar-Lucander, executive]

Richard, do you want to take that?

[Richard Philipson, executive]

In terms of the balance between the treatment groups at the time of that interim review of data, they were essentially balanced. I mean I think for the biomarker analysis of 12 patients, I think 7 were on placebo, 5 on setanaxib. And overall, the 20 is pretty balanced, so.

[Renée Aguiar-Lucander, executive]

In terms of the actual kind of on the Nefecon placebo arm, I think this is something I don't -- It's actually -- in my view, I think this is something that, again, I think we'll see more and more of this as actually kind of more trials come out, but I've actually heard both of these that supposedly, we had much too -- too much kind of decline in placebo arm compared to what people would expect and suddenly people are saying we have too little.

I think that at the end of the day, I think it's very similar to what we saw in our Phase IIb. I think it's actually very similar to what's been seen in other trials where there's been placebo arm. And so I don't really think that it's kind of relevant or helpful to really start kind of comparing one trial to another trial. I think you can pick and choose a variety of trials then to do that. So I think overall, that it is it is -- this kind of patient population group that is at risk of progression, do you seem to have a fairly similar kind of development of the placebo arms. And I don't know if you have anything to add.

[Richard Philipson, executive]

Yes, I completely agree. I mean, I think we've looked at this in detail. I mean our view is our placebo decline in terms of eGFR is absolutely in line with what would be expected in this category of patient population. And as Renee has said, and hopefully, through what I talked about during the presentation, it underlines the importance of early intervention patients on placebo who are receiving supportive care only, there is a significant risk of progressing to end stage kidney disease in a relatively short period of time, 10 to 15 years.

So that, to me, is the key message that's coming from the placebo group. We found nothing that suggests that placebo group is behaving in any way unusually absolutely reflects that patient population that was enrolled.

[Renée Aguiar-Lucander, executive]

Okay. Let's take the next question.

[Operator]

Next question comes from Yigal Nochomovitz from Citi.

[Yigal Nochomovitz, analyst]

Can you hear me?

[Renée Aguiar-Lucander, executive]

Yes. We can here you.

[Yigal Nochomovitz, analyst]

Renee, can you just reexplain -- I know you probably explained this in the past, but in the paper, you're seeing, obviously, that there's no convergence in the slopes on the eGFR after the -- during the observational period, which is obviously showing disease modification regardless of the split by proteinuria. But then in the proteinuria graph, you see that after the 12 months, you do start to see a rebound. So can you just help explain why you're seeing the continued disease modification on the eGFR side of things, but on the UPCR side, it's -- things are starting to converge? So I'm just curious if you could maybe reexplain the thinking around that.

[Renée Aguiar-Lucander, executive]

So I guess I'll give my view, and Richard, you can provide your commentary. So I guess my view is actually this is -- I mean, this is kind of when we're starting to look at the relationship between kind of proteinuria and eGFR and maybe it is slightly more complex than what people had actually thought or how you kind of simplistically can explain it. So you're absolutely right. We are not seeing a kind of first, a significant reduction in proteinuria followed by an impact on eGFR. There seems to be a more complex relationship between proteinuria and eGFR than what may have been kind of depicted in various papers.

And I think this is really when we're going to start seeing this in terms of different modes of action, different drugs. They may very well have a different impact on proteinuria and/or eGFR. And so I think that we'll probably won't have kind of one size fits all here. I think that we will very well may see quite big differences in terms of proteinuria versus eGFR. And I think this is something that we're just going to have to rely on the data sets that are going to become available to see in terms of what this relationship kind of looks like and if it's actually constant or not based on the different modes of action. Richard?

[Richard Philipson, executive]

Yes. I mean I agree. I'm not sure I can add too much more, but as you've -- as you've observed, Yigal, I mean, clearly, there's evidence of the disease modifying effect with the maintenance of the separation of the eGFR curves over the second year where patients are not receiving treatment. But as Renee has said, I think this opens the door to recognizing that there's no -- there isn't necessarily a completely simple relationship between proteinuria change and change in eGFR trajectory over time. And I think you will see different patterns of relationship between proteinuria and eGFR change related to the mechanism of action of the treatment.

[Yigal Nochomovitz, analyst]

Okay. And then just one very specific question. Are you able to say anything more about just the split or the percent of patients that have received our payout so far that are above versus below this 1.5 gram order?

[Renée Aguiar-Lucander, executive]

I don't actually have -- I don't know, Andy, do you...

[Andrew Udell, executive]

No. No, we don't have the exact numbers on that.

[Operator]

And we have the next question from Rami Katkhuda, LifeSci Capital.

[Rami Katkhuda, analyst]

You touched upon the average duration of treatment with TARPEYO being around 8 months. Are you hearing any physician feedback as to why patients may not be completing the full treatment course? Is it primarily due to AEs or are there other factors involved here?

[Renée Aguiar-Lucander, executive]

Andy, do you want to take that?

[Andrew Udell, executive]

Sure. There's several factors. Obviously, there's always -- there could be AEs. But what we're seeing is, interestingly, we've asked some physicians and sometimes they're saying it's been successful, the drug. And remember the typical treatment length of therapy for a product that's probably replacing in lab instances or systemic steroids, and they typically prescribe them for about 6 months.

So interestingly, a lot of times, they would even say, Well, no, no this patient had success and they stop, less than 6 months. And this goes to how this product works different. We talked about even on the last question, people stop taking the drug and their proteinuria continue to decline. Let's remember, they stopped taking the drug while their eGFR stayed stable.

So this drug works differently and I think it's going to take time for people to get used to an initial treatment course of 9 months. But as we said earlier, it's pretty variable right now. We have people that are on for well over 9 months, some that are on 6, 7 months and deeming a success and then stopping as well. And this doesn't speak to -- let me just make one other point. This doesn't speak to retreatment, which is obviously something that's going to start to happen more and more.

[Rami Katkhuda, analyst]

Got it. Makes sense. And then really quickly, with regards to the interim data with setanaxib. Of the 6 patients on treatment who are progression-free, can you touch upon how many were actual responses? And were these patients treatment-naive or refractory coming into the study?

[Richard Philipson, executive]

Well, in terms of treatment, they may have -- because these are patients with recurrent or metastatic disease. So they will have received previous treatment, probably an initial treatment plan that could have comprised anything -- any combination of radiotherapy, chemotherapy and surgery before they come into the study with a recurrent or metastatic disease. And we haven't given that level of granularity around the various responses.

[Operator]

Our next question comes from Annabel Samimy.

[Jack Padovano, analyst]

This is Jack calling on for Annabel. So I know it's not a hard cutoff, but you've previously mentioned requesting a change of the full label language to patients with generally greater than 0.8 grams of proteinuria from the 1.5 grams like it is now. what influenced the selection of that particular number in the context of that long-term outcome study you discussed on the call? And about what additional percent of the overall IgAN population with that capture for the payers who treat that number like hard cutoff?

[Renée Aguiar-Lucander, executive]

So just to kind of make sure that I can understand your question. So obviously, the 1.5 is a UPCR level that's in our label right now, which really obviously, really wants to kind of drive usage towards patients who are at risk of rapid disease progression. The 0.8 of UPCR is the actual kind of level of inclusion into the Phase III trial, which is the NefIgArd trial. So that obviously is consistent with the kind of 1 gram of proteinuria which is in the KDIGO guidelines and represent the broader population at risk of progression.

So this would obviously go from kind of having a fairly limited kind of part of the kind of population at risk to include the full population at risk. And so obviously, what we've said is that the estimate that what we have for this is that 50% or just over 50% of the population is kind of expected to be at risk of progression and therefore, may kind of fall into that type of category. So it's obviously a very -- it's quite a significant broadening of the kind of the patient population.

In terms of the label. In terms of kind of how big exactly this kind of subgroup is I think it's really almost impossible to know. I mean, unfortunately, this is a rare disease, and we don't have a lot of data about the prevalence, the population or these kind of the sizes of subpopulations. So I think we're not really unfortunately able to comment on exactly how big that would be. But we know, obviously, that it's significantly smaller than the overall population at risk, which was studied in the Phase III.

[Operator]

Next question comes from Dan Akschuti at Pareto Securities.

[Dan Akschuti, analyst]

First question would be on the enrollment. So Q1 was a bit slower than expected with 408 and now it's 422 so the pace is not really increasing. Do you expect a slowdown in Q3 now because of the summer holidays? Or what's your explanation that it's not increasing this [ faster ]?

[Renée Aguiar-Lucander, executive]

So again, I think that what we've -- really, what we're seeing is that there is a -- it is a function of the fact that actually there is some market friction in this area. We don't have -- physicians are not necessarily seeing the sense of urgency in terms of actually kind of wanting or needing to treat patients kind of immediately. What we are seeing is a very steady growth, and I think, obviously, also new subscribers who are adding to this.

And so I think that even if we haven't necessarily kind of reached a very significant inflection point, I think that, obviously, the franchise with the kind of growth that we're seeing in revenues, et cetera, I think, is having a very healthy growth trajectory overall. I think that in terms of when would we kind of potentially have that change, I do think that it does come back to not having accelerated approval, not having kind of a smaller subgroup. And also, I think, obviously, having more data out there for people to really understand because as we've mentioned, I think this is differentiated from everything out there in terms of that.

It is not a generally systemic approach to trying to kind of impact proteinuria. It really is a kind of local approach really focused on being disease modifying and really kind of having an impact on the kidney function. So I think that there is an educational component of this. But in terms of the summer, again, it's -- I think what we have so that we can expect potentially to see that seasonality again during this kind of Q3. And I think it's hard to know whether we are going to experience that or not, but it's certainly something that we're taking into account that, that might be the case. And that's obviously also one of the reasons for our revised guidance.

[Dan Akschuti, analyst]

Okay. And yes, you mentioned the clinical data is so far unique on the eGFR effect. So I'm a bit puzzled by the feedback from physicians you're getting that considering that there is no other drug in the market that has shown this effect and it's a progressive disease that there is no interest or not bigger interest to prescribe the drug. So Is that maybe in the end, still label-related as you also said? There's something else that you see?

[Renée Aguiar-Lucander, executive]

I mean I think, I think it is a combination of the fact that this is very -- I mean the renal area has not seen lots of specialty products to start with. It is not something that nephrologists deal with. It's not like they have 100 drugs to kind of choose from their own specialty that they know exactly how to manage. So I think there is clearly kind of a process here to go through. And so apart from the fact that this is a specialty product and it's not that well established.

I think that there is -- part of that is the sense of urgency. I think that a lot of these data sets that are coming out, ours -- we just talked about the data set from registry. That really, I think, is shedding light on this for physicians to kind of say, listen, you may not have a patient who's going to have an event in the next 6 months, but this patient is going to end up in dialysis unless you actually treat this disease and treat it fairly aggressively with a focus on actually stabilizing their kidney function.

And I think that we will see more and more of this as actually this data is making its way into the nephrology community. And unfortunately, it's not immediate. There is a kind of educational process here. But I have no doubt that there will be more and more kind of information and I think that the nephrology community is very data-driven. And I think the more data that comes out there, they will review it and they will start making decisions around treatment paradigms and how to best preserve kidney function for their patients.

[Dan Akschuti, analyst]

Okay. And last follow-up on Europe, how is the progress there has been also fairly close so far?

[Renée Aguiar-Lucander, executive]

Yes. So I think that what we've -- generally, what I think is seen in Europe from any kind of launch in the kind of medical product is that it does take a lot longer in Europe, obviously because, again, of the difference in the negotiation cycles and difference in terms of country-by-country kind of launch. But I think in terms of start, I think they're very happy with the progress that they're seeing. I think that they've started to kind of now launch also in some other countries.

And so we would expect to start seeing again, some of that kind of additional revenue coming from other regions outside of Germany. But my understanding really is and what we're hearing from our partner is that they're very happy with the development. And I think here, EMA really did put quite a strong kind of line in the sand in terms of they did not use the word generally. So I think here, it is very much limited to just that population about the kind of 1.5 UPCR level, which, again, I think we have to kind of take into account when looking at Europe.

[Operator]

Next question comes from Maury Raycroft from Jefferies.

[Maurice Raycroft, analyst]

Wanted to clarify, does the market access friction resulting in the 5% to 15% not converting. Does that include the patients with UPCR less than 1.5 gram per gram? And I also wanted to know if any of the market access friction issues are due to competition with [indiscernible] launch?

[Renée Aguiar-Lucander, executive]

So I would say that -- I would say the answer to your first one is yes. Obviously, this relates to the entire population that prescribers are prescribing for. So obviously, some of the reasons why there is frustration from a kind of physician's perspective and why they kind of ultimately may choose not to go forward is because of the fact that the payers are potentially giving them a difficult time if they're trying to prescribe for a patient that has lower levels.

I think in terms of payers, I wouldn't expect any of that to have an impact as I think that this is a process that other companies are going to have to go through the P&T committees and get their kind of views on. But I don't think that -- I don't think we have any kind of impact on that from a payer perspective.

But Andy, I don't know if you have a different view on that, Andy?

[Andrew Udell, executive]

No. No, I don't think they have an impact. I think what is definitely clear, there are definitely patients that are above 0.8 grams and less than the 1.5 grams that have their -- the time is -- that's where they're seeing some friction, clearly. That's where you might get these patients that aren't filled or these that aren't converted to your first part of your question.

[Renée Aguiar-Lucander, executive]

And obviously, we've also seen situations where actually it's very severely sick patients that actually you are prescribing for someone who may actually be -- have lost a lot of kidney function. And actually, they may actually get on to the transplant -- get into the transplant queue and therefore, will not kind of complete a cure or take kind of the drug. So it is really quite different. I mean, there's quite a variety of reasons. I would say why, not just the fact that it is below. It can be a variety of other reasons as well and also actually being quite far progressed can obviously be another reason why there is a frustration or a decision not to kind of go forward.

[Maurice Raycroft, analyst]

Got it. That's helpful. And any impact with 2Q due to competition?

[Renée Aguiar-Lucander, executive]

I guess, I mean it's impossible for me to know. I mean I'm assuming that every time that you have kind of another kind of company coming into the market, you would expect that there would be some impact from that. However, I think also that this is a very early stage in the launch. I think that it's been very limited revenue so far. But I haven't really -- I mean I don't have any insight into how that launch is being run or what they're seeing or how they're kind of progressing with this.

So I think from our perspective, we're kind of focusing on kind of our market and building our franchise. And again, I think that the -- ultimately, the data the strength of the data will ultimately decide how physicians will derive their treatment paradigm. And so I think it is, as I've said before, it's clearly an extremely data-driven group. Again, they don't like to go to specialty products. I'm sure if you give them free drug, they will definitely like that.

On the other hand, I think that the actual kind of decision medium-term will clearly be based on what is the patient profile I have in front of me, how will I actually kind of treat that patient best based on the needs of this patient. And then I think you will have a variety of different options, which I think is great for the patient. And then I think that the physician will make the appropriate decision based on the data that they have in front of them as to how the mode of action, the type of drug, et cetera. And I think that's ultimately where we're going to end up.

[Maurice Raycroft, analyst]

Okay. That's helpful and makes sense. And maybe just one other question, and then I'll hop back in the queue. Just wondering if you can -- thinking about the longer-term opportunity, wondering if you can elaborate on the open-label extension study and how that's going. If you have any insights from the study as far as how many patients have enrolled and how they're responding to the second round of treatment?

[Renée Aguiar-Lucander, executive]

Do you want to take that, Richard?

[Richard Philipson, executive]

Yes. I mean I think that study is going well. According to plan, we -- as Andy has said, we expect to have data from that study in the middle of next year. 119 patients were enrolled in that study. Most of these patients have completed the treatment. I think we have around about 16 continuing in the study at the moment. Dropout rates have been relatively low.

And as we've said before, I mean, I think we saw when patients were coming in, that one of the main reasons patients weren't getting in was because they weren't meeting the proteinuria requirements, and we can see why now. That's reflected in the sustained improvement in proteinuria that we saw in the second year of follow-up in the main study, so that then translated through to fewer patients being able to get into the open-label study.

But I think that study is, as I say, to reiterate, it's going well. We expect data to come out in the middle of next year, and I think that will be very important information to help us understand the potential benefits of the second course of treatment.

[Renée Aguiar-Lucander, executive]

But to be clear, obviously, that is still blinded and it's -- so we have no insights into any data or readouts or anything such.

[Operator]

There are no more questions at this time. So I hand the conference back to speakers for any closing comments.

[Renée Aguiar-Lucander, executive]

Thank you very much. Thank you for the questions. Thank you for listening to our Q2 report. We look forward to speaking to you again when we report our third quarter.