AUPH (2020 - Q4)

Greetings and welcome to the Aurinia Year End 2020 Financial Results Conference Call. It’s now my pleasure to turn the call over to Glenn Schulman, Senior Vice President, Investor Relations. Please go ahead, sir. Glenn Sc

Thank you, Kevin and good afternoon everyone. I am pleased to welcome you to today’s call discussing Aurinia’s fourth quarter and year end financial results. Joining me on the call this afternoon are Peter Greenleaf, President and CEO of Aurinia; Neil Solomons, our Chief Medical Officer; Max Colao, Chief Commercial Officer; and Joe Miller, our Chief Financial Officer.

Thanks, Glenn and thank you all for joining our call today. Today’s agenda is pretty straightforward, folks. This afternoon, we will be recapping what was a very busy fourth quarter of 2020 for the company, sharing an update on what’s happening just 23 business days post-approval and launch of LUPKYNIS as well as what’s next as we continue to introduce this product to healthcare professionals and patients in the U.S. market. Of course, we will also provide an update on where we are at financially as we close out the year. We all know launching a product is obviously not as simple as flipping a switch or pushing a button. The fourth quarter is quite busy with label negotiations, launch readiness prep, our internal launch meeting and preparing to ship the product to the U.S. market. We were also hard at work finalizing important long-term agreements to shore up our ability to deliver and market LUPKYNIS well beyond launch and to expand the product into global markets around the world. On December 15, 2020, we announced the collaborative agreement with Lonza to build a dedicated manufacturing capacity within the company’s existing small molecule API facility in Visp, Switzerland. The dedicated facility provides cost and production efficiency for the manufacturer of voclosporin, while expanding existing capacity and providing supply security to meet future commercial demand.

Thank you, Peter and good afternoon everyone. So I am happy to share with you what we have achieved over the past month since our approval and launch. And I might begin by saying that this is actually the 13th launch in my career. I guess that’s a pretty good number. And if nothing else, it just proves that I am old, but I am making a point, because none of the other 12 were amidst an environment as unprecedented as what we all see with the COVID pandemic. There is a lot we have had to do in ways that have never been done before. And as you will hear in a minute, the commercial team has stepped up to this challenge in a very admirable way. Of those 13, this is the fourth time I have launched the transformative therapies for rare disease. As many of you know, the market dynamics that drive such are a world apart from launching a therapy for a larger patient population. Those dynamics haven’t changed, even amidst COVID. So, while I can certainly appreciate everyone’s interest in hearing comments related to prescription counts, I am sure you can appreciate that such numbers at this early stage and amidst this environment can provide a good indicator of market response. Even so, I will say that we have been genuinely pleased with the level of initial prescription volume. The numbers are tracking to our expectation. In fact, if anything, they are a little ahead of what we were anticipating. But we feel positive about the very early initial trend and we will certainly be in a position to share more details around this obviously important metric on our next call. In the meantime today, it is entirely reasonable to highlight even at this early stage, our progress in executing our strategy. Just to refresh, our strategy has four planks: establish LUPKYNIS as a standard of care, ensure our own patients receive optimal outcomes, ensure there are no delays in diagnosis of LN, and critically ensure that patients can gain access to LUPKYNIS. Achieving all four of these strategic objectives is critical to the success of LUPKYNIS. What we have achieved in a short amount of time showcases our ability to execute strongly towards these goals. LUPKYNIS was approved late on Friday, January 22. Aurinia Alliance was online right early on Monday following the approval and receiving prescriptions within 15 minutes. 72 hours later, LUPKYNIS was in the channel. Our field team was fully trained and deployed within hours of approval. Interestingly, so far 70% of our sales calls have not been virtual, 70% have been live and in-person, fully compliant local guidelines. We think that in the context of COVID restrictions, this high ratio of in-person calls confirms very robust interest on the part of physicians. It also speaks to the incredible dedication and tenacity of our team.

Thank you, Max. Good afternoon, everyone. As of December 31, 2020, Aurinia had cash, cash equivalents and investments of $423 million compared to $306 million at December 31, 2019. Net cash used in operating activities was $69.9 million for the year ended December 31, 2020 compared to $63.6 million for the year ended December 31, 2019. The company believes that it had sufficient financial resources to fund its current operating plans, which include funding commercial launch activities, manufacturing and packaging of commercial drug supply and conducting our plan R&D programs into at least 2023.

Thanks, Joe. Thank you, Max. And thank you all for joining us, giving us your time today. With the launches of LUPKYNIS underway, we want to hear you – we want you to hear from us bottom line that we are on track with our internal projections for the U.S. launch. Furthermore, with our ex-U.S. partnership with Otsuka, we look forward to working with them to expand into additional territories, including Europe with the upcoming MAA filing by the first half of the year. 2021 will also be a busy year with continued clinical development medical presentations surrounding voclosporin. We also continue to work to enhance value by exploring opportunities to expand our pipeline and we look forward to providing additional updates in the months and quarters to come. As I stated earlier, we continue to work to enhance value by exploring new opportunities to expand our pipeline. As the launch in the U.S. progresses, we look forward to providing additional updates in the months and quarters to come. So with that, I would like to open it up to any of your questions. Operator?

Thank you. Our first question today is coming from Alethia Young from Cantor Fitzgerald. Your line is now live.

Hi, this is on for Alethia. Thanks for taking my question. I was wondering how you think about the lupus nephritis patient population in terms of getting treatment during the pandemic? Do you feel like these patients are continuously going to their physicians to get treatment or do you anticipate maybe a bit of a challenge getting patient motivation? Thank you.

Yes. Since we have on the ground experience with that now, I won’t project I will ask Max, what he is hearing from our field troops, Max, what are we seeing?

Yes, thanks. Thanks for the question. Yes, I would say that it’s variable across the United States. We are definitely hearing of patients that are delaying their visits, but we are also hearing of physicians that are actively engaged in their patients either through telemedicine or getting them in line for visits. So, we are seeing – it’s variable across the U.S., but it doesn’t take away from again our confidence in seeing that the patient opportunity is there.

Okay, thank you.

Thank you. Our next question today is coming from Ken Cacciatore from Cowen & Company. Your line is now live.

Hey, guys. Just have a couple of questions. I was wondering now that you’ve had a little bit more managed care engagement? Is there any reason to sharpen the kind of the net pricing that you gave us before $65,000 just wanted to know if there is any additional nuance there? And also in the early going, just wondering if patients qualify for a medical exemption or how that’s going to be handled? Second question I have is just around the whole process with Aurinia Alliance, I know this is going to sound silly, but with some early prescriptions written, how smoothly is the system getting patients to – sorry, getting product to patients and patients to actually be able to take the medication just any early glitches or successes that you are seeing and some nuance there? And then also, I am wondering if you could help us a little bit on spending guidance for the year, some thoughts on that? Thanks so much.

Thanks, Ken. And I will take the bookends on this one. I think as it pertains to the net price assumptions, it’s at the end of the day, I think it’s too early to tell, policies are currently getting put in place. And I think our assumption is still where we want to keep it. So we will keep it tuned as things progress. Max, you want to take the following two, the medical exemption question and the other?

Yes. And I can tell you that in all of our payer interactions, the payers have – they have appreciated that the clinical and economic burden of LN. They have also appreciated that voclosporin offers more than the standard of care. And they have also appreciated that we are talking about a really small number of patients relative to their covered lives. So we have been encouraged with our interactions. And I can tell you that we have prescriptions that are now reimbursed across every payer segment. So, we have prescriptions reimbursed on the commercial side, on Medicaid, on Medicare, and also on federal government. I also tell you that the payers – this does look like any other rare disease launch where going from prescription to kind of working through the adjudication approvals and finalizing that prescription takes some time. And definitely we are seeing that as well, very consistent with what you would expect in our rare disease launch.

And Joe, you want to take the one on expense guidance?

Yes. Yes. Thanks Peter. So, as we have previously spoken, the Q4 run-rates will – are freely burdened with kind of the build-out of our commercial infrastructure. So you are kind of looking forward, it’s probably best to look back at Q4 and I will give you a reasonable estimate about where we will try and going forward. We haven’t specifically guided to the numbers yet, but that would be a good target point to kind of look what’s going to happen in the future quarters to come.

Great. Thanks so much.

Thanks, Ken.

Our next question today is coming from Maury Raycroft from Jefferies. Your line is now live.

Hi, everyone. Thanks for taking my question. So first question, I am not sure how much more you are going to be able to say on this, but just wondering if you can comment generally on the types of patients you are getting on LUPKYNIS whether the patients are primarily switches from off-label generics or treatment naïve and if you are getting more uptake in community or academic centers. Any additional perspective on those?

Max, jump right in.

Sure. So, yes, Maury thanks for the question. It is too early for us to have any deep insights on the types of patients that we are seeing prescriptions for. We will definitely have more when, as we get into our next call. And tell me the second part of your question was, the…

Academic versus community.

No, we are definitely having more access on the community side. As you can expect academic centers, especially in heavy COVID areas are pretty locked down. So, but we are making inroads. We are making inroads across both, but we definitely have better access on the community side.

Got it. Thank you. And second question was just on, if you can talk more about the potential to get KDIGO guidelines updated? Is this a priority and is it contingent on the Phase 3 data getting published?

Neil, because I know those are in progress. Dr. Neil Solomons is on the call. So, Neil, you want to give an update on guidelines maybe in the manuscript?

Yes, that’s right. I mean, I think it’s a good point. I mean, guidelines are clearly helpful. And we have been in contact with the KDIGO guidelines for years now. But you are right, that it refers to published data and that’s why on sort of record publication manuscript which is as Pete said in the introduction is coming fairly soon and is going to be instrumental in the literature and we will also update guidelines.

Got it. Okay, thank you for taking my questions.

Thanks, Maury.

Thank you. Our next question today is coming from Justin Kim from Oppenheimer. Your line is now live.

Hi, good afternoon. Thanks for taking the questions. Just wondering when you think about the commercial launches progress, just how the team feels about the current commercial team and the footprint the team is able to address during the current environment. I know sort of Max gave some color about how there is heavy sort of in-person touch points, so just wondering how you feel about the size of the team and whether it could grow going forward?

Yes. I mean, I think what we have said previously is we feel very comfortable with how we are deployed against the opportunity that’s out there today and Max can give more color as to how they are seeing that interactions. I can tell you from other boards of commercial companies that I sit on these types of access numbers that we are getting live or higher – quite a bit higher than what we are sitting at other specialty companies that I work with. And so we are encouraged by that. I guess the last thing I would say and then Max if you’ve got any additional comments. So we have got resources that if we found there was opportunity to shift a resource to a certain area where we saw we could fuel an opportunity or we saw the possibility of needing to expand we could do that. I think the forethought that we have put into making sure we had enough cash on the balance to do this launch gives us the ability to make adjustments we have to make, but I think the short answer is we feel we are deployed, right. Max, anything you are learning in the first couple of weeks we are out there?

Yes. No, I think it’s right on. I think we have got the right level of deployment. It’s so early at this point. It’s really very difficult to assess otherwise.

Got it. Got it. Great, thanks. Maybe just another one on sort of macro level, are you seeing any differences? And based on how you expected conversations between rooms and nephrologists to go, just wondering is the commercial launch to target rooms ending up different from through your communications with nephrologists?

And Max, I think you can jump right in on that. And I love the short answer is no, but he can give more detail.

Yes, the short answer is no. We are targeting those specialties. We are targeting about 12,000 physicians across those specialties and prescribing that we are seeing is across both specialties as well.

Okay, got it. And maybe just a final sort of clarification question on sort of the OpEx side and also the R&D numbers were a little bit sort of variable quarter-to-quarter just wondering, is R&D fourth quarter number is also sort of the right way to think about the go forward spend?

Joe Miller?

Yes, thanks for the question. Yes. So, as we kind of noted throughout the call today, there are continuation studies ongoing. So I would say directionally, there will be a shift in R&D related expenses towards other activities, but generally speaking directionally, they will probably be fairly consistent with what you saw in Q4 going forward. There might be some timing related differences as a result of when and if – and when we start the trials, but overall, I think directionally be fairly correct.

Alright, great. Thanks for taking the questions.

Thanks, Justin.

Thank you. Our next question today is coming from David Martin from Bloom Burton. Your line is now live.

Yes. Thank you for taking the questions. I know it’s early, but are you seeing that physicians are treating one set of patients with Benlysta and another set with voclosporin or are physicians making a decision or treat all my patients with one drug or the other? And if patients are already on Benlysta for SLE, are there any cases where they are adding voclosporin to Benlysta?

Yes. So, I think my answer to both of those would be, it’s early probably for us to be seeing the trends and we are not actually out there aggregating data on where Benlysta fits into the treatment paradigm. So, let me see if Max has been hearing any of this and it might actually be good to see if Neil has any comment as well. But my answer would be, I don’t think we have much of that data at this stage of the game. Max, are you hearing anything?

Look, just it’s – yes, we don’t – it’s too early for us to have real insights to your questions are good questions. We haven’t even run market research post-surveys yet given that we are 23 days into launch we have many scheduled, but we haven’t run any yet, right. So, we will have more insights as we go along, but it’s a good question, but we are not there yet in terms of that, those deep insights.

Okay, I did have another question. Sorry.

Yes. Neil, anything to add?

No, I was going to add that although people talk theoretically hypothetically about the combination of Benlysta and voclosporin, I think it’s too early. We got a lot about that combination, but even in the future .

Okay, thanks. Peter, you have mentioned post-marketing obligations, what are those? What are you required to do?

Yes. So, I mean, what we are required to do and there is what the FDA has had further questions about that we can sort of formulate a response to and decide whether we are going to do more work on or not. So Neil, do you want to maybe just go into some of that detail?

Yes, in terms of the requirements which are things we actually have to do there is presenting the AURORA 2 study report next year is number one, which of course we are doing anyway. There is study and also the pediatric adolescent and then pediatric as well. Those are called the drug-drug interaction trial, which is something we have to – we would like to see as well. So, we are looking at doing that.

Okay, thank you.

Thanks, David.

Thank you. Our next question today is coming from Ed Arce from H.C. Wainwright. Your line is now live.

Great, thanks for taking my questions. So firstly, I realized, again, this is very early days, as you have mentioned before, 23 days past approval and launch, but the RX counts can’t really provide any good indication just yet. But wondering, given the variability in the early days, do you have a sense for when that variability may sort of level out and therefore start to provide some indication of a value of what the demand looks like? How far out before the RX counts actually start to signal some sort of the trend? And along with that, are there any other important metrics that you are following in launch that could help provide further insight?

Yes. I think Max mentioned many of the high level metrics that we are looking at right now, whether that be the amount of calls we are actually making on targets what our access looks like in those targets. The payer work that we are doing, policies that we are following, etcetera, but I will in a second turn over to Max and see if he wants to add anymore color. I think our promise to everyone is going to be that over time, as we are more than 23 business days into this is to give more color not just on what actual prescription trends look like and policy and coverage trends look like, but we will also give leading indicators that we think are important to look at. We have given the ones today that we think are important this early in the game. So – and on the prescription trend front, I think just want to make sure everybody heard what we said, I think while we are not giving exact numbers, you should feel comfortable that the trends we are seeing are on target with what our internal expectations have been from Day 1 and our access numbers in terms of seeing physicians live, albeit it’s tougher in the academic centers is above target with where we expect it to be. So, we feel good about things. We just think it’s too early to throw numbers out there, because those numbers I don’t think would be indicative of really, where we are so early. So anyway, Max, what would you add?

I think you commented perfectly, I think the only other thing that we are going to be watching very closely is develop LUPKYNIS specific coverage policies. Right now, we only – we have one payer that’s developed LUPKYNIS specific coverage policy, Blue Cross Blue Shield of North Carolina, and I am sure many others will follow in the next months.

Okay, great. And then just as a follow-up to confirm, I heard this correctly, Max, the total number of payers that you are targeting have an aggregated coverage of 190 million lives I think you said and with the next couple of meetings coming up in a few days, total insured lives would represent 75% or about 140 million of that, is that correct?

The numbers will add to the 190. We have I think it’s another 36 million lives lined up in terms of these upcoming meetings.

Okay, great. And then lastly, with the data coming up in the first quarter of next year for AURORA 2, just if you could remind us what key data points you are looking for there, what you are expecting and what you are measuring?

Thanks, Ed, Neil, you want to jump in just give the detail?

Yes. So, I think it should be – you should remind people that this is primarily a safety study that was our commitment. And that’s going to be the primary output from this trial. But clearly, there are other things we are going to look at as well, such as relapse rates in both arms and obviously the stability of renal function and over the 3-year period. There are other things like compliance, where the people continue selling drug or not present, yes I mean, it’s going to be – going to produce a huge amount of very valuable data for us and the prescribers.

Fantastic. Thanks so much.

Thanks, Ed.

Thank you. We have reached the end of our question-and-answer session. I’d like to turn the floor back over to Peter for any further or closing comments.

Well, thank you, operator. And I want to thank you all for joining us on the call this afternoon. As you can see, 2021 will continue to be an exciting year for the company. And I am looking forward to providing – well looking forward to providing additional updates as our progress continues over the next coming months. Thank you all for your continued support and have a great evening.

Thank you. That concludes today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.