Pareto on Calliditas – Quarterly Revenue Growth of 246%

CALTX launched its product only on January 28, 2022. The company is recording strong revenue growth of 246% – from 1.9 mil USD in Q2 to 6.6 mil USD in Q2. Pareto estimates peak annual sales around 300 mil USD in a few years. The share price is around 84 NOK, both Pareto and Carnegie have 12 month price target over 300 NOK.

Retail investors sold the good news, the CALTX is down 15% in last week or so. The sell off is irrational – it is a buying opportunity. We took advantage of it and trippled our position. See below summary of Pareto and Carnegie research on CALTX.

I also include quick note on Sedana from Pareto from today. Sedana benefited strongly in Covid, bzt sold strongly post Covid. The story remains intact. We have a very small position in the stock, but like the story a lot and reviewing it for further position increase.

Pareto on Calliditas

Q2 report’s market reaction sets buying opportunity 
Last week, Calliditas Therapeutics released their Q2 report, which was in line with our expectations, yetit triggered a sell-off of around -15%.

We believe that the stock will eventually recover as
(i) the company is posting sales in line with larger companies that we used to model Tarpeyo’s sales, 
(ii) we do not expect competitor entry (Sparsantan) in November as the broader market seems to, why is explained under the 2nd title in this note and, 
(iii) the slight increase in cost was expected as function of increase in sales & necessary to catalyze Tarpeyo’s larger potential.

We thus reiterate our Buy rating on CALTX with a target price of SEK 300/share. Q2 progress and 2022E outlook

Calliditas delivered in line with our expectations, and we expect them to continue on this path (see graph below from our initiation report).


Sales increased by +246% from USD 1.9m to USD 6.6m
– The company increased its reach to unique prescribers from 111 in Q1 to 314 in Q2 (with around 4000 available in the US) and patient enrollment from 134 in Q1 to 315 in Q2.•   

– In Q3, we expect a lower quarter-to-quarter growth rate (around +160%) due to less enrollment during the summer holidays and most enrollments during late August-September which are generally strong enrollment months when compared to peer drugs and indications.

Travere’s Sparsantan, the non-selling “soon to be competitor” as per market expectations (not ours)
The market seems to ignore several facts which we elaborated on in our initiation report from June 2nd. Below three bullets + a conclusion bullet on why we see Travere’s chances to get accelerated approval for Sparsantanin IgA Nephropathy as very slim.

•   FDA’s comments and interactions with Reata Pharmaceuticals and Calliditas Therapeutics last year allow for insights in how the agency assesses such kidney disease targeted drugs. Both decisions were expectable also based on previous behavior. The FDA made clear that companies need to show good proteinuria and eGFR data with an adequate safety profile. Reata had bad proteinuria data but good eGFR data and bad safety data = rejected by FDA. Calliditas had good safety, good proteinuria, and good 9-month eGFR data = FDA asked for further analysis on eGFR (highlighting its importance despite the approval being on the surrogate / proteinuria),being at least part of the cause for the three months delay from September to December 2021 = FDA granted accelerated approval to Calliditas’ drug Nefecon.

•   As noted in our initiation, Travere filed for accelerated approval in May 2022, not providing any eGFR data to the public despite having like Calliditas, 9-month follow-up data – also implying that the drug is likely weaker on this key endpoint than Calliditas’ drug. Instead, Travere press released the following sentence “The Company believes that preliminary eGFR data available at the time of the interim analysis are indicative of a potential clinically meaningful treatment effect after two years of treatment.” We note, that “believes”, “preliminary”, “indicative” and “potential” are verbs and adjectives that create less confidence compared to posting clinically relevant and statistically significant eGFR data as Calliditas did from both phase 2 and phase 3 studies.

•   On August 3, the FDA rejected Travere’s Sparsantan accelerated approval submission in another fibrotic kidney disease, focal segmental glomerulosclerosis (FSGS). What did the FDA note? The lack of eGFR data asdisclosed by Travere’s press release: “..the interim analysis from the ongoing pivotal Phase 3 DUPLEX Study conducted in 2021 together with the recent limited additional estimated glomerular filtration (eGFR) data-cut do not meet their threshold to support an application for accelerated approval in FSGS..”.

•   Based on all this, it would be a surprise and change in the agency’s behavior to grant Sparsantan accelerated approval in IgA Nephropathy this November, thus we deem its chances to be rejected as very high and the question for relevant eGFR data remains even for the potential of a later possible approval and the possibleadoption by treating nephrologists. 

Nefecon in other regions and Setanaxib
Following the European approval of Nefecon (EU brand name Kinpeygo) in July, we expect the launch in the region by Calliditas’ partner STADA in the remaining half of the year, likely within September. Calliditas’ partner in China, Everest Medicines, is also expected to file its submission soon with expected approval in H2 2023. The selective NOX1 and NOX4 enzyme inhibitor Setanaxib has fully enrolled both phase 2 trials in primary biliary cholangitis (PBC) and head & neck cancer. We expect an interim readout in head & neck cancer by late this year and topline data in H2 2023 and interim data in PBC by Q2-Q3 2023.
Carnegie Note
Calliditas Therapeutics (Buy): Tarpeyo sales comfortably above our estimate 


Overall impression: Sales for Tarpeyo (IgAN) in Q2 amounted to SEK 64m, comfortably above our estimate of SEK 55m. Tarpeyo grew 250% over Q1 following the US launch on January 28. The operating loss in Q2 was SEK 210m (Car at 243m), and was broadly unchanged from Q1, bringing cash at the end of the quarter to SEK 847m. Main deviation in Q2 was higher sales and lower R&D costs.

Sales efforts since Q1 has resulted in 315 (134) enrolments and 314 (111) prescribers. Post Q2, Calliditas has decided to expand the US sales force by 20 FTEs to a total of 60 that will be fully operational during Q4(22). According to the company, this decision is based on the growing interest of Tarpeyo among patients and nephrologists. We believe it also could be a move to prepare for increased competition as Travere’s sparsentan is expected to be approved in the US mid Q4.  

: We will likely only fine tune our Tarpeyo estimates and lower R&D costs should be off-set by higher S&M spend H2(22e). We currently forecast Tarpeyo sales of USD 45m for 2022, 139m for 2023e and 229m for 2024e. 

Share price reaction:
 We expect the stock to open slightly higher on the back of stronger than expected Tarpeyo sales and a smaller loss for the period. 


Pareto note on Sedana

SEDANA SS – Sedana Medical – Buy, TP SEK 50 – The need for alternatives

Not only because we believe inhaled sedation is a clinically better alternative to Propofol (with positive health economics effects), it is abundantly clear that healthcare providers need alternatives. Propofol is a frequent guest on the FDA list of drugs in short supply, which may get worse near term. On 22 August, Hospira, one of the leading suppliers of Propofol in the US, issued a voluntary nationwide recall for one lot of Propofol (see link below). This may seem like a small thing; however, at the same time, Teva (another large supplier of Propofol) has decided to close its manufacturing facility (see link below). Together, this may tighten the supply even further. We would like to remind investors that neither isoflurane nor sevoflurane has been in shortage during the Covid-19 pandemic.

We have a Buy recommendation and a TP of SEK 50. We believe the Q2 report signalled some positive developments, including market share gains in Germany. We expect reimbursement decisions for France and Spain during the autumn and also the approval of Sedaconda in the UK. With an expected normalization of the ICU admission market, we foresee a return for the shares.


The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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