Calliditas Therapeutics has been selling in the US since 1Q22 based on FDA preliminary approval. Its annualised sales reached USD 100 million. Not bad product lunch. We are long Calliditas. The below well summarises the investment rationale and the strong catalysts we could expect in 4Q23. The Q4 should be very good vs slow first three quarters of the year.
Calliditas has a leading drug in fight against IgA nephropathy. IgA nephropathy is a chronic kidney disease. Blood in the urine is one of the most common symptoms. It progresses over 10 to 20 years, and can lead to end-stage renal disease. It is caused by deposits of the protein immunoglobulin A (IgA) inside kidney.
Consensus expects slow growth of Tarpeyo due to seasonally slow Q3
Carnegie expect Tarpeyo sales to grow 15% Q/Q to USD28m in a seasonally slow Q3 and annual 2023 Tarpeyo sales forecast to USD101m. Better than consensus Q3 results should help the stock to rerate. The company is reporting on 16.11.23
Strong catalysts in 4Q23
The next key catalysts for the Calliditas stock will be:
- Approval of Tarpeyo/Nefecon in China H2(23e) – while in the west IgA nephropathy is a reare disease, in China it is a very common illness. When we spoke to the CEO last, she expressed high hopes for the China market opportunity.
- Full US approval and potential label expansion of Tarpeyo around YE(23), – Calliditas is already selling in the US since 1Q22, the full US approval will allow the company to materially extend its marketing efforts which should result in acceleration of sales growth in the coming quarters.
Competition has suffered setbacks, which could benefit Tarpeyo
Tarpeyo should benefit from competitors failures:
- In September, Travere announced disappointing top-line results from its two-year confirmatory Phase III study.
- In October, Omeros announced that its Phase III study with narsoplimab in IgAN did not reach statistical significance versus placebo on the primary interim endpoint
Carnegie sees Calliditas as attractive risk/reward opportunity
“Based on our estimates, the stock trades at an adj. P/E(25e) of 6x, which we find attractive, even considering that estimate risk remains relatively high.”
“Tarpeyo was launched in the US for IgAN in Q1(22) and sales in Q2(23) were at a USD100m annualised run-rate, which is not a bad launch, although
uptake has been below market and company expectations.”
Our take
We believe that the two catalysts (US and China approvals) both expected in 4Q23 have potential for material stock re-rating in the coming months. We are bullish on Calliditas
Disclosure:
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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