KalVista Pharmaceuticals, Inc. (KALV) Earnings Call Transcript & Summary

Hi, everyone. I'm Andrew Fein, one of the biotech analysts at H.C. Wainwright. Thank you very much for joining us on our HAE Day event. Next presenting will be KalVista. From KalVista, we have Andy, Chris and Ben, senior management team. So we can just dive right into it.

I mean it's been an interesting day from a physician perspective, I'd say. We've heard one major academician who was quite willing to switch patients from prophylactic treatment to acute treatment and didn't seem to have necessarily a lot of stickiness to any particular treatment; and another physician who was a bit stickier, I'd say, in terms of lack of willingness to perhaps shift patients if they're doing perfectly fine. So I guess, Andy or any of you guys, how does that jibe with what you guys have diligence from a market research perspective? Do you think it all comes down to a threshold? If there's a sufficient threshold, then the answer is shift. Or do you think it's simply a matter of each physician is different and each patient is different, and each patient has different level of anxiety associated with new therapies? And I guess how should we think about things broadly?

Yes. I mean I'm sure a lot of those things, right? I'm sure some combination of those things are always the truth -- you'll find the truth, right? But I think one thing that's really important to remember in HAE is that the patient is a really important driver in the decision-making and often leading their physicians to their medicine of choice, right? Obviously, with academicians, you may have kind of a different hierarchy there than your kind of standard treatment paradigm, but we have certainly found in our research that the patients are a major driver in the decision-making and their preferences do ultimately make a big difference. We certainly believe that in the situation where you have a product that is potentially less efficacious than kind of your gold standard therapy but may be more convenient, then you're probably going to see some variability in people's responses, right? You're going to see some people choose one or the other for a different set of reasons. I think you'll see that among patients. You'll see it among physicians as well. But I think one interesting look into the marketplace is when you find a situation like -- let's take, for example, the on-demand -- injectable on-demand marketplace, right? We're clear in a way the market leader is FIRAZYR or icatibant, right? Why is that? It's not because the program is more or less efficacious. It's actually very much the same. It's because it's subcutaneous, and that drove the market share, right? And I think if we kind of forecast a little bit into the future, if we're able to deliver, companies like us are able to deliver on oral medicines that don't ask people to make those sacrifices in efficacy or safety, then I think you'll have a substantial shift in the decision-making there.

That's very helpful, I guess, context. And I guess maybe the backdrop as well, kind of setting the stage for 2023, right, when you've got data from both programs. As you set expectations among investors, is the threshold -- I guess, what's the right way to think about that? I mean, obviously, there are investor expectations. And as BioCryst has shown, sometimes you can disappoint investors and still satiate the market. So I guess what's the right context with which to evaluate your 2023 data for both programs?

Yes. I mean, I think, first, just to your last comment there, I mean, I think we have to be careful. We're still in the early days of this launch with ORLADEYO, right? And without question, I think it exceeded expectation. And we'll have to see, as that moves into the future, if they're able to continue to kind of over-deliver or whether some of the fundamentals will start to kick in more. We'll see. I don't have any way of predicting that. From our perspective, as we think about our programs, is I think we've been very clear from the beginning, both with sebetralstat and with KVD824. Our objective here is to provide patients with HAE oral therapies that are every bit as efficacious and safe as what we see with injectable therapies. And that's our goal. With sebetralstat in the Phase II data, I think we delivered on that across all the primary, secondary end points. And every bit of the data from that trial would suggest that sebetralstat is every bit as efficacious as the injectable therapies we've seen, if not better, because we know that patients will use that therapy sooner. And if they intervene earlier, they'll have better outcomes. So we feel really good about that. Similarly, with KVD824, we expect to deliver on injectable-like efficacy, and we haven't been shy in saying that, that, yes, it's a high bar, but we believe the PK/PD that we have on that program would convey that high bar of expectation. And in the marketplace, we've been discussing, that's really important if you're going to be competitive.

A little bit to the speed, the onset of action, how important that seems to be as you speak with physicians and patients as they think about potentially trying a different on-demand treatment.

Yes, it's critical, right? I mean I think it's something that we've been asked a lot about even since the early days when we're developing sebetralstat just given that it's oral therapy and the expectation is intuitively that oral therapy will take longer to work than the injectable therapies. And so we've had to -- in some ways, the data has had to help us overcome that inertia, but it certainly delivered on that. Every bit of data that we have, PK/PD into now the efficacy data suggests that's true. And that is really important for patients because especially with -- as you're treating on demand as an attack begins, the whole idea here is to help patients remove the obstacles that they currently have that are either preventing them or compromising their ability to intervene early, right? All patients know that if you intervene early with their on-demand medications, they're going to have better outcomes. Despite that, we know that the data, the real-world data tells us that patients don't do that for a variety of reasons. And most of those reasons are attributable to injectable medicine, whether it be because of pain, whether it be because of their inability to access the medication at the right time, difficulties administering it. What we want to do is remove all those barriers. And if you -- and your medicine still has to work quickly. So if you remove all those barriers and your medicine, your oral medicine works quickly, we think that provides for a really substantial opportunity and makes it simple for patients when they have decisions to make about which medication to use.

We heard interesting kind of slightly differentiating -- a differing commentary from the 2 docs about how a new on-demand therapy might impact prophylactic usage. The doc this morning said pretty clearly that if there was a new highly efficacious oral on-demand therapy, in his opinion, you would see patients use less prophylactic treatment. Does that -- seemingly, that's very positive for you guys. But is that what your research has shown as well? I mean I think more people have thought about the other sort of things from the other direction, right, how prophylactic treatment would negatively impact on-demand usage, and we haven't really seen that. So what are your thoughts there?

Ben, do you want to take that one?

Sure. First off, Andrew, we agree. I mean if you look at the prophylaxis usage today, even the presence of ORLADEYO, you don't really see a decline at all in prescriptions on the on-demand side. And we have IQVIA data. This is probably the same as everyone else does. And more or less, acute scripts have been essentially flat for the past 3 years. The dollar volumes come way down because icatibant went generic 3 years ago, and so the dollar size of the market is much smaller. But from a script side, it's basically flat. That reflects an important element to the marketplace, which is that a large substantive proportion of patients prefer to treat their attacks in an on-demand manner even in the presence of very efficacious prophylaxis. And as, Andrew, you sort of touched on and Andy kind of spoke to a few minutes ago, that's for a variety of reasons. But there are -- when we talk to patients, what we hear is a somewhat consistent theme of a lot of patients like to treat on demand because it makes them feel like they're in control of their disease. It isn't like they have something that's chronic that is really severe. It's just they're comfortable with the disease as it is, and they want to feel like they're managing it as opposed it managing them. And they do that even in the presence of the fact they have to give themselves perhaps a couple of injections a month. It's also important to note that, that's not an irrational viewpoint even in the context of current therapies because the average HAE patient has about 2 attacks a month. And so for -- if you look at it just on sort of almost an injection basis, if you have 2 attacks a month and you're taking 2 icatibant injections versus you have 2 attacks a month and you take TAKHZYRO, which obviously drives that to less than 2 attacks a month but you're still getting 2 injections a month, you're more or less neutral. You don't get the big lifestyle pickup that some people perceive you got from prophylaxis. And of course, TAKHZYRO's got the most favorable dosing schedule of anybody right now. I mean HAEGARDA's a couple of times a week. And even the therapies that are coming along that may or may not have better dosing schedules, less frequent injections still offer patients a fair number of injections, which is more than they want. So to these patients, there isn't really a benefit necessarily of going to prophylaxis except for other reasons. They have very severe disease. They have a lot of -- sometimes patients will have sort of psychological challenges associated with disease because the burden of the illness kind of weighs upon them so much. And so you can -- those kind of patients, you might see move to prophylaxis for different reasons, but it's not necessarily just because of the fact that it offers some kind of more favorable dosing schedule. This then goes to your question about what's going to happen with patients on the on-demand space in the presence of sebetralstat. Like I said, we think the on-demand market is quite stable; and we think, obviously, sebetralstat should be well positioned to capture a very substantial share of those patients, so -- fairly quickly actually. Beyond that, this question of where patients go, we think becomes interesting because prophylaxis has in all likelihood probably captured some fair number of patients who don't have the kind of severe disease that might really require a prophylaxis. Again, if the average patient has 2 attacks a month, there's -- some -- and you have more than majority of the market is on prophylaxis, some substantial number of patients who maybe don't actually require a prophylaxis therapy but they went with for other reasons, we think there's going to be opportunity if sebetralstat performs like we think it should, to bring some of those patients back to on demand because, fundamentally, they'll be no worse off in terms of their ability to treat the disease. And they've been well qualified for the disease just by virtue of the fact that their burden isn't all that high to begin with. So we're firmly on the side of, if anything, sebetralstat is going to pull patients back from prophylaxis. I don't think we're going to continue to lose in there.

That's very interesting. So [ we noticed a doctor ] was addressing from the last KOL as well that he said he's not -- his center at least is not getting a lot of new patients. Does that jibe with what you guys are hearing? I guess is that an anomaly? What's the right way to think about that?

The U.S. has a fairly distributed care network for HAE patients. You do tend to see a lot more docs treated here -- in practices that tend to be a lot smaller. And a doc with 10 patients in the U.S. would be a fairly substantive HAE prescriber. And what that -- if you think about what that really means is he had one person who then brought the rest of their family because they came along and then another family they knew heard about him and went to them. But so you can almost see how this would happen organically where a doc is going to have a couple, 3 families in the United States. In the -- in Europe, it tends to be different. Their patients are treated in these fairly large catchment centers. And so a good-sized European center might have a couple of hundred patients. And so no, I don't know that I think we'd consider it all remarkable that docs aren't -- that this particular doc isn't getting more patients because it just seems to be the way the disease works. There are certainly centers that are bigger than others. There's a number of locations that have fairly large patient treatment populations. But no, I don't think that, inherently, we're shocked by him saying he's not seeing a whole bunch of new folks.

Since you brought up Europe, I guess, how are you thinking about the ex U.S. opportunity at this point? Really, it's an important one. When's the right time to kind of lay the groundwork there or if the data are simply as strong as you expect them to be, that'll be an issue for a larger company to figure out?

We already are. I mean -- we believe that sebetralstat should be a global product. It has many advantages, obviously, over the current therapies that we've talked about already in terms of the oral dosing and the efficacy. But also important that people forget about is a number of these modern therapies aren't really seen in much of the rest of the world for a variety of reasons. One of them is cost obviously but also just the logistics of the thing. I mean, proteins, antibodies, they all start to have cold chain challenges once you get above maybe 8 degrees on a consistent basis. And so that has also been a burden in terms of getting these therapies introduced around the world. Sebetralstat by comparison, very stable tablet. We think this actually has the potential to go globally as a product. And we're actually absolutely saying that they should be able to do that. So we've always said we're going to commercialize this ourselves in the U.S. and the major EU. We're already setting the groundwork to do that. Beyond that, we obviously will consider collaborations of some sort whether it's a rest of world type thing or it's smaller geographies. But we intend to make this as big and broad a launch as it's ever been seen in HAE.

I guess, as we get into next year and the data release, is the pushback that you get from folks simply them not being aware of you? Do you get pushback on the market? Do you get pushback on -- I mean, the data, thus far, has been very strong. So it's not pushback on the data, I suspect. What do you think you need to overcome in order to get people fully engaged?

I think some of the dynamics we've been talking about, about the market, certainly something that we need to continue to help investors fully appreciate, right, the dynamic. I think in our previous discussion, Andrew, in the last call with the last physician, his comment that, in the U.S., the market's kind of 50-50 and hinted that's what he sees in his practice. I think most investors have this thought that perhaps the on-demand market has gone to 0, right. I mean that there's just this -- and then there's a number of things that play into that. I think that the dollar volume because of generics has eroded significantly, but they're not appreciating that those are kind of, if you will, 2 kind of independent variables, the demand side versus the dollar side when we're talking. So I think helping people on -- appreciate the opportunities for us in the market, I think, is really important. I think that, as you said, the data has been very good. I think that our ability to predict data has also been pretty good based upon our PK/PD work that we've done. I think we've always been pretty open about our thoughts about where we should be looking and how aggressively we should be thinking about our efficacy given what we see in PK/PD. So I think we've tried to set pretty good expectations here, and we have a really significant opportunity. I think beyond that, I think also will start to work in our favor is people's appreciation of our Factor XIIa asset, right? So obviously, it's preclinical, and so that doesn't get as much attention. But we have a really, I think, important program there that will complement what we're doing in HAE and then also help the company start to move beyond HAE as we think about other opportunities for Factor XIIa. So I think a combination of those things will start to work in our favor.

That's a very interesting spot as we get into next year. Time to stay tuned. I think we ran out of time, but very helpful update. Hopefully, it was -- the dialogue earlier in the day with the KOLs were helpful too for providing some context. So thank you very much for participating. Appreciate it and look forward to staying in touch.

Andrew, great. Take care.

Thank you, guys, very much.