AUPH (2022 - Q1)

Greetings, and welcome to the Aurinia Pharmaceuticals First Quarter 2022 Financial and Operational Results Conference Call. At this time all participants are in a listen-only mode and a question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dana Lynch, Aurinia's Senior Director of Corporate Communications and Corporate Affairs. Thank you. Dana, you may begin. Dana Lyn

Thank you, James, and thank you all for joining today's call and webcast to discuss Aurinia's first quarter 2022 financial results. Joining me this morning are Peter Greenleaf, President and CEO; Joe Miller, Chief Financial Officer, who will be leading the call. Other members of the executive team, specifically, Max Colao, Chief Commercial Officer; and Dr. Neil Solomons, Chief Medical Officer, will also be available at the conclusion of our prepared remarks for the Q&A portion of the call. This morning, we issued a press release announcing our financial results and recent operational highlights and filed our quarterly report on Form 10-Q. For more information, please refer to our filings with the U.S. Securities and Exchange Commission, which are also available on our website at www.auriniapharma.com. During this call, we will make forward-looking statements based on 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 disclosures in our press release and our quarterly report on Form 10-Q, along with our 10-K and all of our recent filings with the U.S. Securities and Exchange Commission and Canadian Securities Authorities. Please note that all statements made during today's call are current as of today, May 10, 2022, unless otherwise noted and are based upon information currently available to us at this time. Except as required by law, we assume no obligation to update any such statements. Now please let me turn the call over to Aurinia's President and CEO, Peter Greenleaf. Peter?

Thanks Dana. And thanks to everyone for joining us on the call today. For today’s agenda, I’ll start with the review of the commercial business including our performance in the first quarter and the positive trends we are seeing for LUPKYNIS as we move through the second quarter. After that, I’ll provide a brief update on our efforts to gain regulatory approval for LUPKYNIS in Europe and the additional clinical work on-going to reinforce LUPKYNIS benefits for patients. And then finally I’ll provide a quick update on our R&D pipeline and cash position before handing over the call to Joe Miller who will provide a more detailed update on the Q1 results, our expenses and overall financial position as a company. So let’s get started on our first quarter business performance. Inspite of some challenges early on, we’ve off to a great start in 2022. In the first quarter, we generated $21.6 million in net sales. As discussed on our year-end call in late February, we experienced a slowdown in patient start forms starting in December given the impact of COVID-19 on prescribers and patients. Many patients faced arrays in refilling prescriptions and many were unable to attend physician appointments on a normalized schedule. As is typical in our industry, at the start of the new calendar year, changes in employer covered insurance carriers and policies and patient copay resets of the new coverage year often slow down converting patients start forms to patients on treatment, and affect the timing it takes for existing patients to get a new year. Exiting the quarter though, we began to see considerable improvements and encouraging trends within our commercial results. First, prescribing has increased significantly. And in fact, we experienced a monthly record high for patient start forms in March, as well as notable improvements in prescription refill rates. In the quarter ending March 31, 2022 we added 461 new patient start forms as compared to 257 recorded in the first quarter of 2021. With a clear upturn since the start of the year, we now stand at 647 total prescription start forms as of Friday, May 6 since the start of the year. Conversion rates and patient access to drug also remain robust and are at the highest level since launch. Patient start form conversion rates are now at 80% for after 90-days. On the access front, we have confirmed patient access to LUPKYNIS through payers in plans representing about 90% of total U.S. lives. And while still early, we're encouraged by persistence trends. Through six months of therapy approximately 70% of patients are remaining on treatment. Additionally, efforts to increase health care provider adoption of LUPKYNIS in regular practice remains consistent and positive. Each month we're adding new prescribers and growing the number of repeat prescribers, prescribing rates remain balanced between both rheumatologists and nephrologist. Beyond prescribing we've seen important increase in awareness of LUPKYNIS and its benefits among health care providers. Based on recent surveys unaided brand awareness is over 70% and if you add branded awareness to the equation over 90% and most significant intend to use in the next three months is now over 70%, which represents the highest level since launch of the drug. Given these progressive trends, there were approximately 1071 patients on LUPKYNIS therapy at March 31 2022 compared with 884 patients on therapy at the end of 2021. Net realizable revenue per patient remains above our initial guidance of 65,000 per patient per year. But as we've discussed previously, we expect to approach this figure as more patients go on and stay on therapy over time. Finally, we're happy to report that with conditions continuing to normalize, there are more in person opportunities to interact directly with health care providers, and with patients. Our commercial activities are ramping up accordingly. Just last month, Aurinia attended the first in-person medical meeting with our first commercial boost since we lost LUPKYNIS with representatives from across our advocacy marketing, medical affairs and sales teams attending the National Kidney Foundation Spring Clinical meetings in Boston. Additionally, we launched an extensive set of new health care provider marketing programs to further share and educate on AURORA 2 data and has begun to develop and roll out a number of patient focused awareness and engagement initiatives, including initiation of a LUPKYNIS patient ambassador program. With the continued return to normal health care practices in the United States and our plans for expanded commercial execution, we remain confident and reaffirm our guidance for net LUPKYNIS sales of $115 million to $135 million for the full year of 2022. As a reminder, our guidance does not include any milestone payments, royalty or manufacturing revenue, or anticipated ex-U.S. sales related to our licensing agreements with Otsuka to market voclosporin in the European Union and Japan. If voclosporin is approved for use in the European Medicines Agency depending on the favourability of the approved label, we have the potential to receive up to $30 million in the second half of 2022, and potentially low double digit royalties on sales as well as supply cost recovery to a cost plus arrangement we have without Otsuka. We continue to work closely with Otsuka to support the European approval process. We have received a day 1 57 question document posed by the EMA and given the on-going interactions we believe we remain on track with pre-EMA approval in the second half of 2022. With regard to our R&D work, next week we will present for the first time more complete results from voclosporin AURORA 2 continuation study at the 59th European Renal Association Congress. This will be followed up by a presentation at the 2022 European Congress of Rheumatology European Alliance of associations for rheumatology in June. Data from this study, which we reported in December looked at 216 patients continuing from the 12-month AURORA study for an additional 24 months of treatment. This data reinforces the favorable risk benefit profile of LUPKYNIS over a three year period was safety and efficacy comparable to that seen in the original AURORA 1 trial. We still plan to submit a manuscript for peer reviewed publication in the second half of 2022 as well as abstract submissions for presentations at additional major scientific conferences throughout both 2022 and 2023. On other research fronts, recruitment of patients and initial new sites into the vocal pediatric study and the ENLIGHT-LN REGISTRY is continuing. As a reminder, we committed to the vocal study as part of our FDA approval, while we initiated the REGISTRY to gain further knowledge about patients taking LUPKYNIS, as well as help their clinicians and payers to improve patient care and ensure access to therapy. And finally, we continue to advance IND enabling work for both AURORA 200 and a AUR300, and we remain on track to submit INDs for both compounds in 2023. These are important next steps in the build-out of our pipeline to build long term sustainable value and growth for Aurinia. As I said previously, we are well positioned relative to many of our biopharma company peers with a healthy balance sheet and no significant debt or obligations. With approximately $420 million through the quarter on hand, and continued LUPKYNIS revenue contribution, we can fund our business operations for at least the next few years and remain flexible while weathering the current weakness in the biotech market and the overall economy in the U.S. I will now turn the call over to Joe Miller for a more detailed review of our financial results. I'll then return at the end of the call for a recap and answer any questions you may have. Joe?

Thank you, Peter and good morning everyone. As of March 31, 2022, we had cash, cash equivalents and restricted cash and investments of $418.8 million compared to $466.1 million at December 31, 2021. The decrease is primarily related to the continued investment and commercialization activities, payments made for on-going post approval obligations and advancement of our pipeline, payments associated with inventory purchases to ensure adequate supply to meet forecasted demand, and a payment for the achievement of one time milestone, partially offset by an increase in cash receipts from the sale of LUPKYNIS. We believe that we have sufficient financial resources to fund our current operations, which include funding commercial activities, including FDA related post approval commitments, manufacturing, and packaging of commercial drug supply, funding our supporting commercial infrastructure, conducting plan research and development R&D programs, investing in our pipeline, and operating activities for at least the next few years. Total revenue was $21.6 million and $914,000 for the quarters ended March 31, 2021 and March 31, 2022 and March 31, 2021, respectively. Our revenues primarily consisted of product revenue net of adjustments for LUPKYNIS, following FDA approval in late January 2021. Quarter-over-quarter revenue growth is attributed to further progress in the launch of LUPKYNIS. Total cost of sales and operating expenses at March 31, 2022 were $59.5 million in comparison to $51.5 million as of March 31, 2021. The quarterly fluctuation can be broken down as follows: Cost of Sales were $256,000 and $48,000 for the quarter ended March 31, 2022 and March 31, 2021, respectively. The increase was primarily due to the growth of LUPKYNIS sales in comparison to the prior period. Gross margins for the quarter ended March 31, 2022 and 2021 was approximately 99% and 95%, respectively. The fluctuation in gross margin is driven primarily by fixed specialty pharmacy costs in the first quarter of 2021 as a percentage of overall cost of sales. These costs were a higher percentage of overall cost of sales due to lower sales volumes in the first quarter of the launch. Selling, general and administrative SG&A expenses were $45.2 million and $39.8 million for the quarters ended March 31, 2022 and March 31, 2021 which is consistent with the prior quarter and represents a fully burdened quarter as the company's not have approval until late January of 2021. The increase was primarily due to an increase in employee related expenses, professional fees related to various corporate matters, pharmacovigilance costs and consulting related expenses tied to the increased investment in our back office infrastructure to support the commercialization of LUPKYNIS. Non-cash SG&A share-based compensation expense for the quarters ended March 31, 2022 and March 31, 2021 was $6 million and $6.6 million, respectively. R&D expenses were $12.6 million and $9.8 million for the quarters ended March 31, 2022 and 2021 respectively. The primary driver for the increase quarter-over-quarter was due to an increase in expenses related to AUR200 and AUR300 development, partially offset by a decrease in expenses related to the AURORA 2 continuation study which was completed during the fourth quarter of 2021 but had wind down activities on-going into the quarter ended March 31, 2022. Non-cash R&D share-based compensation expense for the quarters ended March 31, 2022 and March 31, 2021 was $1 million compared to $1.1 million, respectively. For the quarter ended March 31, 2022, Aurinia recorded a net loss of $37.6 million or $0.27 net loss per common share, as compared to a net loss of $50.4 million or $0.40 net loss per common share for the quarter ended March 31, 2021. With that, I'd like to hand the call back over to Peter for closing remarks here.Peter?

Thanks, Joe. And as you heard throughout the call, we're excited by the trends we've seen in the recent months. The increases in prescribing a number of patients on therapy signals more healthcare provider experience and comfort and treating with their lupus nephritis patients with LUPKYNIS, which we are optimistic will result in health care providers providing continuing to address and therefore improving early, urgent diagnosis and treatment of the condition. Beyond the U.S. commercial results, we’re quickly moving towards possible approval in Europe, triggering the potential for additional milestones, as well as moving closer to IND submission in our two novel acids, AUR200 and AUR300. We continue to operate with a healthy balance sheet which will enable us to execute on our long term strategy. That's all we have for today. Look forward to updating you on these items as the year progresses. And look forward to taking your questions. With that. Let me turn it to the operator for Q&A.

Thank you. Our first question today is going to come from Joseph Schwartz at SVB Securities. Please go ahead.

Hi, all this is Bill on for Joe, and thank you for taking your questions today. Congrats on the recent progress. So one for us, can you just remind us on the on-going litigation with Sun pharmaceuticals? And has the company filed its response to the IPR? And when should we expect an update here and kind of how does this process unfold? Thank you.

Okay, thanks. And that was Joe Schwartz team over at SVB Leerink, sorry a little choppy coming in. So let me repeat the question for everybody on the call. It related to on any updates on the Sun pharmaceutical litigation, the IPR process, and have we actually submitted our response to the IPR submitted by Sun to the U.S. Patent and Trade Office. So to start with the Sun Pharma litigation, there's really no news there. The most recent update we'll have for us probably sometime in 2023 is that that litigation is on-going. We're calling that that is the litigation where we are suing Sun for patent infringement on our ophthalmic solution that we believe their product CEQUA infringes upon our patents for voclosporin's ophthalmic solution. So no new news there, Joe, and wouldn't look for any until 2023. On the IPR process, so officially, the patent office recognize the application, the date for response, so our response back to them is in late June. And then the PTAC has, I believe, three months to review the initial filing alongside of our response. So I would look for something in the in the back half of the year, call it late 3Q, early 4Q but nothing new. We have not submitted our response as of yet because we're still formulating it. And we have until the latter part of June to get that submission in.

Great, thank you.

Thank you, Mr. Schwartz. Our next question is going to come from the line of Olivia Brayer at Cantor Fitzgerald.

Hi, good morning, guys. And thanks for the questions. Joe, can you give us a sense for some of the different factors that drove the drag on 1Q? How big of an impact did Omicron have versus some of the seasonality impacts, around things like insurance changes, that maybe we should think more about as a potential headwind going forward. And then I recommend it's still early days in the launch, but how are you guys seeing uptake play out between rheumatologist and nephrologist so far. I know you may be seeing more willingness initially from one group versus the other? And is there anything that you can do to help drive similar adoption between the two going forward? And then I've got one on one follow up on capital allocation.

Let me let me start and Max Colao is here with me too, so you can get into deeper detail, but as we said on the call right now, our split in terms of prescribing between nephrologist and rheumatologist is on this almost right down the middle. So, and I think that therein lies the importance between both specialties, so we value them equally albeit, the caveat that there is the caveat that a Lupus patient is a rheumatologist patient first. And obviously, as we increase diagnosis, and we want to put emphasis on earlier diagnosis, there's a higher intensity that needs to go against rheumatology. In terms of on-going seasonality sort of consideration. So I'll give my take and then I'll turn it over to Max. I think on a go-forward basis, barring COVID, like being out of the equation, much like any other specialty pharma company as we enter into January, and you can look at others who have a large bulk of rare and specialty products that, patients, employers change insurance plans, patients have to reset co-pays. And I think, as you face January, February of every year, you're going to see some impact in that time period as things start to reset. As you move into Q2 and beyond, I think our, our overall analyst base out there has done a good job of sort of distributing where the year looks and while we don't give quarterly guidance, some we give annual guidance and I think the ramp in PSFs and patients start should be accordingly, whether the impact will be exactly the same to January every year is TBD because as you've mentioned we're early on in the launch Max what would you add?

Thanks, thanks for the question. Yes. What I would add to that is, as Peter highlighted in just the beginning of January, January and beginning of February, what we saw is there was just a care impact above and beyond just your general reset of insurance. And that had an impact on refill rates, and also, on patients being able to continue therapy. And so but we saw that completely normalize as things opened up in March. And in fact, as we highlighted, March was a record month in terms of patients start forms, and we saw refill rates go right back to where they were in Q4. And then what I would add on the physician front is that we've seen just a completely balanced intensity between rheumatologist and nephrologist. And that is actually when we look at the three month intensive treat, it's over 70%. And that's reflected in prescribing where we see balanced prescribing across both specialties.

Olivia, you had another question?

And Miss Brayer, this is the operator. If I could, could I invite you to re signal with star and one we've lost you from the queue presently. Thank you, Miss Brayer your line is open once again.

Hey, can you guys hear me now?

Yes, ma'am.

Okay, great. Thanks, guys. And then on the M&A front, you guys obviously have a nice cash position. So is there much willingness to do a deal near term? And can you give us a sense of, where you'd have more of a strategic interest, whether it's doing a partnership versus adding a wholly owned asset, that is maybe more mid stage development with some level of de-risking.

But I think, as we've said, historically, we firmly believe in diversification and continuous innovation, it's part of our mission as a company and part of our strategy. So business development is key to that, as evidenced through both the AUR200 and 300 deals that we did in 2021. So it's important, but I'll emphasize that, there's no magic to how these things come together. And we are not going to push a higher sense of urgency just to get deals done. We want to try to get the right deals done. But the current market, the fact that valuations are where they are, and raising money is as difficult as it is, right now, I think represents significant opportunity for everything from partnership programs, i.e. licensing of assets, licensing of indications of assets, and M&A are all becoming more attractive, even for our size, which obviously we are not, we are not, one of the larger cash position companies out there, we have a healthy balance sheet, but we're not . So and in order of priority, yes, we'd prefer to license something over acquiring a company. We most likely only acquire a company if in fact, we couldn't leverage the asset out of the company individually, or the company itself had capabilities that we thought were, critical to the success is a program and towards the intrinsic value of the company. So, but is it priority, but making sure everybody's clear, our priority number one is LUPKYNIS U.S. launch and globalization of LUPKYNIS and nothing steering our head away from that. We’ll keep you posted on progress on the business development front.

Got it. Thanks very much.

Thank you, Miss Brayer. Our next question today will come from the line of Maury Raycroft at Jeffries. Dr. Raycroft, your line is open.

Hi, good morning. Congrats on the progress and thanks for taking my questions. Let's see. So just wondering if you can elaborate on patient discontinuations that you mentioned in your 4Q update? Are these transient compliance issues or related to how the doctor is managing the patient? Or are there any other insights or explanations you can provide at this point?

Yes, I’m going to ask Max to join me on that conversation. I think more of my answer would be it's across the board. And we're providing six months of data because we have a healthy number of patients who have crossed six months of therapy. Obviously, since we launched at the end of January, the number of patients seeing 12 months of therapy is lighter. So as we go forward, we'll start to give longer term views on that. But Max, you want to give any color as to why patients the 30% or so might be a product of gestures.

Sure, thanks for the question, Maury. And I'll make one more point before commenting that, which is that 30% discontinuation at six months, we've seen that now consistent for a couple quarters here. So the in terms of reasons for discontinuation, I would say that it's really the typical reasons that you would expect patients discontinuing as a start, there's tolerability issues for some patients that show up early in the treatment. And those that's the primary reasons that patients will discontinue. I'll make one just one more point Maury, which was we talked about that there was a there was above and beyond that, just the discontinuation there was just this temporary impact in the beginning of the quarter on refill rates. And that was that was outside of the kind of discontinuation as and then as I noted, that just rebounded. And, and really, what we see now is consistent discontinuation with what we saw in the fourth quarter.

Got it. Okay. And so presumably, outside of the safety or tolerability, some of these patients could actually come back onto therapy, is that the right way to think about it, or?

We've seen even just tracking analog products like MMF and others that patients do, it's not, it's not in the guidelines, but patients do cycle on and off of products. And I think one way to explain that would be a patient, stops taking therapy finally sees their doctor, doctor says your Proteinuria is still high, start taking your therapy again. So they can’t come back, it's not like we see this as once they've seen the product, they're considered a non-responder something and don't come back. And we're not getting reasons coming back to us saying the patient's Proteinuria was an under control. Lot of these are patient driven decisions. And we'll have to continue to and you heard, that we have an increase in our focus on the patient, educating the patient, and all of that pertains to education on disease itself, importance to stay on your medication and keep on your medication overtime.

Got it. That's really helpful perspective. And then just wondering if you can talk more about what you're seeing with pricing metrics and what your latest assumptions are?

Well, as we said, we're giving an average net in the first year of launch at, at or around this 65,000 net per year per patient. As we indicated in the quarter, it's been above that, we haven't given specifics, because the last thing that we really want you to do is plug in a number that says vary ability, and then carry that forward, and then it changes. The one thing we do know is that we believe that we’ll continue to migrate towards that average net. And that's why we're sticking pretty consistent to that. Adherence, once a patient goes on drug morning has been at or around 80%. So if they're on the prescription, they're staying on it. And that's a good thing in terms of looking at your average monthly number of doses, etcetera. So, as we've said, average net has been higher than 65. But we think it's a safe bet to land on 65 At this stage until we just have more data, because mix of patients depending on insurance carrier, public versus private pay, how much EGFR dosing is utilized and adherence are all going to vary overtime.

Got it. Okay. Makes sense. Thanks for taking my questions.

Thanks Maury.

Coming up next our -- the question to follow is Stacy Ku at Cowen and Company. Your line is open. Please go ahead.

Hi, good morning. Congrats on the quarter. And thanks for taking our questions. So first, is a really specific patient start form additions. From our math and your comments from last quarter, we're seeing roughly 260 patient start forms that we added in March. So just wanted to confirm that? And what are you seeing in terms of the cadence of the kind of quarter-over-quarter patients start form? What are you seeing in Q2 so far? How should we be thinking about the March additions? Is that a run rate? Or are you are you seeing more growth from that number? That's the first question. The second question is, if you could talk about repeat prescribers. So once they've kind of figured out how to use with planning different clinics or getting good, they're happy with the efficacy profile. What kind of what kind of metrics you’d be willing to provide around those that kind of have adopted versus those that are still kind of waiting? And those are two questions. Thank you.

So let me let me start with PSFs and had Joe Miller just make sure I'm honest with the math. What we said was we didn't give the exact number for March, but just told you that in March we had our eyes yet and I don't know how to count what is she said 260.

That's, that's a little bit high, we gave kind of an average number coming into year-end earnings. It wasn't the full February through the end of the month when we did that number. So you're a little bit high on March. But overall, as you kind of look at monthly run rates, March was our highest month today.

Yes. And then what I would say about quarter, we report and we've consistently done this. We'll give you the year-end note with the end of quarter number, but then we'll always give you the depending on when we do the earnings call, we'll give you the most up to date PSF number. And that's what we gave you as of Friday of last week. And that was what was the number we reported. It's year-to-date, 647. What I can tell you about that number, Stacy is it is on track with growing ahead of where we were in Q4, which is what I think you want to see, you want to see consistent quarter-on-quarter growth. And as we noted, we saw a slight dip, from Q4 to Q1, and then we're seeing growth, that's representative growth over Q4 so far into Q2. And that's right on track with where we want to be. In terms of your question on prescriber habits and repeat prescribers let me share just a couple of things here. And just for being expedient here, kind of cover off on this for Max. One, yes prescribers are more apt to use the product once they've used it. So we do see strong secondary prescribing and so from after initial prescription repeat prescribing is quite high and consistent. Second, obviously, we decile our docs and in our top decile docs, our penetration increase and continues to grow. And to put that into perspective, the top tier docs have, in some cases, 10 to 12 times the number of patients and we're talking a small number of patients per doc, but then the average lower decile, and our penetration there has continued to grow as we get, over the next couple of quarters we'll continue to share more as to what our both our depth and breadth of prescribers look like. But we've been quite happy based upon our deployment with our sales force as to what our penetration has been in the highest deciles, the breadth of our prescribing and then more importantly, the debts physicians are reusing the drug after stuff more apt to once they do.

It's very helpful. Thanks for that.

Our next question today will come from Ed Arce at HC Wainwright. Please go ahead.

Hi, everyone. Thanks for taking my questions. Can you hear me? Okay.

Sure can.

Great. Few questions for me. First, I wanted to ask, well, you mentioned in release the PSF conversion rates at about 80% after 90 days. My question is, if you could describe for us the for that conversion, the average period from the PSF to treatment. On average, what does that look like? And then wondering now that you've had over a year now of experience with patients, any lessons learned so far as you work on keeping patients on therapy, that consistency, the persistence compliance, obviously towards not just refill rates, but staying consistent, any lessons learned there, and perspectives you could share? And then lastly, regarding the 30 million, up to 30 million and potential milestones from Otsuka, potentially later this year from the EU approval, is there any details you could provide onto the split and what would be required in terms of labeling and so forth? And then I have a follow up.

Okay, I'll go backwards on this because as you go through those lists, usually the last ones first one on my mind, so on the 30 million from Otsuka, here's what we've said historically. The closer we come to a match of the U.S. label, the closer we'll be assured to a $30 million payment, the range of up to $30 million is all comes down to how the label comes together and duration of utilization. So meaning if the product were by the EMA you know said to be a therapy that can only be used for three to six months the payment would be lower. That's all the color I can give you on up to 30. But the closer it comes to match the U.S., the closer you can be assured that 30 million is the number we would see. And so far in our conversations both at 120 days and 157 days and in conversations with the rafter and co-rafter we don't see any showstoppers here. So we feel good about it. The PSF conversion rate, and then let me go to because I want Max's input there. I have plenty, but you asked specifically about patients, and I think we should give you our color there. TSF conversion rate, on average, we are above, at 30 days, more than 50% of patients are converting on to drugs. So we give you a 90% number, which was 80%, a 90-day number. And but as 30 days, more than 50, almost up to over 60 are on drugs. So they get off pretty quick, we're improving. As I've said historically, we're looking at 30, we're looking at even pre-30. But the important ones are 30, 60 and 90 days. We want to have as many converted within that 90-day period as possible. And I think we're getting to a point of almost like, I mean, not 100% perfection, and we're at eight, and we want to get them on faster, and now to be up over 60% at 30 days is we're on track with where we want to be. Lastly, on lessons learned with patients, I'll just emphasize that it's critical. And that because this disease presents with no physical signs and symptoms, there is no natural patient quality of life indicator that forces a patient to stay on drugs. If your joints hurt, you're more apt to stay on a biologic therapy for rheumatoid arthritis, because it's helping your joints. Lupus nephritis is a quiet disease until it's not. And we need the healthcare providers; we need the patients to be educated on the overall impact of the disease. And we need the patients themselves to be overly educated to stay on therapy, because their kidneys and potentially, because of what the data shows if the disease progresses their lives may be at risk. So patient education, patient support programs are continuing be paramount. And as you mentioned in the call script, we're increasing our investment there, Max?

Yes, I mean, what I would add, and I think Peter hit the nail on the head, what I would add is that we have improved our processing speed, every quarter. We are having more than 80% adherence rate is significant for this patient population. And really the key as Peter highlighted is education, we put significant resources in or any alliance or case management team that connects with patients on a regular basis. We put significant resources in support of physician offices and academic centers to ensure that that patient’s start forms are converted fast. And then those investments are bearing fruit in speeding up conversion, and also helping patients stay on treatment.

That's great. Thank you. That's helpful. Just one more follow up for me. You mentioned the vocal pediatric study underway and enrolling patients. Just wondering if you could delineate for us any other post approval commitments, so just to be aware of what's coming up down the line. Thanks so much.

Yes, as previously mentioned, dear Ed, and just a reminder for everyone on the call. Our post marketing commitments were one; the AURORA 2 extension data which has been shared with the agency and the EMA. And as part of our application in the EMA, the vocal peds study, which is a pediatric study, obviously, which is on-going. And then lastly, there was a lactation study and I think on drug interaction studies that one has been completed. The lactation study is ongoing. The peds study is on-going and will report out on those over time. As I said, the drug-to-drug interaction study has I believe been submitted at this stage completed and submitted. The AURORA 2 has been submitted and then the vocal ped study will take some time obviously this is primarily a disease a fatal disease that effects on middle aged females. So, getting down into a younger audience will take time. But we have all the belief that we can do that. So those are our commitment said, and we continue to through the ENLIGHT-LN study, invest in further research both on the higher level like a global registry, and secondarily, with individual investigator initiated studies and things of that nature to support understanding that therapy in the real world environment.

Great, thanks so much, Peter.

Thanks, Ed.

Next, we'll hear from the line of Sahil Dhingra at RBC.

Good morning.

Hi, Good morning, this is Sahil for Doug Miehm. Thank you for taking my questions. My first question is, can you please elaborate on the quarter-on-quarter decline in revenues? When I look at the total number of patients on therapy, they have increased from 884 at the end of the year to 1071 by end of Q1 2022. So is it a function of refills? Or is it a function like you have more patients on EGFR that is driving the revenues lower quarter-on-quarter? Can you please comment on that? And then I have a follow up?

I'm not sure I understand the question. You're asking about the net price per patient, or you're asking, the patient says accumulated patients have grown? What are you pointing at that that I just need to understand? Can Gabi clarify a little more am I sure I get it?

So in the press release, it was mentioned that there were 884 patients at the end of Q4 at 21 at the end of 2021, and 1071 at the end of March 2022. So there are net additions to patients, but the revenues have declined. So I just wanted to understand, is it a function of lower refills during Q1? Or is it like there are more patients on the dose reduction program? Or is it is it anything else?

Yes, so as we said, because I got it now you're just doing the straight line, Matt, you're saying the question is, if you had 884, and you grew a net 200 patients while the quarter would be down. And what you're not taking to account there is one is a patient growth number, you also have to look at refill rates, right. And as we mentioned, with patient insurer plan changes with the COVID impact and patients, not picking up prescriptions due to that, as we mentioned in the call, that your refill rates were lower. So even though we increased the number, the net revenue per patient in the quarter went down, and I think, the, and then we'll see that hopefully in the next quarter, but we up partially why we try to keep consistent on this net revenue number because in a quarter like this, obviously, we saw a dip primarily due to refill. So the simple answer for you there is based on refill rate per patient.

And the patients on dose reduction that are consistent with the prior quarter. Is that…

Yes, we haven't seen any dramatic changes there. And yes, I would not look to Q1 as anything significant happened with dose adjusting on patients. Some we've seen pretty consistent at or around what we saw on our clinical trials so far in practice in the market.

Okay, And I have one more question. Earlier, you have mentioned that the discontinuation rate, which happens within three months, the patient is on the drug that is that was around 25% to 30%. And today you have commented on for six months compliance rate, which is around 70%. So when we're looking at net patients, should we deduct both of them, actually, or is it combined?

No, what we've done is where we originally when we did not give data for six months or 12 months was we gave you the best grouping of data we had which was what happens at 90 days. On a go-forward basis you should look at our persistency numbers that we give like at six months 70% of patients that get on drug remain on drug as being one number inclusive of those who have actually discontinued drug in the first 90 days. So it's not a double hit.

Great. Thank you so much for clarifying my questions. That is all from my end.

Thank you.

And moving forward our next question comes from David Martin at Bloom Burton.

Yes, good morning. Most of my questions have been asked, but I'll go back to a couple of in previous quarters. The doctors that are using our prescribing clients are they also prescribing generally Benlysta? Or do they tend to pick one or the other and if they're prescribing both drugs, any insight yet as to which patients they decide to give them new kindness in which they decide to get Benlysta?

Yes, thanks. Thanks for the question. And, the answer to that question is pretty consistent with what we've, we've said in the past, which is, really the when we when we talk with rheumatologist, they think about Benlysta, and LUPKYNIS that's for different types of patients. And really, there's almost a different positioning as they think about what the patient's manifestations are, their level of Proteinuria are. Their lupus health state and how they position how they think about whether to use with LUPKYNIS or Benlysta. Well, we've also what we've seen in nephrology, is a is a stronger preference for LUPKYNIS than Benlysta and that comes from just their general experience also with prior generation CNIs. Yes, I think for me on this one and we have with it's tough in the data to really break through it. Rheumatologist have the ability to use them listed for the treatment of lupus. So sometimes they keep a lupus patient on as they get lupus nephritis, sometimes they initiate lupus Benlysta when the patient has lupus nephritis and it seems to us that even the rheumatologist is selecting the patients when they get lupus nephritis for a new patient to when they use Benlysta or when they use our drug. And then the good thing is in nephrology, we were getting preferential right now. So we'll keep you posted on how those numbers move moving forward.

Okay, patients with newly diagnosed lupus nephritis, are the doctors waiting until they fail? And then nothing steroids before they put them on LUPKYNIS or is it first line combination?

Well, I think our greatest tracking towards success and what we've said is our goal is to change the treatment paradigm is to track over time the amount of patients who start receiving LUPKYNIS in combination with MMF and steroids as first line therapy. But as you can appreciate, David, these patients are coming in the majority of these patients that are in the diagnosed and treated population are going to be on MMF and steroids first. So we are seeing growth in newly diagnosed patients, but it's a smaller percentage of the end. And we're going to track it over time, the majority of our patients have seen a course or are currently on MMF and steroids and our drug is added to the equation which is as predicted.

Okay, and last question, are doctors keeping the patients on LUPKYNIS only if they achieve a complete remission? Or is just a lowering of Proteinuria a partial remission good enough to keep them on?

Yes, I don't know that we sort of longitudinally track. Proteinuria rates on a monthly or we can only give you what we hear anecdotally and I'll pitch it to Max to give you the what we're hearing from the docs.

Yes, and what we're hearing from the docs is that, that they're looking for Proteinuria that decreased overall and they're they reach a certain level of they're happy with a 50% decrease in Proteinuria. And clearly, their goal is to get to a complete response, but don't stop treatment. The goal is to get coronary down.

Okay, and recall…

In most cases stated they're adding our drug to the mix. So you're getting an incremental benefit over the current standard of care for the majority of patients.

Okay, great. And I do have one other question. When you say adding it to the mix of these patients with lupus that are already on their list. Are you seeing LUPKYNIS being layered on top i…

We haven't we haven't we have not seen that yet although our thought leader base talks about whether a strategy in combination with C&I and B-cell inhibition could be an approach. But that's one that's talked about hypothetically, as a treatment strategy. We do not see that in practice right now, at least in our data.

Okay. Got it. Thank you. That’s it.

Thanks, David.

And now we'll hear from Justin Kim at Oppenheimer.

Hi, good morning, and thanks for taking the questions. Maybe just a follow up on Stacy’s prior questions. I'm asking to suggest a pretty stable quarterly script number between fourth quarter through even our estimate of the Q2 run rate. So just trying to understand, what the team expects for maybe those numbers to shift or change as you look to maybe reach the high end of guidance. And, whether it's macro factors or sort of micro with, like, the sort of physician practices and that the prescriptions? Can you walk us through how you think about those script numbers changing or maybe not changing over the balance of the year?

Well, I think if you look at the total number of prescription, a prescription start forms that were produced in Q4, and you look at Q1, it was down slightly. When I say slightly Justin, what are we talking dependence it 10s of patients, it's not, it's not like 200 patients. So as we move into Q2, we are back at least in a run rate. And again, we don't give quarterly projections on PSS, but directionally, we're back in a growth trajectory over Q4. So that's where we want to be, we haven't given but you can probably do your own estimated math on. If you believe 70% of patients honor at six months and make an assumption on where they are at 12 months, you carry a prescription start form right into the quarter and figure back what an attrition rate could look like in a quarter what our growth in PSS has to be. You also can estimate what the retenant rate could be. And maybe there are improvements there. All I can tell you is the way we think about it is the retenant rates we're working on. We want to continue to improve on but if we held them steady, what would the prescription start form rate have to be in order to achieve growth numbers from Q4 numbers where we were into Q2? Because from a pure revenue standpoint, the numbers from Q2 has to be bigger, obviously, than where we were in Q4, not based off of where we are in Q1. So that's a grow about Q4. And then seeing that growth continued throughout the year, and multiple assumptions there around continued opening, prescription start form activity refills throughout our entire model in our execution. It's not one factor.

Okay, okay. Got it. And does the team have any updated observations or thinking around how this kinase is being administered beyond maybe the 12-month time point? Just having on boarded several 100 patients in the commercial setting who could have reached this point?

Yes, I mean, that's, to me, the magical question is, what's it going to be in 12 months, and then what's it going to be at 18 and 24 months. And we benchmark this by the way against biologics. And other indications, other rare diseases etcetera. But in all honesty, just like before, we'd rather report 12-month numbers when we have a significant end of patients that are on the drug. And, through this, through six months back, she had several 100 patients who had seen the drug at that point, the number is small at 12 months. But I think it's fair to say that our assumption would be that if you're at 70%, at six months, you're probably going to be less than that at 12 months, that's just the natural way that the biggest business over time will progress, and probably less at 18 and less at 24. It's just a matter of what it is. So just so we can't comment on it outside to say, we'll report it when we have a sizable enough end which each quarter it grows, and so that we can give you something that we think is going to be consistent and projectable. And that generally speaking, we believe it will continue to decline. It's just declined at what rate.

And maybe just a final question if we can squeeze one is, taking a look at the abstract that at ERA, what just kind of curious if there was any observations on the duration of therapy date and time to renal response observed commercially just sort of curious you know with some of the data around five, taking longer time to reach renal responses is that sort of mix of patients being observed, maybe as you look at sort of those populations that at later and later time points that maybe they are, falling into one class or another?

I think you stepped right into the reason we're doing the vocal study, so that we can track prospectively, some of those numbers. Like in real world what that time to renal response actually looks like. So I can't give you what the time to renal response or the ENLIGHT-LN REGISTRY. Sorry, I think I said vocal. But I can't give you what real world evidence shows in terms of time to renal response. But Dr. Solomon is on the phone, he can probably give a little bit more on the abstract specifically, you're talking about Neil, you want to give any commentary if you heard the question?

Yes, I wasn't quite sure exactly what it was you're asking, you were saying? Did you have any differential information around how quickly touched by his response compared to proliferative patients? Was that the question.

So just around whether the time to respond, is and or maybe just class in general and severity of disease is observed as different among the various populations at various times? And so are patients that longer term duration therapy, potentially more severe in disease and in the commercial setting? And whether there are any trends observed as to me….

I mean, yes, I see what Peter said about in the real world, and the registry is going to give us a wealth of information around that. And I think that's the reason we're doing it. But there's so many things at play. And of course, when you look at the abstracts, and the data has been presented, only 15% of the patients who went in, for example, should the AURORA child also or a child workers five. So we kind of look at relatively small populations of patients. I think we just don't have enough knowledge at this point. It'll become it'll become more obvious as we do more and more cuts and fill in like our own registry. So yeah, I mean, that's all we have at this point.

Understood. Thanks.

Alright, so I want to thank everyone for joining us for the call today. I think with that last question, that concludes our Q1 earnings. Thank you for the time and have a good day.

Ladies and gentlemen, this does conclude today's Aurinia Pharmaceuticals first quarter 2022 financial and operational results conference call. You may now disconnect your lines and we hope that you enjoy the rest of your day.