AUPH (2020 - Q1)

Greetings, and welcome to the Aurinia Pharmaceuticals First Quarter 2020 Results Conference Call. [Operator Instructions].It is now my pleasure to introduce your host, Dr. Glenn Schulman, Head of IR. Glenn Sc

Thank you, Jesse, and good afternoon, everyone. Welcome to Aurinia's First Quarter 2020 Financial Results and Operational Update Conference Call, live for my home that is. Joining me on the call from the Aurinia team are Mr. Peter Greenleaf, President and CEO; Mr. Joe Miller, Chief Financial Officer; Dr. Neil Solomons, Chief Medical Officer; Mr. Michael Martin, our Chief Operating Officer; and Mr. Max Colao, our Chief Commercial Officer here at Aurinia. This afternoon, we issued our press release and associated financial statement package detailing the first quarter 2020 financial results, both of which are available on our website at www.auriniapharma.com and filed the 6-K with the SEC as well.Before jumping into some brief remarks from the team, I'd like to remind everyone that today's call is being webcast live on Aurinia's Investor Relations website, and a replay will be available approximately 2 hours after the call. Please also note that the content of today's call is property of Aurinia. It may not be recorded, reproduced or transcribed without written -- prior written consent obtained from Aurinia. For approval, please feel free to reach out to me, Glenn Schulman, via e-mail at ir@auriniapharma.com. During the course of this afternoon's call, we may make forward-looking statements based upon our current expectations. These forward-looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's press release, our most recent filings with Canadian securities authorities and reports that we file on Form 6-K with the U.S. Securities and Exchange Commission.Lastly, please note that all of the statements made during today's call are current as of today, Thursday, May 14, 2020, and are based upon information currently available to us. Except as required by law, we assume no obligation to update any such statements as of this date.With all of that, let me now turn the call over to Peter Greenleaf, Aurinia's President and CEO. Peter?

Well thanks, Glenn. And first and foremost, I'd like to say that, obviously, these are very unique times that we're all going through. And I hope that you and yours on the call and the webcast today are keeping safe and healthy. Between COVID-19, working from wherever it is you're locked down at and a busy earnings season on top of all that, we really appreciate you taking the time with us today. As Glenn mentioned, we issued our First Quarter 2020 Financial Results this afternoon and an update on our ongoing operations. While the COVID-19 situation has had its impact globally we, as a company, are fortunate that the impact on our business operations has been limited. Actually, compared to what other typically small biotech companies, Aurinia has been essentially operating virtually since its inception and as a result, has been able to weather this shift pretty seamlessly.We have our global headquarters located in Victoria, British Columbia, our finance group in Edmonton, Alberta and our commercial hub infrastructure being built out in Rockville, Maryland. But throughout our history, the company has sought to attract and hire those with the right talents wherever they may reside. We have assembled a global team in Canada and the U.S. and throughout the world and have leveraged today technology and through our history, such as Zoom, Skype and Teams to collaborate online and ensure that we get the job done. If anything, with all of our ongoing priorities, we've been busier than we ever have and communicating together in more -- in this current environment more frequently.This afternoon's call should be relatively brief. As I'm sure all of you are aware, our priority today and at this time, is completing the new drug application for voclosporin and submitting the full application to the FDA in order to potentially become the first FDA-approved therapy for the treatment of lupus nephritis. On the heels of receiving the AURORA results last December and conducting a face-to-face meeting with the FDA this past February, we've been compiling all of the study reports, the documents and files and preparing all the modules for submission to the agency.Looking ahead, we remain on-target to submit the completed NDA, including the clinical module by the end of this quarter. We will make it known when that milestone has been achieved as it also sets up the timing for us to know more about the review time lines for voclosporin. As part of the NDA and under the Fast Track status previously granted to voclosporin, we're seeking priority review of the application. And assuming granted and if we complete the NDA filing by the end of this quarter, that was set up a PDUFA date during the first quarter of 2021. And assuming approval, a planned launch of voclosporin to take place shortly after. As an executive in our industry, it's rare, very rare in a career that you're lucky enough to be able to bring a drug to market where there's no FDA-approved solutions. And here at Aurinia, we look forward to making meaningful differences in the lives of these patients.The evolution of this organization over the past year has been well-executed by the team. And judging by the quality and breadth of experience we've been able to add to the Board, the commercial leadership team and throughout the organization, we have further strengthened our commercial capabilities and know-how to successfully launch voclosporin with a world-class team and Board of Directors.Last month, we announced Tim Walbert, Chairman and President and CEO of Horizon Pharmaceuticals that he had joined the Board of Directors here at Aurinia. Tim is an industry veteran that brings a wealth of commercial and strategic experience that complements our Board. As I introduced you all last quarter, Max Colao joined us as the Chief Commercial Officer. And he will provide his initial observations about the ongoing commercial preparations and build work towards launching voclosporin on today's call.Lastly, and in some ways, most importantly, we've brought aboard a new Chief Financial Officer, Joe Miller, who's with us today. And after 21 years of service, including those at Isotechnika and Aurinia, Dennis Bourgeault has decided to retire. I can tell you that Dennis has worked tirelessly over the years and sacrifice greatly at times to bring voclosporin to this point and we are truly grateful for everything he's done for us and the company. And while Dennis is consulting for Aurenia to ensure a smooth transition, we're hopeful that he can enjoy his retirement and get back to traveling the world and enjoying the best that life has to offer.Joe Miller, our new CFO, joins us with 20-plus years of public and private sector career in the pharmaceutical industry, which will come in handy as we look to launch voclosporin here in the United States over the next year. We also established in the first quarter our U.S. commercial hub for Aurinia in Rockville, Maryland. This hub will serve as a launching point for voclosporin in the U.S., which we would hope to return to shortly once things return to normal. So with that brief overview upfront, I'll turn the call over now to Dr. Neil Solomons to review the status of the new drug application for voclosporin and our other development programs. Neil?

Thanks, Peter, and good afternoon, everyone. As Peter mentioned, during the past few months, we've had heads down focused on writing and finalizing the voclosporin NDA that we will submit in full to the FDA by the end of this quarter. Since we last chatted in March and after we had completed the face-to-face meeting with the FDA in February, we have made significant progress. To date, we've already submitted the nonclinical module to the FDA back in March. And in April, we submitted the chemistry manufacturing controls module. We are working now to finalize the other necessary modules, including the clinical and plan to submit everything to the FDA by the end of the quarter. As part of the filing, as Peter mentioned, we will also request priority review for voclosporin as it was previously granted Fast Track Designation by the FDA.In terms of presenting the results from the AURORA study, I'd like to remind everyone that Dr. Keisha Gibson did present the first results from AURORA back in March during the NKF virtual spring clinical meetings. I'm pleased to report that this summer, we will also have presentations at the virtual ERA and EULAR conferences. Stay tuned for more details regarding the time of these presentations.Furthermore, we anticipate having a presence at the 4 conferences, including ACR and ASN in November. Another question we have fielded quite often is regarding the primary publication of the AURORA results. We just wanted to let everyone know that we plan to submit the primary manuscript for review later this year and will let everyone know where, once it's published. For the entire Aurinia team, it has been an incredibly busy an exciting time, and I couldn't be prouder of my team for that continued execution during these interesting global times.Switching topics to our FSGS exploratory study. As a recap, for those who haven't been following our developments here closely, this study was initiated back in 2018 and aim to enroll biopsy-proven treatment naive primary FSGS subjects into an open-label exploratory study of voclosporin.FSGS is an ultra-rare disease, affecting around 5,000 new patients annually in the U.S. Due to difficulty in recruiting the patient population, meeting study criteria, in the spring and summer of last year, 2019, we opened additional sites in the U.S. as well as in the Dominican Republic.Furthermore, we amended the original study to allow inclusion of primary FSGS patients who had previously been treated with a limited amount of corticosteroids. Unfortunately, despite these efforts and enthusiasm from the sites, enrollment regardless of COVID-19 remained slow. We will continue to thank and support the small handful of patients, FSGS patients, that were or are currently in the study. What we've learned is that, importantly, there have been no safety signals or tolerability issues that were noted in the study. That said, the sample size is too small to make any conclusion as regarding efficacy at this time. Therefore, we have decided to invest our capital resources in other ways. And as a result, we are preparing to explore voclosporin in other proteinuric kidney diseases, including potentially, pediatric nephrotic syndrome or adult idiopathic membranous glomerular nephropathy. These additional indications would also be dosed in the same manner described in our 036 patent which also includes LN and FSGS studies.Given our confidence surrounding the 036 dosing patent, we are currently assessing broader proteinuric kidney diseases for clinical and commercial feasibility, with a target of announcing plans for the exploratory study later this year. Owing to the intense current workload with the NDA, firmer time lines will be forthcoming next time we will report quarterly results.On the dry eye front, the ongoing Phase II/III study evaluating voclosporin ophthalmic solution or VOS, in a dose-ranging study compared to vehicle remains on track despite the adaptation of this and our entire clinical development program to the FDA guidance for conducting and maintaining data integrity during the COVID-19 pandemic. Based on internal discussions with the clinical trial sites and our CRO, we believe we remain on track to report top line results from this Phase II/III clinical trial during the fourth quarter of this year. And with that brief update on the clinical and regulatory fronts, I'll pass the call over to Max.

Thanks, Neil, and good afternoon, everyone. Thanks for taking the time. As Peter mentioned, I've been part of the Aurinia team for 2 months now, and I'd like to take this opportunity to share with you my initial impressions and focus. What has struck me the most, as I've continued to learn more about lupus is just how devastating LN is as one of the most serious, common and life-threatening complications of this disease. These patients face significant morbidity and mortality with 10% to 30% of LN patients requiring dialysis just 15 years after diagnosis. When you take a step back and you look at this disease through the lens of all the stakeholders affected by LN, there's a clear and then stark unmet need.From a physician perspective, doctors clearly express the need for more effective therapies, which achieve a quicker time to response as well as minimize the use of corticosteroids like prednisone. Payers ultimately want to avoid the costs associated with end-stage renal disease, including dialysis and/or renal transplant. Based on the AURORA and AURA study results, a voclosporin based regimen for LN clearly demonstrated the ability for the regimen to defend the kidneys by achieving both an early and sustained renal response for a greater proportion of patients. Nevertheless, LN is a relatively rare disease, and we recognize barriers to ensuring voclosporin's adoption.Based on our internal market research, a few observations. First, we see variability in treatment goals, monitoring protocols and the remission or response criteria employed by practitioners. We see variable experience and understanding of the current treatment approaches and also some inexperience around a multi-targeted treatment approach. Lastly, we recognized the challenge of launching voclosporin during a time where COVID impacts stakeholder access. As we flesh out our capabilities, we're focused on implementing a rare disease model, as the path to realize voclosporin's potential. This guides our vision for building out our world-class commercial team and the phenotypes of folks that we're bringing aboard. Particularly, we're leveraging those with a deep expertise in nephrology, rheumatology, lupus and other autoimmune conditions.Second, we're hiring a seasoned team that has successfully executed on the launches of products across rare diseases as well as broader renal indications globally.Over the last 60 days, we've made great progress toward this goal. We've added key leaders to our existing commercial team in sales, marketing, market access and operations. We've also added new capabilities in professional relations, thought leader engagement, patient advocacy, commercial supply chain and patient services. Across the board, we've been fortunate to be hiring industry-leading professionals and adding support staff to build out our Aurinia team.Just for some perspective, our current commercial leadership team has, on average, 24 years of commercial experience: 9 of which in rheumatology, 8 of which in nephrology, plus the team has been seasoned collectively through 72 launches.So with that update, again, I'd like to say what a pleasure it is to be part of this team, and I'm looking forward to providing you further updates from the commercial perspective to all of you later this year.Thank you. I'll now pass it over to Joe for a review of our Q1 financial results. Joe?

Thanks, Max, and good afternoon, all. As of March 31, 2020, Aurinia had cash, cash equivalents and short-term investments of $286.1 million compared to $306 million as of December 31, 2019. Net cash used in operating activities was $22.7 million for the first quarter ended March 31, 2020, compared to $13.1 million for the first quarter ended March 31, 2019. The company believes that it has sufficient financial resource to fund its current plans, which include conducting its ongoing research and development programs, completing the NDA submission to the FDA, conducting pre-commercial and launch activities, manufacturing and packaging commercial drug supply required for the launch, the continued build-out of our corporate supporting infrastructure and fund its remaining working capital needs through 2021.The company reported a consolidated net loss of $16.5 million or $0.15 per common share for the first quarter ended March 31, 2020, as compared to a consolidated net loss of $12.4 million or $0.14 per common share for the first quarter ended March 31, 2019. The loss for the first quarter ended March 31, 2020, reflected a noncash reduction of $9.8 million in the estimated fair value of derivative warrant liabilities compared to a reduction of $1.7 million in the estimated fair value of derivative warrant liabilities for the first quarter ended March 31, 2019. The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the company. The outstanding warrants expire on December 28, 2021.The loss before the change in estimated fair value of derivative warrant liabilities and income taxes was $26.6 million for the first quarter ended March 31, 2020, compared to $14.1 million for the same period in 2019. R&D expenses increased to $13.8 million for the first quarter ended March 31, 2020, compared to $10.6 million for the first quarter ended March 31, 2019. The increase in these expenses primarily reflected higher costs related to the preparation of the NDA submission and the related supporting activities. The ongoing VOS/AUDREY Phase II/III dry eye trial, the AURORA 2 extension trial, and the expansion of the medical affairs team to support the launch of voclosporin. Noncash stock compensation expense charged to R&D also increased to $1.2 million for the quarter ended March 31, 2020, compared to $862,000 for the comparable period in 2019, reflecting the hiring of a significant number of personnel in 2020 and an increase in the fair value of the stock options granted due to the increase in the company's share price.Corporate, administration and business development expenses increased to $11.1 million for the first quarter of 2020 compared to $3.9 million for the first quarter of 2019. These expenses included the expansion of the commercial team, higher consulting and professional fees, insurance costs and personnel compensation costs as the corporate organization build-out continued in the first quarter of 2020. Noncash stock compensation expense charge to corporate, administration and business development also increased to $2.3 million for the first quarter ended March 31, 2020, compared to $742,000 for the comparable period in 2019, reflecting the hiring of a number of significant key personnel in 2020 and an increase in the fair value of the stock options granted due to the increase in the company's share price in the quarter.With that review, I will pass it back to Peter for some concluding remarks. Peter?.

Okay, thanks, Joe. And before opening up to Q&A, I'd just like to say that we are excited about what's on the horizon, if it's not obvious. We're keeping our heads down, focused on filing the completed NDA for voclosporin. Furthermore, we're working to build additional value for voclosporin with the VOS dry eye syndrome program by completing the AUDREY trial and reporting those results later in the year. Based on our continued enthusiasm and confidence around the 036 patent, we are now looking to redeploy our resources and evaluate voclosporin in other proteinuric kidney diseases beyond FSGS and moving beyond this ultra-rare condition and into larger, more commercially viable indications. With a strong balance sheet of approximately $286 million at the end of the quarter, we are adequately funded through 2021 and can confidently execute on our development and commercial launch plans.I want to thank you all for your attention today, and the team is here to take your questions. So with that, operator, can we please open up for a Q&A session?

[Operator Instructions]. Our first question comes from the line of Alethia Young with Cantor Fitzgerald.

Congrats on all the progress that you made in the quarter. Just a couple for me. One, I wanted to just kind of get any kind of feedback that you kind of heard from the FDA, the conversations you had. It sounds like everything's a go to the finish line. But just if anything notable popped up there.And then second, I mean, I hope the drug gets approved relatively quickly after you file and you may be launching, hopefully in early 2021. And I guess, for your new commercial lead and for Peter, maybe just can you talk about how you think about targeting docs in the world of COVID? Are you guys preparing to kind of think about something virtually? I know it sounds a little early, but I guess I feel like all companies are sort of having to think about multiple scenarios of launches or in the next 12 months.

Okay. Thanks, Alethia. Hope all is well on year end. Let me start the first question because I think it's the simplest. Feedback from the FDA, as we said on the last call, from the February 25 interaction and up to this point, has been, I guess -- and Neil, you can jump in here if I miss anything, but it's been on target.We haven't heard or seen anything that has been a surprise to us. And actually, as when we met in Rockville pre all of this lockdown. It was quite a collegial meeting, and we were very happy with the result. Neil, anything you'd add there?

No. I would echo what you said, Peter, it was a collegiate meeting. We met many of the medical reviewers there, most of whom have actually been following this program since inception in 2012, which is great news for us. They're familiar with us, familiar with our story and familiar with what they're about to receive. They also reiterated that this is an NDA based on the 1-year efficacy risk benefit, which we believe is very, very positive. So yes, we're very, very confident.

And on to the second question, which I'm sure this is the standard for just about everybody today is how do you launch a drug in a world of COVID? And I think we're all learning that as we go here. I sit on multiple other Boards outside of Aurenia that have commercial products and obviously, some of those learnings as we're going through the current situation, can be transferred in. We're also watching other companies that have drug approvals during this time to see what they're doing during a lockdown scenario. But before I ask Max, if he's got any comments, I would tell you, our current planning is basically 3 scenarios, one, which is a normal drug launch. And I now that there is a new -- a normal drug launch anymore. There's a new world we're entering into. So we -- what I mean by normal is that would be an unrestricted, non-lockdown assuming access, how we would approach the market.The second is a full lockdown scenario, which would mean that recommendations come out that basically put us back into the same scenario we sit in today. If that would be -- if the virus reappears or a new strain of the virus reappears and states and the nation and countries, quite frankly, decide to lockdown again.And the third would be sort of a limited scenario where the virus is circulating and maybe doctors' offices and health care facilities have less access. We're planning on all three scenarios, and we're just trying to learn as we go. But plan A, I will tell you, is launch in a normal world scenario and build towards that objective. And -- but hopefully, it leaves some level of confidence that we're thinking about it on multiple different fronts. Max, what would you add or build on with that?

Yes. So what I would add is that we are clearly building our virtual capabilities, so we'll be enabled virtually irrespective of what scenario we launch under. And then also, I would highlight that in terms, you talked about physician targeting, the disposition of physician is what you see also in other rare diseases, where you see a number of small number of physicians that actually see a large number of patients. And then you see most physicians that see few patients. And so we're clearly taking that into account in our targeting and deployment as well.

Our next question comes from Ken Cacciatore with Cowen.

Congratulations on all the management and Board additions. Question for you is on the intellectual property. I was just wondering, from a layman's perspective, can you just talk about what was surprising about the dosing of voclosporin in these studies that allowed you to secure that patent and then would you anticipate those dosing instructions to be included in the label?

Yes. So let me take the latter part of that first. And then I would ask -- we have 2 folks on who -- because they're founders of the company, and one in particular, I was intimately involved in the whole application for the patent, et cetera, and that's Mike Martin, our Chief Operating Officer.So -- but I think the last part of the question first is probably the most important. Our hope would be that we would see this appear in our indication and usage section of our label. It was how we did both of our trials, and that this is our eGFR dosing protocol that was utilized in both our Phase II and our Phase III design. As I've said to many investors along the way, I think we spent a lot of time with the agency over the time we've been in the industry and a lot of time, you're trying to modify the way that -- the way you do your clinical trial appears in your actual label. Our hope is that we get what we believe we will is get that dosing that we had and the trial appear in the label. And most of the time, that's the way it works out. So I think we're confident and hopeful that it appears in the indication and usage section of our label.We'll have to see as we go through those negotiations. But it's been a rare occasion in my experience in the industry, where how you do your trial and how you suggest or mandate that the drug be dosed in your trial does not appear in your usage and indication section.With that, the first part of the question was what was unique on the patent front and why the observation was unique. And I would ask that -- and we can start probably with Mike Martin. But if Mike wants to move to Neil, that's fine, too just to go through a little bit more of that. Mike?

Yes. Yes, no problem. So the long and skinny of it is basically what we've done here is we've generated intellectual property with respect to a personalized treatment regimen. And we know from past experience with the drug and other CNIs is that some patients are much more susceptible to the short-term hemodynamic effects of calcineurin inhibitors. And this causes kind of a structuring of the renal arterials. And thus, a corresponding decrease in eGFR. It varies from patient to patient. But what we found is that if we can monitor these patients early on in therapy, drop the dose, manage these short-term variations in eGFR and keep them on therapy, that actually in both AURA and AURORA have shown to have better complete remission rates at 6 months and 12 months. And that's exciting. And that's unusual in that you would expect the lowering of the dose of this particular medication to generate lower complete remission or partial remission rate.So that's the surprising result. And I will remind you that you can review the prosecution history. It's available on the U.S. PTO under Public Pair, and you can read how the response came out from the examiner and what kind of data was presented to kind of basically define or determine this is patentable subject manager. I'll leave it there.

Thank you. And Neil, anything you'd add? Or I think we probably have a cover, but let me just check.

No. I think that's everything.

Ken, anything else?

No, that's it.

Our next question comes from Joseph Schwartz with SVB Leerink.

Great. Just to continue some questions on the label, how do you anticipate the indication will look in terms of things like line of therapy induction versus maintenance? And then how many patients in the United States do you think would be covered by however those things are structured?

Thanks, Joe. And I'll ask Neil to build on this with me, but I will tell you, as I've said an individual one-on-ones with investors. We're in the process right now with Max joining and bringing his leadership team together to do what most would expect of a commercial team to really sort of nail down through patient flow modeling exactly where patients show up, how they show up, who they show up to rheumatologists, nephrologists, and ensure that we know the right call points. Within those call points is also ensuring that we have the right message delivered to those physicians and to ensure we're identifying the right patients.So we're in the process of looking at all that right now through market research. I'll ask Neil to maybe just comment on what we're aspiring to in the label. And I think from that answer, you can probably derive at least what that patient population could be. But I do think it's going to be important to really see where the label comes out. And for us to then come back towards the latter part of the year, and be more definitive with you about how we think we need to attack the call target in terms of the physician base that's out there and then on top of that, exactly what our individualized message will be to identify the right patients. And I think that will be able to give you almost a pinpoint accuracy as to how many patients might be out there.We'll also learn more as we look coding and we actually get out there and start profiling docs and patients more commercially. But Neil, you want to try the label side of the equation?

Yes. I'll make a start. I mean, it's very important when we look at label to see what sort of patients we enrolled into both our studies. And actually, we very deliberately made an effort to enroll a very broad range of lupus nephritis patients, such as the extremely active new onset even treatment-refractory patients who enrolled. So the target label for us is actually just the treatment of lupus nephritis. And that's what our current position is. Obviously, we'll see how that pans out. But I mean, it's pretty best to hand over to either Max or Peter a bit to build on that a bit more.

Yes. I mean I'll just -- I'll put a bow on it because I don't want to overly speculate on where we're going to end up on the label. But what you should be hearing is we've enrolled a very broad range of patients. And our ask will be what we did in our trial. So we'd say, go back and look at our entry-level criteria for the trial. And I think that will give you a good idea of where we're trying to range into.And as I said before, because I don't want to put Max too on the spot to get into the details of it. We're in the process right now of really refining that into a commercial targeting and a commercial message that will -- once we have a label, be able to go out there and give more direct feedback to the investment community about exactly how many patients we think that opportunity could be. But just to recap what we've said, publicly, is, we think there's somewhere between 400,000 and 500,000 lupus patients that are out there and that somewhere around 50% of those patients have lupus nephritis. And again, this is a cyclical disease. So they can -- of that patient population. So you're talking somewhere in the range of 200,000 to 250,000 patients is our estimate. And then of that, what will be accessible to us and when. I think there's a label component to that. And then I think there is a marketing execution component to it. We look forward to telling you more as we come to the back of the year. Joe, that rounded out for you. Do you have another one?

Yes. That's very helpful. Maybe just one on the dosing scheme. Does it require physicians to do anything that they don't already do in the normal course of treating lupus nephritis patients? How intensive of a dose adjustment scheme do you envision physicians having to be doing in the real world? And is it a big ask for them?

Yes. I'm going to ask Neil to build on to my front part of this question, but listen, one of the benefits that this product has is the ability to be flat-dosed. So the last thing we would want is a patient-tailored dosing profile that have been put in our trials that actually added to -- added complexity so that it became something that couldn't be flat-dose and needed to be monitored like some other first generation CNIs. So I think the short answer is docs are doing this already in tailoring a dose or taking these types of reads already. And tailoring the dose won't be anything that is additive to their normal treatment -- their normal monitoring of the patient. Neil it's fairly accurate? Or am I off-target on that?

No. That's pretty much it. When these patients are first put on these drugs, they're in the doctor's office when they have an active flare very, very frequently. And the frequency is reflected in our study protocol, which is pretty much every week or every two weeks in the first couple of months. And the dosing, the thing that triggers the dosing is eGFR, which is routinely measured. It's cheaply done. It's basically a sim -- current test system that's done everywhere, not just at specialist centers. Just out of local labs everywhere in the country. And that can be plugged into a very, very simple formula and return to the doctor a patient the same day within minutes. And so we feel that it's accessible. It's simple, but also it's informative as well.

Our next question comes from Justin Kim with Oppenheimer & Company.

Maybe asking a little more specifically about the real-world patient population. Do you have a sense on what the allowable eGFR status range might look like practically speaking, relative to what the entry criteria we saw for AURORA was? And in what way the results of AURORA, including Dr. Gibson's presentation at NK have shaped that thinking?

I think it's a great question, not being a treating nephrologist and really knowing that our current market research probably isn't drilling down on that -- or is drilling down on that. We don't have that data for you yet, I would turn that to Neil because he's been around these patients longer and maybe has a practical way of giving you some guidance on that. Neil?

Yes. No, I mean, it is a good question. And we put a floor of eGFR 45. Clearly, some patients have a much more and more advanced and sicker patients have a lower eGFR than that. But I think just -- it's probably worth considering that when we started screening for the study, very few patients are actually excluded on the basis of that eGFR. And what we did permit was if they had a lower eGFR than 45, and they had a pulse of steroids and that eGFR recovered, they're still allowed in. So we believe it's a very, very good real reflection of a patient population who are having proteinuric flares. It certainly does it exclude the ones who are kind of very far gone, who perhaps shouldn't have CNIs, but also perhaps needs to think very carefully about the sort of therapy that they should have as well. And it is possible that within that in a future date, we could move into some of the more severe patients in the Phase IV program, but that's for discussion between us and our commercial colleagues.

And I think one last thing I would add to that, Justin, is like, listen, as grown up commercial guy here, what's exciting to me is the prospect of being able to go in and engage a physician, both through our medical affairs and our clinical organization, but all the way through to a sales representative, where the conversation is not just starting it. Here's my drug, here's features and benefits of it. You're actually talking about the way these patients are treated, the treatment paradigm, how our drug fits into the treatment paradigm. And I think this patient-centric dosing that we did, the fact that there was a steroid reduction protocol in the trial all give some element of challenging the individual physician -- patient -- the individual physician treatment of the patient, the entire dynamic of the treatment paradigm itself. So with Max's comments on the type of people commercially that we're trying to court and that we are successfully courting right now that experience and that engagement in rheumatology and nephrology and experience in those 2 areas with that customer base is going to pay dividends if and when we get the drug approved. Do you have another question, Justin?

Yes. Maybe just one then. In light of the clinical development strategy updates, can you just talk a little bit about the additional opportunities that were just mentioned on the call and sort of mechanistically, how they may benefit from voclosporin's action on podocyte?

Yes. It's the first thing I would -- and then I'm going to ask Neil and/or anyone else who may have a comment on the call. I want to reinforce to investor something I've been saying all along. I think that FSGS, I think, the company started work here before I came onboard, and I think we did the absolute right thing going after a proteinuric kidney disease where patients currently, and to some degree, are getting utilization of first-generation CNIs. We know that today and it made a lot of sense. I can tell you, just from an investment standpoint, that this was sort of an off-NPV or IRR body of work that the company was going down. It was an exploratory study. We knew from the outset, our estimate was that there were about 4,000 to 5,000 patients here, and that if we were to get the drug approved in lupus nephritis, that the pricing of the drug would be priced relative to the lupus nephritis market. What we believe much larger market opportunities, so pricing accordingly. And the folks in -- with FSGS, we get the benefit of that. But this wasn't a high-return area for us and our burn on a monthly basis to do the work we were doing, didn't justify continuing to operate here when we can go and operate in other areas where the return could be potentially better and the impact on patients could be better.So Neil mentioned a few. I might ask him just to comment on the maybe technical rationale on a few, but maybe not go so deep because we'd like to come back to investors and say specifically what are those targets in short order. Neil?

Yes. No, I mean, I think you actually touched on it with the word, post-cytopathic. I think that's what most of these conditions have in common, and they are a good target for a calcineurin inhibitor. So mechanistically, just sort of poeticize leading to proteinuria and also that is covered by our 036 patent, which actually the diseases that I mentioned as examples, we are not final on that by any means, are covered by that, and we're going to look into more detail.Obviously, diseases that may have off-label use of CNIs or very, very high doses of steroids are a simple target for us from a commercial perspective. But we'll report back with those indications with the rationale, both clinical and scientific and also commercial rationale around those.

Our next question comes from the line of Ed Arce with H.C. Wainwright.

Congrats on the progress with the build-out of the team in preparation for the launch. A few questions have already been asked. But let me start first with Neil, if I could. Instead of FSGS. Maybe a question on the VOS program. Clearly, that is progressing well with your target remaining for the fourth quarter. Just wondering if there have been any incremental learnings or takeaways as you continue to treat patients, enroll patients anything anecdotal there would be helpful.

Yes. Neil, I jump right in it, Neil. Sorry.

Yes. Sorry Peter. Did you want to...

No, no, jump up, please go ahead.

Yes. Yes, because he was addressing me by name. So no, Ed, I mean, it's a blinded or masked study, as we say, in ophthalmology. So we have -- other than the fact that we receive top line safety, which, of course, as you can imagine, in this sort of population, it's not a systemic disease, and it's very little to report. We don't hear very much. And I'm not really at liberty to disclose any of the other information. We have teams looking at the data from a data cleaning perspective, but certainly, there's no interim or sub -- or early analysis going on in this program.

Okay. Fair enough. And then perhaps a question for Max. You had mentioned a small handful of barriers to adoption. And I was curious if you could, given the brief time you've been at the company so far, perhaps general thoughts about how you are thinking about intending to address those and where you see the sort of greatest opportunities for improvement?

Yes. Max, you want to jump right on that?

Sure. Thanks for the question. Yes, so the barriers that we see are barriers that we have seen in other rare diseases. And again, it's from this it's a reality that the many physicians are only treating a handful of patients, right? And so really, the -- again, I mentioned kind of applying a rare disease model, which basically means that hiring exceptionally talented, world-class people in the field that act to educate and promote our messages in terms of the identifying patient and treating the right patient. And Peter, I think, eloquently stated what that looks like. And again, it's that rare disease paradigm of -- in sales.

Yes. And Ed, just to add, I think that the barriers that we have and the ones that we're identifying early to me, if done right with the right people, with the right message, the right label, we have the right drug, we believe, it creates a great opportunity to sort of change the entire treatment paradigm and the way docs are thinking about treating this disease. Our trial, and the structure of our trial predicated that. And now we've got the negotiation. We need to go through with the agency. Hopefully, we gain approval in the early part of next year and go out there with the right message with the right people and just -- and be able to really shift the way patients are treated It's a really cool commercial scenario. I'm excited to charge down. And I think it's why we're having such -- it's one of the reasons why we're having such success in recruiting high talented people.

Great. And then one last one for me, and this is for Joe. Joe, how should we think about sort of the general trajectory of OpEx, especially the SG&A for the remainder of 2020, given, obviously, lots of moving parts across the three therapeutic programs?

Yes. I think if you kind of think about operating expenses across the board, obviously, there'll be some continued ramp-up in SG&A as kind of we build out the infrastructure. Obviously, Q1 wasn't fully burdened by the full SG&A costs. So we'll have a slight increase as you kind of look out into the future quarters associated with that. Obviously, the remainder of the year will have quite a bit of MD&A preparation costs, so you'll have somewhat of a shift between kind of your peer development costs into more of your kind of CMC and NDA cost. But overall, I think your R&D expenses should remain pretty consistent quarter-over-quarter.I'd say if you used Q1 as kind of your benchmark, you may have a slight increase in the coming quarters, but you could probably use Q1 with a little bit of an uptick to kind of project what the remainder of the year will look like.

And obviously, for everyone else on the phone, because that question, I think, is sort of leading to the projection forward. We'll hope to be able to -- as we get closer to a potential approval and label, give better guidance in terms of what the future looks like after that point. So more to come.

[Operator Instructions]. Our next question comes from Maury Raycroft with Jefferies.

Congrats on the progress. Just as a follow-up to a prior question, I was wondering if you're doing market research and if you have a good sense of how much off-label use in non-lupus nephritis indications you might get? And in what indications that is most likely to come from?

Yes. I mean, obviously, we would never project any spontaneous sales we might get in the market. I think some of that is just going to come down to physicians' comfort in wanting to look at the drug in other areas. I think there's a well-worn path for that. I mean I think anti-TNF is a really good example of when you have a new immunosuppressant that people feel comfortable and get comfortable with, they start tinkering with it in a lot of different areas. But obviously, we can't comment on or speculate on any off-label use, nor would we, in any way, promote to it. So -- but I think there's a host of areas that CNIs are used today. And I think you could use that as a way to look at how docs might think about it. But again, reinforce not anything that we're looking to do in terms of promotion, not anything we're encouraging docs to do unless we actually do research and development work there.

Understood. And then I think on the fourth quarter call, you said you could provide more on pricing details in the near term. I just wanted to check in and see if you could provide your latest thoughts on pricing.

Yes. Max and his team are doing all that work as we speak. So a whole comment -- it's so label driven to that we've not given any guidance here yet, but we look to in the future. If we're thinking about a first quarter launch, best target would be around that time period. And if we get potential launch that is. And if we get more sensitivity closer, we'll -- as we've said, we want to give more details of the general launch plan as we go closer to market, towards the back half of the year. If we have any better range, we'll come back at you. Obviously, there's also market sensitivity around that, not just in terms of valuation, but also the competitive set out there. So we're going to keep that as close to our vest as long as we can, but appreciate the question.

Our next question comes from Tom Bishop with BI Research.

You mentioned some barriers to insurance for voclosporin. I'm just wondering if you could give us a little bit more on that. Do you just mean like relative to pricing? Or is there some other issues?

No. I think, listen, I want to answer this for Max because I'm just I'm close to some of the data we've done in the past. I think what Max is trying to bring up is just -- these are the normal barriers for any new product coming in the rare disease space, and we're making sure that we look into all of them and dig into them. But as I've said historically, when we concluded the Phase II trial, and we went out and we did our preliminary market research on potential profiles and what barriers there might be in terms to access, one, we found out with payers, this today, nor is lupus, a managed category by payers.That doesn't mean it won't be in the future. But today, this isn't a category that they actively manage. And when we brought profiles and put them in front of physicians and payers with data like we had seen in our Phase III in terms of outcome, access did not appear to be an issue in a range of different pricing sensitivities.That being said, we're all over it. We're looking at doing current market research around the profile coming out of Phase III, and we will be prepared to ensure best we can that patients and physicians have flawless access to product. I think the point was being made is we're going to make sure we're on top of it. But everything points to with this profile that broad access should be there for patients. And that today, this is not a managed categories even by payers.

Okay. And my other question relates to VOS. And I was pleased to see that the trial is on target. I was guessing that given that -- I would think people have to come in to the physician's office for the tests that, that might have been delayed in this COVID-19 environment. But apparently, it was not an issue with your test?

Yes. I guess what I would -- it's one of the things that I would hope most would take away is this is a pretty damn good outcome for the company. When others in our space are saying, "Hey, listen, our trial is locked up, and we had no patients being enrolled." I want Neil to give a little bit more specificity as much as we can give but I do think your takeaway should be, we were doing a damn good job of enrolling, and we had a pretty damn good stable of patients up to that point.And then second, as things are opening back up, we've got a really good statistical management plan in place that we don't think we're going to see a hiccup here. Without telling too much detail, Neil, what can you give just to make folks feel comfortable that everything is good and why it might be good for us outside of the fact that we had a really good enrollment up to that point.

Yes. No, I think that's very important to know. We have a number of patients in. And also, there is some quite good guidance from the FDA around missing visits. These subjects take their eye drops themselves. They don't have to come in the doctor's office, for example, for infusions. So they can go away, take their eye drops and if they can't get back to the doctor's office for an assessment, they can delay out a few weeks. And certainly, without, as Pete says, giving away, our belief is that we've missed very few of those. And we've been in constant contact with our statistician, and we've been -- and the protocol permits us to make sure that we get the right number of patients in to get adequate statistical power by opening up a couple more sites in areas of the U.S. where they are perhaps less affected by some of the shutdowns as well.So we're confident. And I think some of it's a bit of luck that we've got a huge amount of patients in sort of early. But the way things are going, we're pretty confident at this point.

How big was enrollment? Or where does it stand now? Also?

We haven't actually given a number as to where we stand in enrollment in the trial. But Neil, you want to just give them the total number and the cohorts we're looking at?

Yes. I just have to remember, we have 4 groups of Mike may have to jump in here.

It's about 580, 180.

180 in total? Okay. That's what we needed. Wow it's great that that's on target. Congratulations.

We have no additional questions at this time. So I'd like to pass the floor back over to management for any additional closing comments.

Great. I want to thank everybody for taking the time with us this evening to run through how the quarter went. We continue to be incredibly excited about the opportunity that lies ahead for us, and we will look forward to reporting back to you soon on our progress on the NDA and our development programs. Thank you very much for taking the time and stay safe and healthy.

Ladies and gentlemen, this does conclude today's teleconference. Once again, we thank you for your participation, and you may disconnect your lines at this time.