All right. Happy to be moderating this panel with Ben Palleiko, CEO of KalVista Pharmaceuticals. I'm sure folks know the KalVista story well. It just reported a nice quarter. Maybe I'll have Ben give a quick overview of the company and recent progress, and then we'll do Q&A. Sound good?
Absolutely.
Thanks for coming.
Yeah. No, thanks, Paul. Thank you for inviting us. Nice to be here today. Thank you, Steve, for just being a great partner with us for a long time now. KalVista Pharmaceuticals is a commercial pharmaceuticals company. This summer, we got approval of the first and only oral therapy for treatment of HAE attacks. The drug's brand name is EKTERLY. We got approval on July 3, right before the July 4 holiday, launched on July 7, right after the holiday. Just yesterday, in fact, reported our first full quarter as a commercial company. I think we've had extraordinarily good uptake so far in this marketplace. I guess we'll dive probably into the reasons for that more soon.
After about less than four months in the market, we've got right around 10%-12% of the patients have already converted over to EKTERLY, which we think reflects its substantial advantages in the treatment paradigm in this space. Revenues came in, I think, kind of meaningfully beyond where people thought they would at this point in the cycle. In summary, the launch is off to a great start. It's a good drug. It fulfills a substantial need in the marketplace. People seem to be liking it very much so far. The data we generated is tremendous. We look forward to continuing to broaden the reach here over time and to bring this to more people in the coming years.
Ok, great. On the revenue number that you reported, I want to just try to kind of dive in and understand better what run rate you're actually at. On the one hand, how much inventory was in that? On the other hand, of the patients that are getting scripts within this recent quarter, how much free drug is there still?
Ok, to the first part, without getting sort of we didn't really do the breakdown. I guess I probably shouldn't do it here either. Plus, I'm not the CFO anymore, so I really couldn't. There's definitely a stocking element in the SPs. In these kind of high-priced therapies, you don't tend to see these and relatively low volume. You don't see enormous levels of stocking. I would describe it as probably in line, maybe a little bit ahead of in line for what a company in this kind of similar space would do. The large proportion of that demand was actual patient demand, patient sales. We don't have enough experience yet to really break down the refills versus the new starts revenue. Obviously, arithmetically, given that your first quarter, most of that's going to also be from people getting on drug as opposed to refilling, just because.
Yep.
The second part of your question was the free drug.
Are the people getting scripts for the first time still largely getting free drug?
This is one of the great misconceptions in this space. When people go see their physician and they get a prescription for EKTERLY, and it's basically actually two prescriptions. It's this kind of start form, and it's an actual prescription. Those both go to our hub. They both get dealt with. Once we know they have insurance, we do ship them out their first carton of EKTERLY so they can start using it. Irrespective of that, whenever the commercial prescription gets approved, we then ship them commercial drug, whether it's, whatever, a month later or two days later. The free drug program, as you call it, A, we don't tend to call it that. Also, it doesn't really have any impact on the commercial prescriptions. As soon as they get an approval, they get a commercial shipment. After that, it's PRN, right? It's patients calling for refill as they need them. It's not a trial. They're actually switching to EKTERLY before they get it. Once they get this free drug, this quick start, it has no correlation at all with what happens on the commercial side.
I understand. Ok. Any metrics you can share or qualitative feedback you can share on how payer coverage is going?
It's going at least as well as we hoped it would. We've always told people that it would take six months to get on the formularies. What tends to happen is the smaller formularies will come a little faster. The smaller payers will get the policies set up sooner. The larger ones tend to wait, largely because they want to see demand. Before they go through all this, they want to get a sense of the demand. That's the way it's played out. We've actually seen a fair number of policies come out much earlier than we expected. The larger ones, again, we've always said are going to come at the tail end of this. They are kind of going to be an early 2026 event to get them fully through.
The vast majority of the prescriptions in the third quarter, our first commercial quarter, were medical exception because we did not really have hardly any policies in place then. If you are curious about what the policies are, they generally are PA to label, which is what everybody has in the space. It is a 100% prior authorization requirement in the space. There have been a minority of policies that require a step through generic Icatibant. We expected that. It does not really represent a significant hurdle. It is all kind of playing out as we would expect.
What are they asking for with the step through? Just that someone's tried it, failed it?
Yeah, yeah. You generally need to fail it. And the criteria are somewhat different with every payer. Part of this is getting the experience of what the payer views as adequate criteria. Because again, coming back to they're all a little different. That's one of the things the hub does, is they gather this information on what payers recognize certain conditions versus other ones. Yeah, patient doesn't follow needles, unable to treat because of just the logistics of the thing, injection site reaction. It's important to remember Firazyr has effectively a 100% injection site reaction rate. That was 97% in the phase three study for Firazyr. So ISRs are a really straightforward item. There's a series of these criteria that you can use to justify a person moving off of Firazyr to EKTERLY.
Ok, Got it. Do you want to talk about the types of patients that are going on early? I think in our conversation, you've said that you're seeing a higher attacking population early. Maybe speak to that and any insights you have gotten so far on refills.
Yeah, sure. For a few years now, we've talked about the fact that our view has always been there's this population of people in the HAE space who have very high attack rates, even though typically they're on prophylaxis. We define a high attack rate as someone who's having two or more attacks per month despite being on prophylaxis. I think there was a lot of questions as to whether that population existed. Because a lot of times if you talk to physicians, you'll hear them fairly consistently say that their patients are really well controlled and not having this attack. This is one of the kind of great questions in the space. What we have seen, though, our theory going into this launch was that those people do, in fact, exist and would be very receptive early on to EKTERLY.
Because at the moment, they're not well controlled on their prophylaxis. Of course, with two or more attacks a month, that's a lot of injections or a lot of suffering. As we've gone to the launch, what we have seen is that that population has, in fact, showed up just as we would have expected early. Through the third quarter, about half of the people switching to EKTERLY self-reported two or more attacks a month, which sort of validates, I think, what our view was. Those people, because they have so many attacks, are very high users of on-demand therapy. This goes to the refill rate question you asked as well. Because they use a lot, they refill at much higher rates. They tend to refill at much higher volumes. Certainly, as those people got started early, that has early benefit to us. We fairly consistently said that as you broaden out the population you're in, that population will refill at lower rates. Your overall refill rate and refill timing, the refill rate will come down. The refill timing will extend. So far, those people have shown up. We're pleased that they're getting the benefit they would hope for.
Yeah, that's awesome. What kind of metrics do you think you might be able to share on refills, if any, over time? Given that, again, we've talked about this before, the bear case or whatever, right, is that we're going to get a lot of patients on therapy, but the recurring revenue number might not live up to some of the expectations over time.
Yeah, I mean, I think a lot of starting the fourth quarter, it's still largely a new patient add question, more people coming on. Maybe even early next year, it's really all about new people coming on. Refill rates will continue to grow as a proportion of the refills will continue to grow as a proportion of sales. There is certainly a time, but I frankly don't know when it is yet, when it becomes useful to people for us to talk about refill percentages versus maybe new start percentages. We're aware that that shift will occur. I think we're going to be somewhat data-driven here. As the revenue composition starts to shift or the prescription composition starts to shift, I think that's when we'd start to talk about it. We're going to be a little bit empirical about this. I don't know what. If for some reason the fourth quarter was some really important distinction, I think we'd make it. I do not want to set expectations in there. Because frankly, I do not think it will be. I think it is still going to be about new patients.
Yep.
On the first quarter, we'll see.
Yeah, ok, fair enough. On the demand dynamics, right, I mean, you can see, I'm sure you see how many patients start the drug every single day, if not week to week, month to month. Do you feel like this is a bolus and we're going to get into a new phase of growth o r do you think what you're seeing is sustainable?
If you do the numbers, we've added about 200, 220-ish people per month so far. That's a lot of people switching. The number's been quite linear, quite consistent. It is a question to us even of whether that's a natural rate. Or is there some bolus built in? We hesitate to call it a bolus because it's gone on for four months now. I think what we're trying to wrestle with is understand if it's a bolus, when does the bolus end? On a fundamental level, this is a, depending on whose numbers you believe, an 8,000 or 9,000-person marketplace. It should effectively almost completely switch over to orals over time. I mean, there's no benefit to having an injectable or even, heaven forbid, an IV therapy in the presence of EKTERLY. EKTERLY, the efficacy is people say it's injectable-like efficacy. The safety's been pristine.
There's no trade-off. People are making the switch to EKTERLY. They get a remarkably better experience. That helps them control their disease better. Virtually whatever the number is, I guess 100% never do anything. The vast majority of these people should over time convert to oral therapies. My point is, and that probably happens over a few years. Whether the rate continues as it is or accelerates or slows down, honestly, I think we're going to a little bit have to just kind of see where the data takes us as well. We've been consistent and said we have no idea what's going to happen during the holiday period because this is kind of a nine-month quarter. I don't know if there's going to be any fundamental conclusions to draw from the fourth quarter about growth rates.
I think we'll have to get into next year and kind of see where it sits. Whether the rate is a little bit faster or a little bit slower, I don't think it changes at all the fundamental point, which is the vast majority of these people are going to switch to oral therapies in a relatively short period of time.
Yep, oK. When you prioritize internally, what is the biggest concern has a negative connotation. But what is the thing you need to get right or "not get wrong" over the next year to keep this going?
Yeah. I think we have executed an extremely strong launch so far internally as a company. It's important to kind of remind folks, KalVista is a first-time commercial launcher. But the team we have assembled at KalVista, most of these people at the senior levels for sure, have launched multiple drugs in HIV. I mean, three, in some cases, four HIV launches. This is a market we know really, really well as a group. And so we were able to put in place a really strong commercial team, a really strong payer access team, a really strong hub team, patient services team. And so nothing at this point really has gotten in our way. I mean, the field team's doing great. The access I've talked about is coming along. Any time I see reviews of the hub, I mean, they've been stellar. People really liked what we're doing for folks.
My point is, what do we not have to do wrong? We have to not start to screw up any of those things. We have to kind of keep on going. Literally, the only sort of challenge so far in the launch has really been, to believe it or not, kind of the administrative side in physicians' offices. All these prior authorizations have to get worked through between physician offices and payers. We are not allowed as a manufacturer to participate in that process. Physicians' offices only have so many folks who work on these. The real issue has been administrative in a way that we can't control.
Right, ok . How are you thinking about this? How do you think about how this market evolves with potential competition from another oral, from more payers?
Yeah, right. They have a data event coming up. We'll see where the data event goes. I guess I look at it kind of two ways. There's kind of a data event. There's a commercial event. The data event is going to happen in the relatively near future a nd we'll see. There's a group of folks that play those events in certain ways. That's effectively irrelevant to us. I think on the commercial side, I don't think we think the data event has any impact on us commercially. Again, we've got 10% or 12% of the patients after four months. We're going to continue at a very high rate, converting people over all by ourselves until whatever, early, mid-2027, so another 15 or 18 months. We'll keep going on that front. The highest burden subpopulation is the one that's moving fastest, EKTERLY.
In 2027, assuming that Farvarius arrives, we'll have a market share. I also think we'll have an attack share that's probably going to exceed the market share because you've got these larger attack rate folks coming. We'll see. I mean, we'll have two years of experience commercially with the drug. We have this tremendous data set. We have extraordinarily high patient satisfaction data. I think that will continue. We have a hub that really works. We have a drug that's got baseline terrific characteristics. I think we're going to be exceedingly well positioned competitively. That said, there'll be some market division. Coming back to the fundamental thing I said a couple of minutes ago, there's 8,000 or 9,000 people who are the vast majority going to switch over to orals. There's space for two participants.
Yep, ok . Anything on the prophy side that's coming that you think could change the actual on-demand TAM?
To date, there does not seem to be. The prophylaxis therapies are all very efficacious. The new ones coming are roughly equivalently efficacious with the things that are already out there, honestly. I mean, within a little bit of an error band, they all look more or less the same. What they have mostly been doing is trying to adjust the dosing schedules so that people do not have to inject as frequently. Or maybe there is an oral. Or people just can go from twice a month with lanadelumab to once a month with Dawnzera or Andembry. And maybe once every three months or so with the Astra drug in a few years. They are mostly modifying dosing schedules, not efficacy. The other thing that has sort of become apparent to us is that, if anything, the efficacy in the real world has been even let me say it differently.
The rate of attacks of people on prophylaxis in the real world that we've seen so far in our launch has been probably meaningfully higher than people even realize. We've had a couple of instances. This is sort of anecdotal. We've had a couple of instances already. In fact, it happened at the college this past weekend where our Chief Medical Officer was talking to some physicians. We hear about these, or they're actually really more the field team. We hear about these patients who they say are really well controlled. We talk to them, and we say, that person's already refilled like twice. There's been a little bit of this sort of interesting dichotomy where physicians' views have consistently been that these folks are really well controlled. Yet the experience we see in the commercial side is that these really well controlled people are using a lot of on-demand.
Right, yeah, ok, interesting. How do you think about planning for the long term with KalVista? Obviously, you've got to get this drug launch right. How do you think about bringing in other assets, like building a company versus partnering? I mean, selling the company is always the thing that no one really asks us explicitly. Obviously, it's kind of like you can either build and have multiple more drugs. Or you can kind of prove this out and try to generate value another way. What's your thought process?
Ok, I was a banker in my younger life. Companies are bought, not sold is a great rule of thumb that I generated, that I learned. The trick is to build a great company. I think that's what I get up and think about all the time. I don't worry about somebody calls and I don't answer their phone. The pathway to any kind of success is to build a great company. We've got EKTERLY, which is a great drug and which is launching really well. People will come to realize that over time. We've got tremendous clinical development capacities. We've got tremendous global regulatory capacities. We actually have five, as of yesterday, regulatory approvals globally. We've got great global capacities. We've got terrific commercial capacities, U.S., Europe. We've got a partner in Japan. We'll do more collaborations.
My point is we've got a really good skill set. How do we apply that skill set? I do think that we've started to talk a little bit about the fact that one of our goals as this company is to grow into a leading rare disease commercial entity. We will certainly consider how we can apply other assets, whether they be commercial or even development stage, that are similarly high quality to EKTERLY and move them forward to build a terrific company that brings a lot of value to patients with any number of rare diseases.
Yep, ok , great. What else should we cover here? Do you want to talk actually a little bit about the ex-US market? One, how you're trying to address that. And just two, how much pricing power is there in these other markets?
Yeah, oh, jeez. ok, so ex-U.S., the U.S. is probably, I think really like with most diseases, U.S. is probably 80% of your revenue stream, plus or minus. The majority of the rest is Europe. After that, it's probably Japan. It kind of gets into some of these other markets around the world, whether MENA or South America or certain countries. Our plan has always been to commercialize it, obviously, ourselves in the U.S. It's important to mention, and I hadn't done so far, we got approval in Europe this summer. We actually launched in Germany last month. We've been generating commercial sales in Germany. To the moment, it's doing beyond our expectations so far in Germany. Next year, we expect to get through the NICE process in the U.K. We also got U.K. approval this summer.
We'll launch in the U.K. next year. We'll broaden the launch in the EU next year. We're going to do all that ourselves, major European countries and the U.K., EU countries and the U.K., we'll launch ourselves. We already partnered in Japan with a company called KAKEN Pharmaceuticals. They'll be the sales and marketing entity for us there. Beyond that, we'll put up a network of partnerships. We have an agreement with a company in Canada. We're working on some others we'll announce over time. EKTERLY deserves to be a global product. It's a very good drug. Like I said, it's a rock solid, shelf stable tablet. It can go in a lot of places that a lot of these other protein-like or antibodies really struggle from a supply chain perspective or even a cost perspective. We do plan to take EKTERLY globally.
All that is for maybe 20% of your total revenues, the majority of which is going to come from Europe. That is because, to your point on pricing power, you do not really have a ton of pricing power. Prices in Europe are fractional compared to the U.S. 20% of the U.S. price, maybe 25%, is kind of reasonable. There is a little bit of variance there too, Northern Europe versus Southern Europe pricing. You end up with a broad reach. Like I said, the revenue stream is much less.
Yeah, is it NPV positive to launch it?
We wouldn't do it if it wasn't NPV positive.
I know that. What do you have to believe to kind of believe it is?
It is not much you have to believe. Europe, what is fascinating about the rest of the world is there is a ton of prophylaxis use in the U.S. Two thirds, whatever, of people in the U.S. are on prophylaxis. Outside the U.S., the world is probably 90% on demand. There is a lot less prophylaxis usage over there because it is so expensive. The government payers, and largely you are talking about government health care outside the U.S., they do not want to pay for prophylaxis except for the most extreme people or severe disease people. My point is that it is an all on demand market, is the good news. You have got a lot of units. The units are at a fractional price compared to the U.S. market. It is not a fundamental question.
You do not have to worry about demand because you know the demand is there because that is what they use nowadays. The pricing is what the pricing is. You cannot control it. The trick is the cost structure is what kills you. Some companies have gone way too big, way too fast. In Europe, for example, if you build an enormous team in every country and you kind of have this whole dozens, hundreds of people, you are never going to make money in Europe. What we have done is do it differently. We have kind of a little bit of a hub and spoke model. We have a core team in Zug, a dozen people plus or minus. They are the European commercial center. What we are going to do in every country is have just a few people who deal with the commercial side there.
Germany, for example, Germany is going to be four field reps plus one MSL. You can make money in Germany on four field reps and one MSL. U.K. is going to be a similar sort of setup. Now, Germany plus U.K. is probably two thirds of your European revenues in total. Germany is probably two thirds of that. Germany is your major country in Europe from a financial standpoint. U.K. is a second. After that, the numbers kind of tail off quickly. You're talking about fairly small markets. Those you deal with with one or two people. Sometimes it's just contractors. There are certain countries you won't have any people. To make it NPV positive, it's not about the revenue side, which is going to be what's going to be. It's designing a cost structure that fits within the revenue side.
I understand. Makes sense. We have a couple of minutes left. Anything else you want to highlight?
I mean, I think as always, you kind of are super efficient. We couldn't be more happy with the way this has gone so far. I want to say we ran the largest clinical trial program ever conducted in HAE. We've generated a tremendous data set, breadth, depth, covering everything. We've got a pediatrics trial going on. We expect to be filing an NDA for the PEDS indication kind of Q3 next year. I think that'll be the final kind of extension for us in terms of just taking this all the way from at that point to as far as you can possibly go. Early reviews have been terrific on the drug. I think we're very confident in the future growth of it and the opportunity. We're excited to keep going and show people how well this actually will be.
Ok, congrats on the progress, Ben.
Thank you.
Appreciate it.