Q3 2021 Aurinia Pharmaceuticals Inc Earnings Call
[music].
Greetings and welcome to the Arena Pharmaceuticals third quarter 2021 results conference call. At this time all participants are in a listen only mode. A question answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host paint alerts arenas Investor Relations and corporate communications. Thank you you may begin.
Thank you Latanya and thank you today's joining today's call to discuss <unk> third quarter financial results.
Leading the call. This morning are Peter Greenleaf, President and CEO, and Joe Miller, Chief Financial Officer. Other members of our executive team must Clough Chief Commercial Officer, Neil Solomons, Chief Medical Officer and hired the Guy.
Executive Vice President of research are also on the call and available for the Q&A portion of the agenda.
Today, Peter will begin with an update on our progress with the commercialization review recent and anticipated clinical and regulatory milestones for Buffalo, scoring as well as provide an update on the M&A pipeline.
Then Joe will discuss our financial performance in more detail.
At this time.
The executive team members are available for your questions.
Today's press release announcing our financial results and recent operational highlights.
Basketball from our website at Www radio pharma Dot Com and has been filed on a form 8-K with the U S Securities and Exchange Commission.
This afternoon, we plan on filing our financial statements and accompanying management discussion and analysis and the quarterly report on Form 10-Q.
During 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 our actual results may differ materially.
For a discussion of factors that could affect our financial future financial results and business. Please refer to the disclosures in our press release and our quarterly report on Form 10-Q, once filed along with our recent filed.
Filings with the U S Securities and Exchange Commission and Canadian Securities authorities.
Note that all of the statements made today during today's call are current as of today November 3rd 2021.
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 as of this date, let me now I'll turn the call over to Iridium as President and CEO Peter Greenleaf Peter.
Thanks, Dana I don't want to thank everyone for joining us today, we're now well into the launch in the U S and I'm happy to report strong results for the third quarter.
We continue to execute on our commercial strategy and increase access to and adoption of loop kindness for the treatment of adults with active lupus nephritis.
This morning, I'll take you through our performance results as well as provide you with some look kind of clinical and regulatory updates.
I'll also provide you with an overview of the two exciting pipeline assets, we recently acquired.
Finally, we will report our financial position and answer any questions that you may have.
So let's start with our business performance related to the launch starting first with the quarter.
In Q3, we generated $14 $7 million in net sales, which exceeded analysts' expectations and represents a 122% increase over the prior quarter.
Since the launch in late January our total recognized revenue is $22.2 million.
Based on our current metrics and anticipated year end results, we maintain our guidance in the range of $40 million to $50 million for 2020 one.
In the third quarter, we added 412 patients new patients start forms while COVID-19 challenges was the delta very southern states impacted.
P. S. S prescribing early in the summer it should be noted that we saw a steady increase in prescribing rates throughout September and continuing into October.
As of this week, we have now logged a total of more than 12 565 patient start forms year to date and remain optimistic that this upward momentum will continue.
We also continue to see improvements in movement from patient star forms to patients on therapy with a conversion rate in excess of 68%. Currently this is up from approximately 50% in Q2.
In addition, our time to convert is shrinking both 30 and 60 day conversion rates have continued to improve each month.
On the payer coverage front, we continue to make progress, especially with regional and local plants.
As of early October we've confirmed those kind of coverage through published payer policies for 65% of total lives in the market.
Two patients gaining access to loop kindness, we have now confirmed coverage and plans covering 87% of total lives.
While our goal is to ensure there are specific policies in place health care professionals and patients are gaining access to loop kindness through medical justification and working in conjunction with Iranian personalized patient support resources.
We continue to work to make access the access process as seamless as possible for providers and patients. So that patients can quickly gain access and start our treatment.
Just over nine months post launch, we're not slowing down our team continues to work tirelessly to educate professional and baldpate professional and patient audience about loop currents and the urgent need to diagnose and treat lupus nephritis patients as quickly as possible. The most recent health care.
Our provider market research shows that loop kindness awareness has increased significantly with both rheumatologists and Nephrologists and is on par with the competition, which by the way. This competition has been on the market for over 10 years.
<unk> remarkable clinical results continue to differentiate our product and bolster this awareness and confidence in prescribing.
This week Iridium has five presentations at two key medical meetings, the American College of Rheumatology and the American Society of Nephrology.
These include data from our pivotal Aurora, one study showing what kind of efficacy in newly diagnosed patients and patients with severe lupus nephritis.
Our or an oral presentation at ACR will also feature an updated analysis of the Aurora two continuation study assessing the safety and Tolerability of loop kindness at three at 30 months.
As a reminder, we expect to announce results from this continuation study looking at the final data from two additional years of loop kindness treatment or three years in total by the end of this year.
This will represent the longest lupus nephritis treatment duration and recent studies.
Lupus nephritis is a lifelong condition and this long term data will provide necessary support for hcp's patients and payers to safely continue loop kindness treatment beyond one year.
So, let's now shift to a look at the ongoing work to establish Farquhar sporn as a global therapy.
The EMA marketing authorization application, which as you recall was filed in June with our licensing partner Otsuka remains on track for a review.
We continue to accept expect to see HMP opinion around mid 2022, and finally M. A decision sometime in the third quarter of 2022.
As part of this submission on October one of this year Otsuka filed an NDA and MAA with the Swiss agency for therapeutic products or Swiss medic seeking approval for the use of baucus born in the treatment of adult patients living with active lupus nephritis.
Additionally, otsuka continues to work towards finalizing the timeline for the Japanese NDA regulatory filing with the P. M D. A to seek approval for baucus born in the treatment of L. N in Japan.
We continue to be pleased with this progress and look forward to supporting sugar and launching our therapy in these markets.
And as we said before reaching these milestones will provide us with opportunities to continue to strengthen our company's financial position as we work to globalize loop kindness.
Moving now to R&D updates on August 17th of this year, we announced the acquisition of two exciting and innovative additions to our pipeline.
The first of these compounds is EUR 200, which is an FC protein targeting bath or b cell activating factor and April or a proliferation inducing ligand.
As you May know about Paas at April play a key role in B cell mediated autoimmune disease and while this mechanism of action has been widely studied and we have proof of concept. We believe this compound has differentiated properties compared to those in development and we're eager to establish those pre clinically.
And then of course advanced into clinical development.
The I N D for EUR 200 is expected to be filed in late 2022.
The second compound that we acquired is EUR 308.
Our 300 is a novel peptide therapeutic that modulates M. Two macrophages, which is a type of white blood cell via the ant via the CD two O six receptor while there's less research with this mechanism of action. It has been established dysregulation of M. Two macrophages causes fibrosis and.
AUR 300, the goal will be to reduce M. Two dysregulation early and decreased fibrosis and inflammation.
The IND filing for this compound is targeted for the first half of 2023.
These transactions allow us to leverage our existing R&D capabilities and growing commercial experience, we strive to further diversify and grow our pipeline, which is a key strategic imperative for us and our goal to provide stakeholders with long term value.
In summary, we're making significant progress as we as we work to expand adoption of loop kind of sit in the U S as well as other parts of the world.
At the same time in parallel our R&D teams are committed to advancing our new pipeline assets and addressing autoimmune diseases beyond lupus nephritis.
I'll be back to close out the call, but for now let me ask Joe Miller to get into more specifics regarding our financial position Joe.
Yes.
Thank you Peter and good morning, everyone.
As of September 32021 Arena had cash and cash equivalents and investments of $286 4 million compared to $422 7 million at December 31, 2020. The decrease was primarily related to the commercial infrastructure spend to support the launch of loop kindness and upfront payment made as part of a collaborative agreement with lines.
To build a dedicated manufacturing capability and an upfront license payment related to our recently acquired developmental programs net.
Net cash used in operating activities was $131 8 million for the nine months ended September 32021, compared to $73 1 million for the nine months ended September 32020, the increase was primarily due to the commercial infrastructure spend to support the launch of lip kindness payments for inventory and a one time payment to.
A related party upon achievement of specified milestones, partially offset by an increase in cash receipts as a reminder, in the prior year. The company was still in the adult development phase of the tightness and was only in the beginning phase of building out its commercial and back office infrastructures.
The company believes that it has sufficient financial resources to fund its current plans, which include funding commercial activities, including FDA related post approval commitments manufacturing and packaging of commercial drug supply funding are supporting core corporate infrastructure conducting planned research and development programs and investing in our pipeline.
Into at least 2023.
Total revenue was $14 7.029 million for the quarters ended September 32021, and September 32020, respectively. Total revenue was $22 2 million an 88000 for the nine months ended September 32021, and September 32020, our revenues primarily consisted of loop kindness.
Revenue net of adjustments following FDA approval in January of 2021.
Cost of sales was 254000 and zero for the quarters ended September 32021, and September 32020, respectively cost of sales were 610000 and zero for the nine months ended September 30 of 2021 and September 30 of 2020. The increase for both periods was primarily result of commercial sales of loot kindness.
Gross margins for the three and nine months ended September 32021 was approximately 98% and 97% respectively.
Selling general and administrative expenses or SG&A were $44 1 million and $30 7 million for the quarters ended September 32021 to September 30 of 2020, respectively.
For the nine months ended September 32021, SG&A expenses were $127 2 million and $57 2 million for the comparable period in prior year. The increase for both periods was due to employee related costs associated with the expansion of the commercial and administrative functions to support the launch of loop kindness, which ramped up during the third quarter of <unk>.
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Also contributing was an increase in professional fees for exit activities, such as patient assistant programs consulting recruiting legal market research and marketing related activities.
Noncash SG&A shared based compensation for the three and nine months ended was $6 million and $19 2 million compared to $3 8 million and $9 2 million in the same periods in 2020.
Research and development expense were $20 1 million and $12 2 million for the quarters ended September 32021 at September 32020, respectively for the nine months ended September 32021, and September 32020, R&D expenses were $40 million and $37 2 million. The primary driver for the increase for the three months.
And at September 32021, as compared to the same period in prior year was the upfront license and accrued milestone expense related to our recently acquired developmental programs in accordance with U S. GAAP. These transactions did not meet the definition of a business combination and therefore, we recorded it as asset acquisitions. The company expense the cost of the assets at <unk>.
R&D related expense at the acquisition date, the increase was partially offset by a decrease in clinical supply and distribution costs due to our new drug application and <unk> foreign related clinical trial expenditures in 2020 not recurring in 2021 also contributing was a decrease in employee related expenses.
The primary drivers for the increase for the nine months ended September 32021, as compared to the same period in prior year due to the upfront license and accrued milestone related to our recently acquired developmental programs and higher CRO costs related to our new clinical programs offset by a decrease in clinical supply and distribution costs. Following the approval loop kindness.
<unk> a reduction in NDA preparation costs and termination of the dry eye trial during the fourth quarter of 2020 now.
Noncash R&D shared based compensation expense for the three and nine months ended September 32021 was $1 million and $3 2 million, respectively compared to $800003 1 million in the same periods in 2020 for.
For the quarters ended September 32020 Arena recorded a net loss of 50, $350 3 million or <unk> 39 per common share as compared to a net loss of $42 1 million or 34 cents per common share for the quarter ended September 32020 for the nine months ended September 32021 Arena recorded a net loss of one <unk>.
Hundred $47 6 million or $1 15 per common share as compared to a net loss of $94 6 million or <unk> 82 per common share for the previous period with that I would like to hand, the call back to Peter for some closing remarks Peter.
Well, thanks, Joe and I want to thank everyone again for joining US today, let me close by saying that I'm proud of the work we've done so far this year under the backdrop of a challenging and unprecedented global pandemic, we continue to see strong and significant progress in our efforts to drive adoption of <unk> in the U S.
Our clinical and regulatory teams are working hard to advance and achieved important milestones for <unk>, including the completion of the Aurora two continuation study.
And we're pleased with the work achieved so far this year with our partner Otsuka to ensure regulatory approval abacus foreign outside of the U S.
And then finally, we're excited to have two new pipeline assets that will help us further our mission and changing the course of rare and autoimmune diseases.
We look forward to providing additional updates in the months and quarters to come.
And I would now like to open up the line for questions. So with that operator, please feel free to open it up to the Q&A.
Thank you at this time, we will conduct a question and answer session.
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Our first question comes from Alethia Young with Cantor Fitzgerald. Please proceed.
Hey, guys. Thanks for taking my questions and congrats on all the progress so far with this launch.
One question is just on what between the rooms.
Prologis soon take two are they are they are kind of different concerns are that is one population. We're concerned about maybe what to do after a year versus the other just trying to get the finer points of what the dynamics are between those two prescribing grip and then I know, we haven't experienced yet at least with kinase, but can you can you talk about how you're thinking about maybe potential seasonality.
He had with the end of the year and how we should think about.
They're working through that in the model. Thanks.
Thanks, Alicia and let me start out and Max can build on what I might Miss on.
Obviously, rheumatologists and Nephrologists are different.
Specialty and how.
How they think about the disease I think the treatment goals are aligned but obviously the.
Our lupus patient starts first set of Rheumatologists office, if you look at our market research, though in terms of both awareness and intent to treat they are pretty close to overlap in terms of.
Awareness of the drug one and intend to treat moving forward.
In terms of our day to day, our messaging et cetera.
Still call on high target side targets, both in nephrology and rheumatology and right now both from our impacts scores in terms of the market research. We track were right on target with both Nephrologist and.
And with the and Rheumatologist Max what would you add there anything yes, I'd just add that are prescribing is actually pretty much split down the middle with her.
Half being nephrologist and half from apologize so it kind of reflects again, what Peter just highlighted which is the intent to treat pretty much overlap as what we see in our research and.
And Alicia can you just ask the second question again.
Yes.
No worries. It was just unlike season that how to think about maybe seasonality from like Thanksgiving to Christmas do you think that you'll kind of a slowdown or just you know kind of talking about the dynamics that we may see over the fourth quarter I know it seems like Covid is waning and scripts are picking up but they've gone out of the holidays, but I know you havent gone through the holidays, yet with Australia.
Yeah, I think it's still a little early to understand whether there is sort of a summer seasonality to this or not because the delta variant sort of hit right at the front end of the summer and we couldnt discern between the two a matter of fact that could probably almost pose the question back to you since you talked to a lot of.
Specialty companies out there in this space and what they saw that they thought was pandemic related or more summer summer seasonal, but we're watching it very closely I want to make sure that people are really clear on the message that we communicated dough.
Where we were in a quarter in terms of PSS and where we've trended too as we moved into September and October we've had north of 265 Psf's year to date and if you just do the backwards math on that in the month of October alone. It's approximately 160, new patient start forms in the.
<unk> of October alone. So I don't want anyone to take away that we have seen a slowing down of this business. We saw impact specifically in the southeast as it was related to the Delta there and that was on target with what we've seen since the start of this launch we still feel very confident.
For for our prescription start form performance as it pertains to year to date and we don't know yet if this summer was something that's gonna be a predictable seasonality sorry for the long winded answer.
I appreciate the helpful color.
And I would add to that.
We did see a slowdown specifically from Texas to Florida and to Peter's point and that has rebounded as we've gotten into September and October.
Great. Thank you.
Our next question comes from Ed Arce with H C Wainwright and company. Please proceed.
Hi, good morning, everyone and thanks for taking my questions and.
Let me add my congrats on the strong quarter.
First question is.
Sure.
Thinking about the drivers of clinical adoption here.
You know I know you just went over some of the.
The variance.
Early in the summer and what drove that but given that youre seeing some some real acceleration more recently just thinking about you know what.
We should be focused on in terms of the drivers as you as you increase your PSS.
And in particular, perhaps discuss the.
The impact on <unk>.
Scribing.
Hum.
More recent data I know, we just got 30 months.
From Aurora, two and 36 months to come.
So maybe talk about you know.
The impact of that as you go out there in the field.
Well to answer your first question Ed I think we report the meaningful numbers that we want people to be focused on and really that's at the top end of the funnel, it's new prescriptions or patient start forms and then as we report.
The conversion of those percentage of those patients getting on therapy, and you can see whether it's patient start forms.
The time point of the launch to a year to date, we continue to see strong growth there on the conversion front, we've not we've moved from an early stage at the front end of the launch.
Around 30% to 40% to today, just below 70% conversion.
Obviously, that's a critical one and then lastly, I would say over the course of really this year and into next year, it's going to be tracking compliance or persistence or whatever the right word is you want to use their how long patients stay on therapy, and obviously, our expectations arent at 100% of patients are.
Gonna stay on therapy, the patients will fall off over time, either for their own reasons or for positions.
Physicians deciding how long they want to use the therapy.
I'd say the reason we haven't reported more on net the data because it's just too early if you think about the Max number of doses that patients could have seen if they were approved for the drug in January it would be in and around nine months worth of doses up to this point. So just don't have enough to really point to a trend there.
Max anything you'd add yes, I would say the only thing I would add is that repeat prescribing is now becoming a better a bigger part of our PFS SaaS and and I think that reflects really just the overall increase in confidence with prescribers, both from just understanding our data better as well as gaining experience in.
Treating patients.
Okay, Great that's helpful and then.
Couple more just on.
Finances.
Sure Joe.
One is around the R&D expense in the quarter I know, you're a bunch you mentioned.
The upfront license of the new assets.
And that being.
Book, as an asset acquisition and that impacted the quarter, but wondering.
You know what levels.
Trajectory.
<unk> expense, we can expect over the coming quarters, and then also gross margin.
Still staying really high 90, 897% just thinking about you know when that will normalize and at what level. Thanks. So much.
Thanks, Ed.
Regards to the R&D expenses I think if you kind of trend them out and you take out the one time payments associated with the two recent acquisitions and as I mentioned in the script. We also had.
An accrual of a milestone that we had to fair value as well so.
Our R&D related op expenses for the quarter were about just call. It $20 million just a touch above $20 million. If you look look in the prior quarter that number was around $10 million or so so you take out the one time upfront payments coupled with the accrual.
A one time milestone and your run rate's pretty consistently around $10 million or so and as as we spoke previously I think those numbers will continue.
So last question question answered first mowry on the.
Average net price we're still.
And the range to support and are above the range to support the assumption that we put out.
At this stage we have not.
Gone deeper on that primarily because it's still early in the launch and as a result, we're still getting an understanding of how doctors are prescribing loop kindness and the number in time to discontinuation persistent patient.
And payer mix, all of which really impact the actual net realizable revenue per patient per year going forward. So looking at the results. We have to date, which is about nine months post launch we're currently on or above the guidance. We've given previously on average net now in terms of what we understand.
About dose reductions that we see out there again I'd say, it's early but it's getting long enough in the launch to to understand it more and as we get a little bit more data will start to report on it I would say at this stage, we're probably close sand or hopefully trending.
Slightly above where the trials were and if you remember both in the phase II and the phase III trials, we were somewhere in the 25 to call. It 30% of patients said saw a dose reduction so.
I'd say that we're consistent with that but we want to see a little bit more data as patients get more experienced with the drug.
In terms of compliance, it's all wrapped up in what I just said Maury.
We got to see a year's worth of data at least to really understand what the average patient persistency looks like on this drug.
With only nine months under our belt, it's really hard to say, what's going to be realized for a projected book forward.
Got it.
One question is I didn't know if there had been rumors circulating on several companies approaching you about a potential takeover. So can you provide like can you confirm whether any deal signed works and what are you looking for from an idea.
Right.
Well, we obviously cant comment or speculate on the source of the room or a recent report so I'll just leave it at that.
Okay. Thank.
Thank you.
Thank you.
Our next question comes from Ken <unk> from Cowen <unk> Company. Please proceed.
Hey, Peter a follow up on that question, even though youre not going to comment on it try to just elicit something from you obviously been massively in the news and the stock prices clearly pulling forward, what we believe to be eventually wonderful performance on the kinase, but maybe get you to talk a little bit about how you think.
About standalone.
Versus.
Thinking of or engaging with others. I mean is it a is it a matter of folks just viewing the opportunity. The same as you kind of coming into an agreement around size of opportunity is it what you see in front of you in terms of how you can leverage your own sales force, obviously a lot of infrastructure.
Build for a single product and you are starting the process of building it out but can you just help frame out for us a little bit given kind of the the breadth and depth of the rumors that were we're all hearing about just how you think.
Generally speaking about either putting your hand up or a willingness to speak to others. Thanks. So much.
Thanks for the question, Ken and ill repeat what I already said I mean, we really cant comment or speculate on the source of any of these rumors of research reports that are circulating in the market, but I think the second part of your question, which is fair to understand where management and our board.
Mindset would be as it pertains to continuing to create shareholder value drive shareholder value and I guess, what I would answer how I would answer that question is to reinforce what we've said in many calls before this time, we have a business plan and we have a mission as a company and that business plan is to get this drug.
<unk> to as many patients.
<unk> from autoimmune disease, and lupus nephritis as humanly possible and we remain committed to doing that in a way that drives the most shareholder value and we remain committed to exploring any and all avenues to complete that mission and do it in a way that is best for driving shareholder value. So.
Realize that Thats a wide open answer, but I think if you read between the lines.
No one here at <unk> has a box in way of thinking about how we both create value and expand access to this product more broadly either in our hands or someone else's are in partnership with someone we remain open to all potential avenues.
Okay. Thanks, Peter that's helpful. I appreciate it.
Our next question comes from Joseph Schwartz with SBB Leerink. Please proceed.
Thanks very much.
In terms of long term data that you've generated already in the longer term data that you'll have in late fourth quarter. I was wondering if there's any way that you can quantify for us how important this is in the marketplace.
Are there segments of the market.
Inc are reluctant to use look kind of us until they see such data.
How large are these segments is there any way that you can provide us with any.
Any parameters to help us appreciate the importance of this data.
Yeah.
Yes.
It's a great question and I think the two biggest in my mind. The two biggest swing factors that are hard to quantify for me today around the launch in the business. One has been the impact of Covid on our first year to launch to quantify that for you would be difficult I would say it definitely has but to say, whether it's 20% or 30%.
Just don't know the second.
And by the way Covid decreasing.
<unk> seen lower virus rates et cetera, we know it will have a positive impact on our business both with a physician access patient access access to care patients staying on drug we know that the other thing we know thats hard to quantify is that obviously, having three years' worth of data both.
Safety and Tolerability data out to three years is better than having just one and.
We know that.
It's going to help our business in lots of different ways. One we're one of the only products that has data out. This long in this patient population such an important thing to note and with our drug in the class of C&I is obviously, we want to while we're a new and differentiated new mechanism new.
Drug.
Want to continue to reinforce that utilizing this drug over longer periods of time doesn't compromise in any way the patients kidney function, which we are hopeful that three years will actually show that we know that's going to have meaningful impact on both prescribing behavior and probably even more importantly, how payers react to.
<unk> reimbursing the drug over longer periods of time, when as you know our label today said safety and efficacy beyond one year. It has not been established.
So hopefully that it's not a quant answer for you and I apologize for that but we think it's going to be really meaningful.
To both our patients physicians and our efforts in getting the drug off the ground and we will launch this data to the market in terms of what the outcomes are as if it were an extension of a pivotal trial, which it is.
So you will be filing our NDA for that or what is the actual process in order to be able to promote that data.
It's a really good question and no. This is not a supplemental for US we do all of this data to the agency.
They did not they didn't quote unquote asked for it but we said we're going to do it and it is part of our application, but I want to be really clear technically it's not a we're not putting this in as a supplemental application we will discussed with the agency.
How meaningful the data is what it tells us and see if we can get to an aligned approach as to how that may or may not be added to the label because I mean as you know.
Our supplemental package opens up the entire label for review and I personally have seen many times, where you're going to get something like this added to the label in NAND or change in three or four other areas. So I think we need to be.
Smart and strategic and talk to the agency. We think is very meaningful and there should be merit to adding it to some area of the label, but not at this stage as a supplemental package.
Okay. Thank you and then we noticed that the guidance remains unchanged at $40 million to $50 million.
Couple of kind of sales for this year.
Is there can you provide us with any color commentary on how ambitious.
You think it might be to achieve the high end versus the low end and what the biggest swing factors that you're focused on or is it patient start forms, which you've noted are accelerating or the conversion rate, which is already quite healthy.
Do you think will determine where you end up for the year, how empower ambitious do you think the.
The ranges.
Well I think what we said when we put up any sort of guidance in the first year of the launch was that we werent trying to softball anything.
And if global pandemic situation.
First year of a drug launch, we gave a $10 million range and what I said when we put it out there was.
We're not obviously, we want to be a meet and beat kind of company, but at the same stage.
First 910 12 months of launch.
These are these are not lay up numbers for sure, but we remain confident that we can be in this range and I think to me the biggest swing factor here, yes, we want new patient start forms in the quarter, that's critical right, but a new patient started in the quarter doesn't drive a lot of revenue for us. So it comes down to.
Continuing to work convert and keep compliant those patients that have seen the drug in quarters before that's going to be the single biggest driver of our performance in the queue ending out the year and the biggest driver of what we will continue to build that base into first quarter of next year will be those.
Patient start forms so, let's say it comes down to compliance and conversion.
Thanks very much.
Our next question comes from Justin Kim with Oppenheimer <unk> Company. Please proceed.
Hi, Good morning, Peter and team and let me add my congrats on the commercial progress during what's been a certainly challenging environment.
Maybe just to probe a little bit more on that point with respect to patient start forms.
As you think about the guidance range is an acceleration in those sort of script.
That you would need to see to enter the higher end of our guidance, let's just sort of.
But we're sort of getting out based on our talking again.
No.
No I think the way you want to look at patient start forms because this is a clear example of it in the quarter is as a general health and growth of our business, we need to continue to be pushing new patients into the system too.
Effectively were any patients that are going to fall out of the system. If we had 100% compliance.
We we probably wouldn't worry about this as much but as we continue to see compliance over time, we want to continue to drive patient start forms the conversion no. We could even if patients start forms were lower like we saw in.
Not lower but sort of flat quarter on quarter that we saw due to the delta variant in Q3, you can still achieve a financial metric as long as your patients convert and stay on drug, but I think you're always going to be looking at that patient star form number because it is a it is a general health of the business in <unk>.
Future growth to business metric for us.
Okay got it and then maybe just talk a little bit about Aurora two.
He has insight on how physicians have been implementing dosing I thought the sport in those outer years and how representative that may be a real world practice that sort of more meaningful patients transition from having high approaching your disease going into 2022.
Yeah, as we've said.
Its early so its really hard to deduce what the trend will be going forward.
We are watching bolt physician behavior here and and patient behavior remember we have this patient population is a difficult one and can be pretty notoriously uncomplaining. So we are looking very closely not only of physician prescribing behavior, but at at persistency as it pertains to the patient and stay.
<unk> compliant and staying on drug and I, just think we're not trying to in any way walk away from this question I, just think you need more than six to nine months worth of data to say you know anything about the persistency of your drug.
But over time this is going to be one that we cannot speak about when you have a year's worth of <unk>.
Data that's out there or more and we as we've said on previous calls have every.
Beliefs that we will do that so.
So far things look good but I don't want to force report that compliance will be until I have a projected what I believe will be a projected number and thats time.
Understood and maybe just a final question in terms of that insight on persistency does that complicate or make it more challenging to provide guidance for 2022, and when might we be able to have that sort of sort.
Okay.
Viewpoint.
And color.
Yes, we havent given any feel on what and if we're going to guide for 2022.
Much like the first launch of our.
First year of launch there are factors, we just got to take indicate indicates like patient re ups, how the Aurora two extension study and what that recent readout will mean for US. There are a lot of factors that are going to be playing out in 2022, and I think we need to just be careful and really no see what we do know as we roll into Q.
Four and how we can project that out for the year I'm, not saying, we won't give guidance, but at the same time I'm not conclusively, saying, we will I think we got to look at all the factors if anything I think investors should feel very comfortable that we have been extremely transparent.
And maybe even more than we should about the early launch metrics and how they bled into this year and I wouldn't see anything changing for us in terms of our desire to be transparent very transparent with investors about our performance and how our brand is performing.
Okay, great. Thanks, so much and congrats on the progress.
Thanks, Justin.
Our next question comes from David Martin with Bloom Burton. Please proceed.
Yes, good morning.
First question.
A piece of it is coming in with newly diagnosed lupus nephritis are the physicians first treating them with MMF and steroids, and then adding loop kind us if they don't respond to that combination or are they starting with the three drugs.
I think the majority of patients today, David are being treated in the in the <unk>.
Way, you're laying it out but there are a minority of patients and of course, our aspiration, which will be to totally change the treatment paradigm and start with the triple therapy upfront.
I think the thought leader basin, where people are challenging each other right now at that level.
As an <unk>.
Thinking about therapy in the future and that way, but the reality of our systems today, how payers work et cetera. The majority of patients that are being treated today are ones, who are seeing breakthrough after seeing an MMF and steroids regimen, that's not where we aspirational position the drug which is.
Where we position of right upfront with where our data is which could be a newly diagnosed patient or it could be a patient who has seen a course of therapy and multiple therapies.
Okay, Great next question.
Are there any thoughts of doing a trial in combination with cyclophosphamide or is that becoming less and less used in treating lupus nephritis.
It's not a discussion we have at this stage other combo trial, yes.
But not with cyclophosphamide I think if anything and we're not my comment here is not a commitment to do anything but an area, where we get questions is combination therapy with T cell therapies as they move forward.
Okay.
And then last question I know there was a sub study with pre and post biopsies.
Any idea when that data is going to be public.
Published or presented.
No because of the complexity of this study the central readership, the fact that.
There are a lot of complexities around how that study can be executed or how that subset can be executed we have not committed to a timeline on that first step of course will be getting the extension data and as we've said we have that by year end, but no no definitive timeline yet.
Okay great.
You have one other quick question.
With the two and three year data is there a chance you think you could get the nephrotoxicity warning off the label if everything comes up clean.
Neil is on the call too and I think he'd have an opinion here I think it is a.
It's a reach.
There is a class of drugs that came before us that have <unk>.
Decades of experience in transplant, where this is prominent in their label and I think we should be very happy with how our label came out as it pertains to class labeling and I would not see a world where three years worth of safety and Tolerability data is going to get us there.
Neil would you have a different view.
No I would agree completely this is cluster, enabling David based on.
Decades of experience with the other customers inhibitors, and we would have to publish have you just prove in all areas the recalls any of us.
He was also done to do that.
Got it okay. Thank you.
Our next question comes from Doug <unk> with RBC capital markets. Please proceed.
Yeah. Good morning, Peter just a quick question in terms of a follow up with respect to compliance can you tell me what the companies specifically doing to aid.
And ensuring that the compliance space.
As long as possible.
Yes, I'll kick that one to Max colao, since we tactically and medically have a lot of things we're doing Max yes sure. So.
About 90% of our patients are consented through <unk> and so they they threw that drove any alliance. We provide case management support regular case management support to all of the patients the patients have dedicated nurses that reach out to them again consistently.
Two for education and support so that's probably the most.
Most impactful part of how we support compliance and then beyond that we also make sure that the communication is really clear between the patient.
The physician.
The office staff.
True again through a linear lives. So I would say that's really again, we developed or any alliance to really.
Support patients.
Considering the fact that this is a rare disease.
Disadvantaged patient population and we are absolutely here and see the benefit of the support that we provide.
Okay great.
And the second question, Peter and maybe I Misheard you.
Are you and you can correct me, but.
In speaking about the drug you said, obviously, it's indicated for Alan but more broadly autoimmune disease.
Any evidence that you're seeing.
Could see off.
Hopefully we'll use of this drug.
<unk> any doctor conversations that you've had.
Well, let me be Crystal clear, what I said is our mission as a company is to get this drug to as many <unk> patients and to continue to move our pipeline forward in other autoimmune diseases and obviously, we don't do anything in the market to drive.
Off label promotion of any kind.
Physicians are free to prescribe the drug where they want to as long as they get their payers aligned to do it but we surely are not promoting to that your broader question about well, where we take the drug or could we see the drug going indifferent.
Areas in terms of.
Our regulatory filing approach what I've said historically as we've looked at this as a team and at least at this stage, we don't see other areas that would warrant a full development programs, but we get tested on that pretty often from physicians out there who have curiosity about where they might use the drug.
So right now thats centered through our clinical and our medical Affairs organization, and if anything becomes bigger than a conversation or something that's looked at it from an individual investigator basis, we'll be we'll be sure to reach out to you and let you know.
Okay. Thanks very much.
Makes sense okay.
The question and answer session I would like to turn the call back over to management for closing comments.
No further closing comments here I want to thank everybody for their time and look forward to updating you in the quarters and months to cut in the months and quarters to come and have a great day.
Thank you. This does concludes today's teleconference. You may disconnect. Your lines at this time and thank you for your participation.
Okay.
Okay.