Q2 2020 Aurinia Pharmaceuticals Inc Earnings Call
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Question and answer session.
<unk> if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
I know this conference is being recorded it's now my pleasure to introduce your host Dr. Glenn Schorr.
Investor Relations. Thank you you may begin.
Thank you Jesse and good afternoon, everyone welcome to Iranian second quarter 2020 conference call.
Turning on the call from the irony a team today are Mr., Peter Greenleaf, President and CEO.
Our chief commercial Officer, Mr. Maxwell Mr., Joe Miller, our Chief Financial Officer, and Dr., Neal Solomon Chief Medical officer or anything.
This afternoon, we issued our press release and associated financial statements package detailing the second quarter 2020 financial results.
Which are available on our website at www Dot Iranian pharma dotcom and filed vs 6K with the FCC.
Before jumping into some brief remarks from the team I'd like to remind everyone that today's call is being webcast live on a radius investor relations website, and a replay will be available approximately two hours after the completion of today's call.
Please also note that the content of today's call. Its property Virginias may not be recorded reproduced or transcribed without prior written consent obtained from Iranian approval leased feel free to reach out to make lunch oldman via email at <unk> IR at <unk> Dot com.
Also during the course of this call we may make forward looking statements based on our current expectations. These forward looking statements are subject to a number of significant risks and uncertainties and 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 we filed on form 6K, with the U.S. Securities and Exchange Commission.
Also please note that all the statements made during today's call or current as of today Tuesday August 11, 2020 and are based upon information currently available to us except as required by law, we assume no obligation update any such statement that the state.
So I know everyone's busy in the summertime somebody I turn it over to Peter for some brief opening remarks, and a updates from Neil Max and Joe regarding our pipeline commercial preparation for buckets for in a in their financial results. After that we'll give a quick.
Was quick remarks, well open it up for QNX and all that let me turn the call over to Peter Greenleaf already as President and CEO you.
Hi, Thanks, Glenn on behalf of the company I want to thank you all for taking the time with US to review our second quarter results as Glenn mentioned, we issued our second quarter 2020 results. This afternoon, along with operational highlights from the past few months as a team we're incredibly pleased to be making such a significant progress towards our goal of <unk>.
Launching the potentially first ever F.D.A. approved therapy for lupus nephritis.
And getting our chance to make a real difference for the lupus nephritis community.
This community has been under served for too long with no approved treatment options for the management of their disease and the prevention of progression into potentially life threatening kidney failure.
Lupus nephritis creates significant specific burdens on both patients and the health care system, even relative to suffers the best Shelly and we're incredibly proud of the work we're doing both with Fokko sporn and in our engagement with this community to improve awareness and hopefully outcomes for patients suffering from office stuff.
Yes.
Moving onto our operational highlights we'll spend just a few minutes. This afternoon to provide a quick recap before turning the call over to your questions.
Needless to say 2020 has been a very very busy year for us so far and things are ramping up even more so as we focus on potentially successfully launching vakalis born in the near future.
We've made significant progress since we turned the data card last December from the oral or a pivotal trial and have been rapidly and responsibly growing the organization in order to be launch ready with Fokko spore him for the treatment of lupus nephritis by the end of 2020.
Our clinical and regulatory teams continued their excellent execution with the early filing of R&D a package for Vakalis for and what the U.S.F.D.A. This past may even besting our internal goal by getting the filing into the agency nearly 30 days earlier than we had anticipated.
As we announced a few weeks ago R&D, a filing for Fokko sport and was accepted by the U.S. food and drug administration was granted priority review and given a PDUFA date action date of January 22nd 2021.
In addition, based on communication received from the agency. The FDA has stated that they do not intend on holding at Advisory Committee meeting prior to the action date.
We internally view this as a positive signals, but that hasn't stopped our internal preparations for an AD com since the agency reserves the right to change their view during the course of their review process.
In parallel we've been building out an experienced a nationally distributed commercial team, which we are actively recruiting in the months. We last spoke in may.
Despite the almost entirely virtual nature of our current operations. Our recruitment efforts have gathered a world class team with many talented and high performing individuals with successful track records in the industry.
Specialists phenotype is strongly aligned with our commercial leadership team put into place earlier. This year. The rapid development of the commercial function has been gratifying and there you know I didn't they drive to swiftly move and efficiently get baucus boring to patients in need after the potential approval.
To that end, we anticipate on having our salesforce onboarded trained and launch ready by yearend.
I also thought it was important to make mention of the successfully completed follow on offering which brought in over 200 million in gross proceeds to fortify the balance sheet and provide working capital for the next several years, excluding any revenue or non dilutive capital realize from possible in licensing or other ex U.S. partnerships for vakalis.
Foreign.
With a robust cash position of nearly 442 million, we can now fully execute on our plans.
So with that brief overview I'll now turn the call over to Dr. Neal Solomon Stat additional color regarding the ongoing <unk> and D.A. review process and the ongoing Vakalis born development programs now.
Thanks, Peter and good afternoon, everyone as Peter mentioned, it's been a very exciting and busy times the entire clinical them regulatory groups given the number of years that my team has worked on advancing this kind of the cat for patients suffering the lupus nephritis were truly humbled feeling the cost.
Delivering on the potential therapy that can make a difference for these patients.
Well, we're also quite gratified and the person progress we made through our recent regulatory interactions with the F.D.A.
As a reminder, youre originating maintained its regulation momentum through the Kobin 19 pandemic and follow the in D.A. with the FDA approximately 30 days ahead of our internal estimates that they see luxury received in July was also welcome news there's no Tony did the FDA validate and they accept.
Spring funding for view, but also granted it hurt your view with the PDUFA date should you have to the 22nd a January 2021.
As we also announced last month the agency indicated in their response is rather than to recently received a 74 legs to that they do not anticipate the need to who said Advisory Committee meeting this application.
That said as Peter mentioned earlier, the FDA retain their right to change their mind throughout the review period with respect to scheduling and I've come prices due for date. Therefore, the team continues to prepare though an outcome will take place and continues ongoing dialogue with the agency regarding the proposed label.
Sure drilling clinical and manufacturing site, because it's another routine routine activities during the review period.
We're also working diligently to characterize additionally, approaching your kidney conditions that we could evaluate book this brought against over the next few months, we will complete internal deep dive combining inside from across the organization and we look forward to providing updates on the indications later this year.
Switching gears to our book is for another solution or balls program for dry we were pleased to announce recently, we've completed patient enrollment in the old you phase two three study.
This 12 week dose ranging study is evaluating three doses of boasts.
0.20, Mormons airplanes, or a 5% compared to vehicle.
The primary endpoints. This study is improvements ensuring a kid test of greater or equal to 10 millimeters.
Well we.
Second DRAM points at 12 weeks.
In addition, we are evaluating corneal staining.
As well as improvements in symptoms of dry.
Good day Roman complete thanks incredible work well carry corporations developments in Boston teens, we're on track Triple topline results from this phase two or three clinical trial during the fourth quarter. This year.
The results from also determine next steps <unk> development program and guide our planned interactions with the FDA do we expect to have after results for available before the initiation of a second potentially pivotal trial of balls.
With that brief update on the clinical and regulatory from I'll pass the call over to Max matters.
Thanks, Neil and good afternoon, everyone. Thanks for taking the time.
I want to take a couple of minutes to highlight the progress that we're making and becoming launch ready for vocalist phones potential approval in lupus nephritis as Peter mentioned earlier, the commercial organization has grown exponentially over the course of 2020 and its especially gratifying for me to see the depth and breadth of relevant experience of the individuals.
We recruited to join our team.
Across the board you attracted the most tenured individuals nephrology and or rheumatology experienced in the industry.
Each member of our field team has at least 10 years of nephrology and or rheumatology experience.
As a potential we first pharmaceutical company that support Allen directly we feel the responsibility to serve this patient community and we're holding ourselves to the high standards in building a premier rare disease commercial team.
The patient will be at the center of all our efforts surrounded by specialized highly trained resources to support every step of the treatment journey.
From Ellen diagnosis to a treatment decision to navigating access and reimbursement and to remaining on treatment apps prescribed.
At every step of the treatment journey.
We understand how Allen patients can miss the opportunity to receive optimal care and potentially avoid disease consequences suggest kidney failure.
We aim to be at every step of the journey to support L and patients with dedicated experts in a way that is different from others.
During the last call, we introduced our expanded and highly experienced commercial leadership team.
We have made great progress in building on our strong foundation of leadership across access sales professional relations advocacy patient services training and operations.
At last count we've had more than 8000 applicants for our open positions. We've interviewed more than 1000 candidates and we've hired more than 100 in the last three months.
As of now we've completed hiring for almost all our customer facing roles as Peter said, we are focused on being launch ready before our PDUFA date, and we're well on track to do so.
The commercial organization also continues to come online in appropriately engaging customers. We have now started to engage payers to ensure they recognize the burden of Alan and the value of our therapy for appropriate patients we've enhanced our education efforts and we're finalizing our launch plans.
We're also well on track with building the infrastructure for customer engagement compliance and operations that aims to meet the highest expectations of our patients and customers.
That review I'll now pass it over to Joe for a recap of the financial results Joe.
Thank you Max on the financial front Arena had cash cash equivalents and short term investments of 264.4 million at June Thirtyth 2020, compared to 286.1 million at March 31, 2020, 306 million at December 31, 29 team.
Net cash used in operating activities was 22.6 million for the second quarter ended June Thirtyth 2020, compared to 13.3 million in the same period last year.
As we detailed and this afternoon's press release when the three months ended June Thirtyth 2020, we reported a consolidated net loss 29.5 million or 26 cents per common share compared to a consolidated net loss of 15.9 million or 17 cents per common share. The second quarter ended June Thirtyth 2019.
The loss for the second quarter ended June Thirtyth 2020 reflected an increase of 3 million in the estimated fair value of derivative warrant liabilities compared to a reduction of 625000 any estimated fair value of derivative warrant liabilities for the second quarter ended June Thirtyth 2090.
The derivative warrant liability will ultimately be eliminated on the exercise of orphan drugs. The warrants and will not result, any cash outlay by the company the outstanding warrants expire on December 20 2021.
The loss before the change in estimated fair value of derivative warrant liabilities and income taxes 26.6 million for the second quarter ended June Thirtyth 2020, compared to 16.5 billion the same period in 2019.
R&D expenses decreased to 11.1 million for the second quarter ended June Thirtyth 2020, compared to 11.2 million second quarter ended June Thirtyth 2090.
The decrease in expenses, primarily reflected higher costs related to the preparation of the IDH submission and related supporting activities. The ongoing Boston Phase two three Audrey trial The award to extension trial and the expansion of the medical affairs team to support the launch of Baucus form, partially offset by lower or travel costs.
At this trial has now been completed.
Noncash stock compensation expense charged R&D also increased to 1.1 million for the second quarter ended June Thirtyth 2020, compared to 749000 for the comparable period in 2019, reflecting the hiring of a significant number of personnel in 2020, and an increase in the fair value the stock options granted due to an overall increase.
Company share price.
Corporate administration and business development expenses increased to 15.5 million for the second quarter point 20, compared to 4.9 million for the second quarter of 29 T.
These expenses included the expansion of the commercial team higher consulting and professional fees insurance costs and personnel compensation costs as a corporate organization build out continuing into the second quarter 2020.
Noncash stock compensation expense parents to corporate administration and business development also increased to 3.1 million for the second quarter ended June Thirtyth 2020, compared to 1.2 million for the comparable period in 2019, reflecting the hiring them a significant number of personnel in 2020 and an increase in the fair value of the stock options granted you an increase in there.
Let me share price.
Following the recently completed 200 million dollar public offering which closed on July 27, 2020, the company's cash cash equivalents and short term investments totaled approximately 442 million at July 31st 2020, we believe that following this raise we have sufficient financial resources to fund our current operating plans, which include our ongoing research.
And development programs completing the Andy submission to the FDA Inducting pre commercial launch activities manufacturing and packaging never commercial drug supply and funded our support our corporate and working capital needs with that review I'll pass it back to Peter for some closing remarks.
Peter.
Hey, Thanks, Joe and let me Echo before opening up the Q when a our overall pride and the ability to attract so many high quality professionals to our mission as a company at this exciting and really productive time for us here to renting out.
Our deepen engagement with the lupus nephritis community has underscored the importance of delivering a new standard of care to these people and potentially changing the course of their disease and their lives.
We feel the importance of that mission, which we've been impressing on all our new staff at its driving our feeling of urgency to deliver an outstanding launch of Vakalis born.
With regards to the dry eye syndrome program for Vakalis foreign the Audrey results anticipated in the fourth quarter will build upon the exploratory phase two phase two data produced last year, which pending regulatory discussions would lead to a confirmatory pivotal study for vos.
With a strong balance sheet and cash cash equivalents in short term investments of approximately 442 million at the end of July we are amply funded to support the launch of Vakalis foreign and continued execution on our pipeline.
I want to thank you all for your attention today and the team and I are here to answer your questions. So with that operator, please open up or do you and I session.
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Our first question comes from the line.
With Cantor Fitzgerald. Please proceed with your question.
Hey, guys. Thanks for taking my question my Congrats on a lot of the continued progress and you guys, but making one I guess, it's kinda focus a little bit on the launch and I mean I was looking at some of the sub groups in the Aurora study and just wanted to kind of talk about you know where you might think somewhat who are the people who might not that the most you know whether it be by race, there or gender or any other kind of like precise.
The side measure that might be the both obvious people to start the therapy and then can you talk a little bit about I'm kind of how you're managing and thinking about kind of dose adjustment in the real world. I know you know what happened during the clinical trial, but just trying to kind of understand how somebody possessed simple we'll work through that and the real world of what kind of guidance you can give them. Thanks.
Yes, So I think the first question, let me start and then I'm going to try to pass to Max and he can give you a little bit of an update on what we've been doing in terms of our commercial preparation how we're thinking about population the dose adjustments I mean, a lot of its going to come down to how how the label comes across and but but but it's a great question as to how.
We're going to sort of guide physicians Neil might be also be able to give some some input on not so from a real world Medicine standpoint, what that this is something that's common practice, which I think in terms of monitoring and these adjustments we feel pretty comfortable that that physicians are going to be able to incorporate this into their practice.
So on the you know the work that we've been doing in terms of.
The patient populations and where we think the drug can best be suited today I think the beauty of our trials as we had a pretty broad capture strategy in terms of who could be who could be incorporated in the trial and as I said post state I think we're going to try their best to to start started an aspiration allpoint here and really challenged physicians on what patient shouldn't be.
On the drug.
Our trial was not a drug trial done just for failure patients.
No we incorporated a broad group of patients and and our depending on our label of course, you know our goal would be too to really try to challenge. The current standard of care at our drug to the mix and give us the patients what they deserve which is the beneficial you know that the additional benefit of our drug in the results that we've seen.
I won't turn it over to maybe Max cloudy can talk a little bit about sort of the question too and maybe dig a little bit more into some of the work as we're doing as it pertains to both patient flow modeling positioning et cetera, Max you want to give a little bit of a just a preview on that.
The Max you may need to on mute yourself I know I gotcha, Thanks, Peter and thanks for your.
As you know Allen is one of the most serious complications of S. Lee and its if if left untreated it leads to irreversible kidney damage kidney failure and even death.
And you know that the standard of care focuses on immune suppression, our phase three trial compared a bulk of Spartan regimen relative to the standard of care, we know that with a standard of care that long term outcomes in l. in earn satisfactory do the fact that.
A good subset of these patients progress to kidney failure and need replacement therapy. So so as Peter said, we see this as an opportunity to reset the standard of care and we see ourselves [laughter] sitting for first line patient, we're very excited about the potential for early intimate into.
Prevention with buckets for him and we think that we can change the course of the disease and possibly prevent us from irreversible kidney less damage and that is a you know a tremendous benefit as we think about long term outcomes for allied.
But I just ask one quick follow up you know people have asked me about like the the glass the compound and and I know what tends to work flow Arb I just want to get your perspective on the massive got somebody that different compounds with buckets one thing.
Yeah, I think you just talking about other other therapies that are currently other being on our under investigation are going through the review process like Benlysta I. I think one of the benefits and I think obviously, there's multiple tar product is the fact that in the clinical studies, we've done to date there the rapidity of response that we.
See with this drug you know happens happens quickly and most of the other investigational drugs that have that we've seen so far appear to take a longer time to a.
To get there it all the trials are different slightly different and and I think you have to take that into account too but at the end of the day.
We have an internal monitor that at times net Frans and that matters. How quickly patients are putting to control as to how they're you know the diseases impacted and to have the types of numbers. We have as early as six months. We believe we're going to be or we're going to be critically important not just to physicians and their treatment, but to the outcomes of patients.
Neil anything you want to add to that.
No I mean nothing completion the.
Take away from by Mr., It that although the drug was well tolerated and suddenly had a a well defined treating but it would appear at least and the the take said they presented so far that.
That their response rates, it's 18 months or two years or so much was at about six months. So I think yeah. The there's a magnitude of effect that but also the caveat in caution that they've use different outcome measures in that trials as well and <unk>. We have limited amounts of takes from.
So the compound well we can do is token do so about what all combined to us.
Great. Thank you.
Thanks, Louise yet [noise].
Thank you. Our next question comes from the line of Georgia <unk> with Cowen. Please proceed with your question.
Thank you guys for taking my question I'm serious first Oh, given the six months priority review could you comment on your programs in negotiation with Payors and if we have any clarity potential pricing and then you have a follow up on the commercialization.
Yeah I'll jump in here and then Maxus's anything I Miss a you know feel free but you know as we've said in previous calls advances song remains the same a little bit here in terms of a pricing, we're not going to come to a final price until we really see with the labels looks like if of course, we we get an approval and we get to go through label negotiations I think it's going to be very.
Finally determined by by what that label looks like and Max and his team and no actually probably even post phase two yeah, we took.
One out that quite a bit of research work with both Payors and physicians to get a good idea of what price elasticity could look like.
For the drug and we're doing the next round of that as we speak.
Mack said in his comments intro comments, a wordy out there engaging payers so no that no that that's happening and.
They're out there supporting the value proposition to Vakalis form, making the right introductions and ensuring that once we do have a label on a price that we have as much ease of access as we can break from the outset.
I have said a and then a lot of our past calls that I think if you look at the drugs that have been launched and like areas today over the last 10 areas and when I say like areas similar patient population size.
Mostly auto immune disease.
Disease burden similar.
And that would include everything from our rate to amass too.
Some of the G.I. indications for biologics and small molecules on you know there's been a fairly wide range of prices taken by companies at least in the work that we've done anywhere from sort of call. It the high 15 to $20000 year, all the way up to.
Hundreds of thousands of dollars a year, but at the end of the day, the theres sort of a fat grouping of where those products launched prices seem to sit and it's somewhere in call. It a 50 to 70000 dollar a year range.
So I've guided of sorts to some for other investors and analysts that you know I think you know that if you just want to use a benchmark of how other products are competing today in similar areas that sort of where the median is hitting today I think we also taking consideration that we could have a competitor coming into the market.
Benlysta.
While there an injectable formulation right now for us Ellie.
That product has studied as a lyophilized ivy infusion and lupus nephritis. So.
Yeah, there may be some changes, but if we try to.
Just look at the average patient has lupus nephritis or wait et cetera, and what we think a weight based infusion would look like or we just look at what the average SL leap patient is getting on an annual basis, you're probably looking at the.
Hi, Thirtys mid to low 40000 dollar a year range for Benlysta. So I think we have to keep that in mind.
It's a beacon we can look at so key takeaways, we're talking to payers today aggressively we're out there in the community starting to do our access work at the end of the day pricing is going to be determined by label and our overall value proposition everything else I'm, giving you is just a context around which.
We will be looking at other contacts at sort of separate from the drug Max what I Miss on.
Thanks, Peter you covered it pretty comprehensively I could add that we're pretty early in our payer engagement, but the payer feedback has been positive so far and we found payers to recognize a serious is seriousness of Alan and the associated burden from a clinical and economic standpoint.
You've heard the payers appreciate our clinical results in showing superior African ceded the standard of care.
While demonstrating a safety profile bumps comparable and we've also heard payers appreciate the potential to prevent irreversible kidney damage, which can lead to kidney failure, yes, our d. So so far the <unk> does the feedback has been positive.
That's great. That's very helpful and I guess, just assuming that there will be no advisory Committee meeting do expect any standalone labeling discussions with you and do we expect to have any clarity on label or any sort of communication prior to the date.
Well I did we they'll be ongoing dialogue with the agency that's.
Not something that stats formal and communicated on a on a day to day basis and as.
As for example on of course, we got it would just passed our day 74, we did receive correspondence from the agency. It day 74. It was confirmatory of everything we've already reported so there was nothing meaningful in terms of changes in there, but there are elements of.
What would go in around and directly and indirectly the label throughout that entire process and.
I think as Neal would would support not asked him for his comments here.
It's a it's an ongoing process and and the label itself will be something that will be in the mix all the way through up toward approval nail foot what would I what would you add to that yeah. No nothing else you you've covered most of it some the discussions seemed going in parallel with the with the General review if something in the review brings a bounce that comes Quinn.
Discussion point 15, the labeled and that's what comes out.
That's great. Thank you so much thanks, so much to date.
Thanks.
Thank you. Our next question comes from the line of ours, what H.C. Wainwright. Please proceed with your question.
Hi, everyone. Thanks for taking my questions I have a couple here first given the expanded leadership team a that you have in place and many of the folks that Youve just recently hired both in medical.
Affairs, and and the sales and marketing teams. So wondering if you could just give us a bit more detail qualitatively around.
How you think about.
Helping physicians, specifically with a diagnosis and treatment decisions.
And then I have a follow up thanks.
Yeah, well I mean I'll start.
The probably the.
One of the most exciting things I've seen as part of this process, especially in the current market environment with Covidien.
Fact that a lot of us I'm flying around the globe and and doing live one on one interviews has been the the excitement that we've seen from external commercial people on looking at the company.
I would put a lot of this on the fact that you have commercially driven and sort of commercially raise people on that are both running the company and new leap brought into the company. So there's an element of followership that comes from that.
But were higher just do a little deeper on what I've seen from the resumes at Max has been able to recruit so far I mean these are deeply experienced folks. The majority have decades of experience. The majority come from more of a bio <unk> biologic or highly scientific orientation and.
And there's a huge percentage that are deep in rheumatology and deep in the area nephrology.
Many of these people do they've worked in and around Max and or myself for last.
10, or 20 years in some cases more so.
I can't overemphasize that I haven't seen sort of a rent to commercial like this sense, either my medimmune or my Synacor days, So it's exciting.
The.
Other part of your question.
I think as I look at everything we're trying to do it necessarily lead up to to launch here at the.
Areas of trying to educate and not get physicians on the patient identification side are going to be some of the most important and I used to work on that I that I really want people to hang on and that's we've got an aspiration to really try to change of course of the disease and change the course of how its managed as it pertains to our drug if we're able to get the drug approved.
And that starts with the first Rep call first day, how our medical affairs folks work you can go for low hanging fruit and identify the patient that this is right in the the physicians mind or you can go wide an aspiration on challenge the physician and challenged.
System, a little bit to ensure that you're getting as broad as possible and that's what we intend to do now our label will be a part of that and the research work. We've done in terms of the trials. We've done are going to be a part of that but as I said earlier, we have pretty wide open access on that I think the question about diagnostics I'm going to maybe pushed a Mac.
Because I know he is working on some of this and Maxwell, we probably aren't going to give them everything it probably be good just to you know if we can reinforce some of the activity that we're doing up to this point Max Yeah. No. Thanks, Thanks, Peter Yes, I would add to Peters comments that.
Whether you think about it from a diagnostic standpoint or even from a treatment standpoint. This is not a satisfied market. We've heard this clearly from K wells, we've heard it clearly from through market research.
Physicians are not satisfied with the standard of care and the type of types of outcomes that they achieve and treatment and and frankly also in the delays from going from Esa lead to being a diagnosed ellen patient in the early intervention matters for these patients. So really you know the the on the foundation.
One of you know really tenured experienced.
Folks with deep long standing relationships, it's going to boil down to clinical acumen, and it's going to boil down to education, and it's going to boil down to you know really effective promotion and so and that's what we're setting ourselves up for in terms of fostering the the change in the in current practices.
Okay. That's helpful. Thank you. The other question I had was Oh I realize this may be still a bit early.
And there may be some parties that would prefer to engage in more substantive discussions or post approval, but just wondering if you could or perhaps give a in detail around the types of approaches that the approach that you were taking as it.
Relates to.
Potential ex U.S. partnerships. Thanks.
Yeah, I mean, as we've said.
Strategically and building the company that we want to take a focus on the largest market opportunity and that's the U.S.
For context, you can look at quite a few analog products spend list, even being one were north of 85% of their overall product sales come from the U.S. So this is the area that should get the intense focus and should get to build in the investment in the company is going to drive the most shareholder value for for for investors and.
For the long term build out of the company arm. So outside the U.S.. We've we've basically concluded that a partner would be better served helping us out in terms of marketing and selling the drug I can't they don't really give you much update on the who in the when but you know weve talked to both regional and global pharma companies.
And most of size and scale that have infrastructure, obviously those are going to be the ones.
And we feel good about our progress I've not guided to timing on that or set Dom you know sort of concrete expectations in terms of one we want to get this concluded for a number of reasons the biggest being the situation. We're in terms of co bid.
And being just harder to predict when you can get a deal done today when.
Everything is being done remotely diligence and ER and conversations have moved to fully phone and fully computer at this stage and.
While we have long standing relationships with many of these companies we can't predict how their internal processes or are being impacted so we still feel very comfortable we can get a deal done.
And that you know, it's a goal for us as a year so stay tuned and it's ongoing I guess, all I can say it.
Great. Thanks, Peter appreciate it thank you.
Thank you. Our next question comes from Joseph Schwartz with Leerink. Please proceed with your question.
Great. Thanks, very much congrats on all the progress I.
I was wondering if you could talk about how your field force the structured and.
Positioned to cover the landscape of triggers a for 11 patients.
How how affected you think that the.
The resources that you're putting in place or can be.
Yeah, I think I think it's really good question I mean, I've, obviously, the two main specialties were calling on here in Nephrologists and Rheumatologists and.
Obviously the is covert situation has had impacts on everyone I'm, especially patients and physicians in the relationship between the two.
While we see regional differences sort of state by state as too and actually Dr. office by office in terms of how open access is to face to face interactions on et cetera, I would say that you know just this is a sick patient population.
And.
Patients are still being seen by physicians and you know we're not hearing of any major lapses and I'll turn to nail for comment Max as well, but lapses in treatment and care et cetera, because it is a serious patient population.
But the question around access and promotion and how you launch a drug in this space where learn as we go just like everybody else and noted that our assumptions include.
Everything from.
Unfettered access, which I don't think is reality today too you know if we got back to a full lockup locked down how we would how we would do that as well theres a lot more virtual going in and our team is being I think very smart about how they're looking at this evolving market under our feet and all I can tell you is depending on where.
For the situation is with pandemic, we will be prepared to do.
What we think will be best to launch the product and whether that's in a locked down situation or more.
Sort of a hybrid or.
Clearly wide open, which I actually don't think will be the case by January but we will have to see.
Neil any comments from you on what you're hearing from trial sites et cetera, and that maybe we can have Max just give any comment he might have on not planning around this pandemic et cetera.
Well I mean, I think yeah access to size stuff is as good or bad <unk> that it hasn't been a remotely because people I guess, oh, that's physically tied up a mere with or without their work in the hospitals for most part beginning more time to be able to use but have a virtual communications.
I think when things that helps as well as the very very strong pre existing relationships that they were in a groups have with a very broad range of an opinion leads and that's and you can see how how's access and how to close it the communications moving forward, but no I mean, nothing come you know as Pete said, the you know Hep C O things.
Go, but the momentum we don't seem to compromised in that much.
<unk>.
Yeah, Thanks, and what would I would add is that we're paying very close attention to two best practices in terms of launching therapeutics. During this time.
And frankly by in a in the Salesforce continues to be the fundamental success factor too successful launches today, we're adopting of course, we're adapting our training we're adapting and also what we do in terms of our engagement above and beyond our salesforce.
As Peter said, we're learning as we go along with everybody else.
But we firmly believe that the salesforce is going to be key to our success and and and that's what that's what exactly what we're building too.
Thanks for the added information.
Thanks show.
Thank you. Our next question comes from Justin came with Oppenheimer and company. Please proceed with your question.
Hi, good afternoon, everyone. Congrats on all the progress I don't want to make lessons on my and but.
Maybe just on the anticipated odds you read out in Fourq you can you just talk a little bit on a high level.
What types of results would help inform does lux Gen digital future trial design and entered the pop or generally good program.
Yes, so that I don't over simplify this answer let me, let me ask Neal to maybe comment on.
What we hope to see in terms of making a directional decision on on the right dose from the from the next trial.
You know I think with any dose ranging study were looking for the right and so.
Fixing tolerability although.
With our highest concentration.
Formulation, we tried news purchase of its a new drugs, it's trays to well tolerated. We obviously the primary endpoint is the imprudent to ensure limited test because I was consistent with the inputs that are being used to approve of accounts mirror images and drives you see CRE and and Restasis, but also we seem to see if I.
Good signal from as purchase study of extremely good outcomes in terms of corneal staining, which of course is on the Naples, Florida as well and so I think a good combination.
Of cemetery test scores corneal staining, but also symptoms offerings implied drawing this we should built into our pre specified her glenn points, yeah, he's going to detect a.
We try to move which will move forward.
Also in terms of an ideal results, who would be very good to see where the a taxi lies so for example, our hope is for the.
Patrick seems less.
Is this sort of visible in the very very low construction, but we don't know yeah. That's how would you in the trial.
Okay, that's really helpful.
And then maybe just a modeling question on the piano right.
Seems that you know some of the Precommercial.
Precommercialization activities for Twoq you have been reflected in January just wondering how should we think about R&D spend and.
Central for expenses based on production of commercial supply going forward.
Well, we haven't we haven't given much guidance on this yet for number of reasons, but.
Joe you want to try to tap this around a little bit maybe maybe give a directional answer on that.
Yes sure. Thanks Peter.
I would say directionally as as we mentioned we continue to kind of build out the infrastructure. So one would expect them to costs throughout the remainder of the year will increase accordingly, as as do come fully burn quarter over quarter I'm as we kind of looks or towards R&D expenses. Obviously, we have some trials that are still ongoing.
There's been some one of the shift in R&D related costs, obviously towards the end D.A.
Submission slash approval and away from some of the clinical trial costs as we move through the back half of this year I think that shift continue we look into the outer years.
Obviously, we are evaluating other.
Indications at this point, so it's a little tough to say what will happen with R&D in the out years I would say.
You know probably remaining fairly flat.
Compared to this year as we kind of look and again it will be more of a shift in the nature of the spend than the actual spend itself.
As far as inventory costs, yes. Some you know there's obviously some expensing of inventory that ran through R&D in the past as we look into the future. You know those will obviously ship from R&D related expenditures in two into cost of goods sold.
Oh, I guess, the last thing I would add to that just obviously.
With the within approval and launch you know at eminent like we gain the approval.
It's going to be on us to come forward and say, here's what our here's what our infrastructure looks like here is how many sales reps and or other bomb infrastructure. We've we've brought on board and to try to give some directional guidance on how that will look going forward I guess the other thing I would mention is on the R&D front, obviously, we have fokko sport.
Today, our goal is going to continue to be a company focused on the development of drugs and you know as I've said in the past I think it's important that we continue to look to diversify our pipeline and until we do that it's just sort of a speculative thing if we're only investing and vakalis born the amount of R&D line is going to.
Be.
Limited as we move forward, but our goal will be to be there will be to diversify the pipeline as we have another companies prior to this.
Okay, Great I'm just gonna last question in terms of a European filing just wondering what the progress toward bad and what the guidance I think maybe lost time expect was it by first half of next year. That's still correct. Yeah. As we've said as six six to nine months behind where we are with the FDA right now.
And our work with the FDA in the U.S. filing and we've we've added to the extra three months on there just for a little bit of buffer in terms of.
This current pandemic situation on previously I think we had said more like six we could still be there, but we're probably thinking somewhere in the six to nine month range for the he may and then when we look out to Japan, where we need we're trying to work scheduled meeting with the PMTA our ongoing.
Hi, there to try to get a little bit more of a range and on target for for Japan. When we have that will provide it.
Great. Thanks, so much.
Thank you.
Thank you. Our next question comes from the line of Maury Raycroft with Jefferies. Please proceed with your question.
Hi, everyone dark congrats on the progress thanks for taking my questions I'll try to be quick I.
I was wondering for Aurora to the double double blind extension study. It seems like you should have the one year extension data by year end of this year and so I'm just wondering if you're planning on reporting that at the end of this year or what the plans are there for disclosure.
Neil you on about the surrounding them, yeah, I mean actually it's a two two year extension Murray So the results the phone the results for that won't be though.
Next to you.
Got it okay, Okay and then.
The other question I had was just on that additional proteinuria, a indications that you could pursue with bartlett's, Florida could theoretically work in lot of different indications I guess can you say if the new program.
That's gonna be focused on one indication or will you want a basket study what are some of the main considerations that you have for choosing which indications pursue.
Nail you want to take this show yeah, I'm actually yeah, we were still looking plans or considerations I'll take the first and you know its told I mean to commercial potential commercial viability and where the drug would works us a little bit more straightforward, but it's also.
The competitors in this space the off label use of us unionized and the potential to be as much recruit, especially during the pandemic <unk> disease I'm you know what we want to do is as when we launch interest studies gonna be clinically meaningful to physicians, but also of used to a prescribing physicians centers.
<unk>, especially within the day.
So you know we've got all those kinda considerations and you're right, we have and the potential to a basket study, where we can learn more about wish indications to progress, but also I think you know there's some schools a full especially in opposition coming to the thing to believe that we know enough about about this drug in many ways.
These diseases and yeah, we may potentially go into into just one or more indications, but we will update you towards into the year on the we doing a deep dive we have to get a input from a commercial and also Oh I'm key opinion leader colleagues.
To make sure that we're making the right decision.
Got it that's helpful. Thanks for taking my questions.
Thanks Mark.
Thank you. Our next question comes from the line uptake on <unk> from BTI Gene. Please proceed with your question.
Great Good afternoon, and thanks for taking my questions and congrats on all the progress.
You've laid out the commercial work that's a that's going on the Precommercialization work that's been going on so just looking ahead I guess based on your interactions obtained while at the end your commercial strategy and other pre commercialization efforts I was wondering indeed backdrop as the current Colby Thanks gene what kind of.
For ramp or kind of a launch dynamic are you guys anticipating.
Recognizing the fact that doctor visits are not as frequent but at the same time, the telemedicine and virtual.
Access seems to be helping in some ways, how should we think about that and I've got a follow up yeah, I mean, I'm going to take take this one formax yeah. As we said we're not at this stage right now where we're guiding on non specific revenue numbers and what the sort of shape of our curve is going to local.
Look like in general.
<unk>.
All the Covance situation aside I mean.
But we as we get closer to year end and a potential approval, we'll start to to help folks understand more what what our expectations are but we're working on all that right. Now we don't have a drug we don't have a label yet we don't have an approval. We don't have a price. So we want to make sure that we roll all that out at the right time nodes.
So that.
Our aspirations are to do really well with this drug and as Mack said in his notes and the.
Transcript, we want to surprise people and we want a very successful launch for patients for investors and for the company and our gross but more to come as we get closer to central approval at the end of the year.
Great and just real quickly as we look toward Audrey obviously, Audrey has implications for your future development and dry eye disease. Just wondering in terms of your commercial plan and ophthalmology I know you previously mentioned that you'd be looking for partners, but at the same time you could make.
And even start commercializing on your own while concurrently working on a partnership. So if you wouldn't mind, just reminding us sort of the considerations that you're looking for in your partnership and is there a quote unquote timeline that you currently have in terms of then you want that kind of things I said before or after things too I mean Adrienne.
Yes.
Well I think the the market will somewhat dictated dictate to us a little bit the timing of when a deal can get Don I. You know, we think we fully expected in our plans that that will fund this thing all the way through.
Through the to the regulatory process like we did al and I think thats, a smart assumption, but if someone were to come and.
Talk to us now and want to do something in terms of co development be involved in that process be involved in the regulatory process I think you'd have opening hours on on this side of the phone.
That being said you know what would we made sure to say to investors are two things one our core is really auto immune disease with it with a really sort of acute focus on renal.
And you know even more so sort of rare rare renal diseases, and we'd like to try to stay in and around there.
That doesn't necessarily mean that if we get a burden hand, and we have a drug that looks great and dry eyes commercially competitive and we don't have a partner that we couldn't figure out a way to launch the drug and.
I think the ideal path for launch is is a global company that would would have deeper pockets and have the ability to invest at a much higher level than other than a small company would we're firm believers that dry eye is.
Like many other diseases crosses multi specialty is primarily in ophthalmology play, but these patients C.
The pharmacy, they see a primary care physician then they see an ophthalmologist and they see a lot of different types of ways to to take care of the disease, even before its diagnosed in some cases, even after so we think a partner that has and infrastructure and has the ability to do direct to consumer Mark.
Cutting et cetera, and spend money to get this to where it could potentially go in terms of size is probably a better approach, but that being said if we get caught in a situation, where we have a drug approval and we have the ability to launch it I do think their targeted waste on Shaw launch in the space as well, we won't Miss the opportunity another side, but strategically right now.
Now our primary focus is auto immune disease lupus nephritis, the kidney and the like ophthalmology is a great bolt on because of the great molecule that we have but we would we would probably look to partner and timing on that will be ongoing.
Great. Thanks for taking my question.
Thank you.
Thank you. Our next question comes from the line of deadline with RBC capital markets. Please proceed with your question.
Good afternoon, just a single question there has to do with the label. Peter You mentioned, that's a couple of times in terms of its importance but.
Based on the call do you do that generate perhaps what you could do.
Hi, this with what you said that the bookends on terms of what the optimal way, but could be and.
Maybe what yes, the negative label could be in your opinion, then if you could tie that into an important question that I think you asked at the beginning of the call, which was which patients that are currently on standard of care would not go on most you could sort of walk us through that be.
And that's it for me thanks.
Now gotten element in need your help a little bit on this one and it's always.
For called are going to ask a question on on what would it be best case worst case scenarios I mean, I will speak in generalities, because we're in the middle of talking to the aid agencies. So I think that you know to really start pegging, what expectations should be for the label et cetera, I would want anything too.
Poison those conversations or or sort of lead those conversations for the company and our clinical folks as earn dialogue, but I think the the short answer to what could be a much more complex question on the label is you know we would hope that where a lot were afforded the ability for to happen our label the ability to have a drug to treat.
Active lupus nephritis and.
To probably not have a lot of color around how long that treatment is maybe the appropriate warnings where they need to be brown, what's been studied not but you know a pretty open.
The area of patients to be able to try to help with the drug and we've looked at probably the transplant area as a good area to look at that you know sort of how those labels are written for CN eyes, and you know there there I wouldn't say they have the appropriate warnings and for.
Cautions, but at the end of the day, they're Britain pretty widely in terms of.
Like duration of use and in terms of the patient population. So that would be our hope worst case scenario is always when it becomes limiting where you know here's what just studied here is with the expectation should be.
This has not been studied fish patient should be limited to only these areas et cetera. Those are the things pitfalls, we're trying to avoid and since were first hopefully first potentially first add to be approved here. Our hope is that the agency will allow for patients to get the benefit of the drug that we studied bottom line.
And in terms of patient populations that we should expect I'll go back to the to the previous answer where.
We want to go we want to go as far as we can as wide as we can really be aspirationally and really try to change the standard here.
Patients that maybe wouldn't be appropriate.
Patients that have if there are contraindications, a contra indications obviously and.
Patients maybe that are that are doing just fine.
But even there.
Challenge in that position to go out and ensure that they're really looking at the diagnostic approach to those patients to ensure that they are truly doing fine not just of opinion.
I would be important since it's a very silent disease.
It's not like patients are coming in complaining of symptoms with this it's.
Proteinuria as measured and we've got to ensure that that continues to happen. So hopefully I just answered that for you to nail life, we get a lot more technical there, but I don't think it's in our best interest with our ongoing negotiations with the FDA to say anything, but we hope to be aspiration on how wide. We can go.
Thank you we have reached the end of our question and answer session. So I'd like to pass the floor back over to Mr. Greenleaf for any additional closing comments you don't want to thank everybody for taking the time with US. This evening I Hope you all have a great end of your week and thanks for continuing to take the right.
With us have great.
Ladies and gentlemen, this does conclude today's teleconference and webcast. Once again, we thank you for your participation and you may disconnect your lines your lifetime.