Q3 2022 Aurinia Pharmaceuticals Inc Earnings Call
Greetings and welcome to the Arena Pharmaceuticals, Inc. Third quarter 2022 earnings call at.
At this time all participants are in a listen only mode. A question and 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 John Woolford Investor Relations for Arena Pharmaceuticals.
Thank you you may begin.
Thank you Melissa and thank you all for joining today's call and webcast to discuss <unk> third quarter 2022 results. Joining me. This morning to lead the call are Peter Greenleaf, President and Chief Executive Officer, and Joe Miller, Chief Financial Officer. This morning, Irina issued a press release announcing its first financial results and recent operational highlights.
And filed its quarterly report on Form 10-Q for more information. Please refer to arena as filings with the U S Securities and Exchange Commission, which are also available on <unk> website at arena pharma Dot com.
During this call are ringing in mid May make forward looking statements based on 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 <unk> future financial results and business. Please refer to the disclosures and arenas press release and its quarterly report on form.
10-Q, along with Iranian 10-K, and all of its recent filings with U S Securities Exchange Commission and Canadian Securities authorities.
Note that all statements made during today's call are current as of today November three 2022, unless otherwise noted and are based upon information currently available to us at this time.
Except as required by law Arena assumes no obligation to update any such statements. Let me now turn the call over to <unk>, President and CEO Peter Greenleaf Peter.
Thanks, John and good morning, everyone and thank you for joining us on today's call. We'll provide you with a review of our commercial business, including loop kind of performance in the third quarter and year to date.
We will then provide our updated expectations for the remainder of this year and since we now have three quarters of results for 2022, we will also provide a preliminary view for 2023.
In addition to commercial performance, we will cover ongoing medical affairs, and clinical work to reinforce slip kind of specialty benefits for patients.
We'll then move on to providing an update on our global expansion efforts, our R&D activities and an update on our intellectual property.
Ill turn the call over to Joe <unk> to provide more details on the third quarter and year to date financial results.
They're all strong financial position.
So let's get started with a third quarter business performance total net revenue for the quarter amounted to $55 8 million, which included a recognition of a one time $30 million milestone payment from us.
To the achievement of the European Commission approval of loop kindness.
Total net product revenues for Lupron is 25 5 million for the quarter, bringing the year to date total for loop kind of snap product revenues to $75 1 million.
Total reported revenue for the 2022 fiscal year through September 30 was $105 6 million.
Moving to more detail behind the financial results total patients on therapy grew to <unk> hundred 54 by the end of Q3 up from 274 at the end of Q2.
The increase in patients on therapy. This quarter was driven predominantly by improved finished prescription or patient start form conversion rates and processing speed.
Alongside of new patients start forms.
Patient conversion rates on that on the drug and 20, and 30 days continue to improve quarter over quarter.
As of today overall conversion rates at 60 days remain consistent with prior periods at approximately 84%.
Consistent with prior periods adherence remains strong with approximately 80% at quarter end.
Looking at our patient stock comps, we saw a slight decrease quarter over quarter moving from 409 in Q2 to 374 in Q3.
Looking at our most recent data through October 31st TSMC year to date with <unk> hundred 57 <unk>.
These trends are clearly something we have been watching closely and have a tactical actions to address.
Our net realized revenue per patient got it for the.
Florida remains higher than our initial guidance of 65000 per year.
As we discussed previously we expect to approach this figure on an annualized basis as more patients go on and stay on therapy over time, and as persistency dosing and payer mix evolves.
What we have seen from our internal analysis of claims data is that several leading market indicators, including patient tests, new lupus nephritis diagnosis and the number of patients renal biopsies declined from Q2 to Q1.
Excuse me declined in Q2 purposes Q1. These are numbers foreshadow the potential slowdown in the summer.
For visits that did happen. We also saw lower amount of proteinuria testing, which declined approximately 15% in Q3 versus Q2.
These numbers.
Both Doctor and patient summer vacations resulted in overall lower office volume and impacted our performance during the summer months in both rheumatology and nephrology offices.
Our internal analysis leads us to believes is that these market events or temporary seasonal or event driven in nature. While we are currently digging deeper to better understand what impact. This will have on a going forward basis in the interim we are driving on the tactical activity to power through these external market dynamics.
I will now walk you through.
First let's look at our selling focus in health care provider driven efforts.
What we've learned throughout the whole on from our highest prescribing physicians at high frequency engagement is required to adequately deliveries of Lupron is clinical message and gained solid clinical adoption.
As a result of our actively increasing our focus and frequency of high potential desktop desktop seven through 10, rheumatology and nephrology offices.
Setting clear expectations tracking activity closely and even increasing our incentive targets for our field team in these areas.
Is this your article execution or medical affairs that for temporary related to loop kindness are crucial to driving growth.
Over the past few quarters, we have generated significant visibility with health care providers with a substantial unhurt impersonal presence at the major medical conference.
We continue to submit new data from Aurora wanted Aurora two for presentations at the conference is coming up which include 14 abstracts accepted it lupus H E. R. N a S N. This year.
My favorite marketing approach is designed to increase the depth and frequency of prescribing among our existing base. We also want to ensure that first time prescribed or is that a meaningful experience without a product and throat runny alliance patient support team.
We continue to make seamless first patient experiences with kindness and key priority.
We can see direct debit and as far as a pack earache and increase psf approval rates as well as time to receipt of borough the following medical prescription.
Along with our sales and support team to focus and intensity. We've also increased our focus on the patient.
We've recently made enhancements to our brand website <unk> dot com to provide additional information for patients and health care professionals.
In addition, we've enhanced and increased sharp focus directly and through online social media channels.
In September we begin a new campaign with the Lupus Foundation of America directed towards Lucas Nephritis naive patients with a series of Elizabeth walks across the country.
The fall campaign launched just last week and we plan to continue to grow this campaign as we move into 2023.
All of our existing anchor programs have always centered around patients.
Our efforts and advocacy and education all of these continue.
In addition to have a number of new programs that the launch over the next few months and I'll pay increase diagnosis urgency of treatment at hearings and persistency all moving directly to the patient.
Lastly reported on previous calls <unk>. However, some payers till include administrative hurdles for patients initiating thyroid.
Just last week, we actually signed a contract with one of our national payers, if I'll remove certain access hurdles to lessen the <unk> managed straightest one of our officers. You'll also shortly average time diverse commercial federal and further enhance the prescribing of experience for physicians and patients.
So we can drive it right motivation under the right terms with <unk> with payers as access and also to speak <unk>.
Based on the third the third quarter revenue resolves N P. S that trend moments. Thank you start out press police were updating our 2022 kind of net revenue guidance to 100 to 105 million for 2022.
In addition, with more than three quarters of results for 22 now available. We are also providing a preliminary guidance net revenue guidance for 2023, and the range of $120 million to $140 million.
This represents a 17 to 37.
Seven per cent growth over the menu for one of our revised estimated got us for 2022.
In order to achieve this growth.
This growth is expected to be driven by an increase in the number of the quarterly PSS improvements in Kimberley tile solid persistence features and continued strongly adherence.
Moving out of our globalization efforts for Luke kindness, and mid September and collaboration with our partner aren't so good we achieve that important files stone as the European Commission granted marketing authorization of Blue kindness to treat adults with active Lucas nephritis.
Authorization is valid and all in November staged as well as Iceland <unk>, Norway in Northern Ireland.
Upon approval, we received a 30 million dollar milestone for mazzuca.
Eligible to receive additional regulatory and reimbursement milestones and the modem to update your royalties on net sales once launch.
What are we began to recognize revenues person to buy a product to Asuka, which is reflected his pride ourselves as well as collaboration revenues for C. M C N R&D support.
We'll send her a cost plus arrangement.
As a reminder, or updated 2022 get neck product guidance revenue guidance of $100 million to 105 million does not include this milestone payment any <unk> any payments or any collaboration revenue related into our agreement with up to go to market look on us and the European Union and Japan.
Alright, getting authorization applications have been submitted in Great Britain, and Switzerland with approval is expected in the first half of 2023.
As a reminder, pricing and reimbursement approval and three of the five major countries in European market will trigger a 10 million dollar milestone to a radio.
In addition, our work in Japan remains on track.
Upon approval, we would be eligible for an additional 10 million dollar milestone relating to.
And along with our double digit royalties on net sales once launched.
T ongoing clinical data to loop kindness include the advancement of both the bulk of pediatric studying and they had like airline registering.
With the registry, which just <unk>, which we have just initiated the beginning of the year. We now at 38 active sites towards our goal of having 17 total sites.
As a reminder, which plan to leverage real world data collected from this study to gain further knowledge about patients, taking <unk> and <unk> and payers improve patient care and ensure access to therapy.
We remain on track to meet our Postapproval F D a commitments.
Moving onto our research pipeline, we continue to advance I N D. Enabling work up I'll say you are 200, <unk> 300, and we continue to work towards submitting ind's for both compounds by the end of 2023.
These are important next steps in the advancement of our pipeline as well as to build longterm sustainable growth to the company.
And finally I would like to provide you an update on our ongoing IPR interpart case relating to our <unk>.
Since the fees have been sent to the V. I P. R. In July 26, we've been diligently working on or off the defense to the I P. R.
December Windsor mutually agree to a two and a half week extension to each of our upcoming filing deadlines.
With that extension or curls false a defense is due to be filed aftermarket tomorrow.
The defense will be will be substantively dispute into well subsequently dispute all challenge just raised <unk> N B I E R.
<unk>, let me pull up all the available in one spot and we are confident the arguments that we are planning on for sending in that defense.
There are a number of future steps to be taken in the I T R proceeding, including with you to further filings.
Events, culminating in the decision from the P Deb being expected on or before July 26 of 2023.
In the meantime, Patton infringement lawsuit against on Pharmaceuticals in which we would like to have any furniture advice on pharmaceuticals of our pet and related tobacco sworn in off the mountaintop that like solution remains.
I want to emphasize that we will make me focused on taking all initiatives to protect and strengthen arrived decision as a company.
<unk> applications relating to live the kind of set or file in under way, which is granted.
To add and grant us additional patent protection for the kindness.
Before I turn the call over to Joe as a reminder, inclusive over the Super milestone catch receipt, which you. He was received on October 31st of 2022, we now have approximately $400 billion in cash on our balance sheet.
<unk> well capitalized and we have a brief drug that we believe in it will become a problem eventually become a profitable franchise.
Line with this updated alcohol we.
<unk> archive spend drive sales of kindness and to allow the company to further in best in its current and future Python.
I'd now like to turn the call over to Georgia, Joe Miller for more detailed review of our financial results and then I'll return at the end of the call for a quick recap and to open up to any questions you might have joh at all.
Thank you Peter and Hello, everyone at.
At September 30th 2022, we had cash cash equivalents and restricted cash and investments of $376.6 million compared to $466 1 million at December 31st 2021.
S. Peter said this does not include the cash receipts of the 30 million dollar milestone payment for mazzuca related to E. C approval that was recognized as revenue in the third quarter. The company received this payment on October 31st 2022, bringing cash cash equivalents in restricted cash and investments in October 31, 2022 inclusive of other milestone.
To approximately $400 million.
We believe that we have sufficient financial resources to fund our current operations, which include funding commercial activities, including F. D. A related post approval commitments manufacturing and packaging of commercial drug supply funding are supporting commercial infrastructure advancing our research and development programs and funding are working capital obligations for at least the next.
Few years.
Total net revenue was $55.8 million and 14.7 for the quarters ended September 30th 2022 in September 30th 2021, respectively.
An increase of 280% period over period.
Total net revenue for the nine months ended September 30th 2022 was $105.6 million and $22.2 million for nine months ended September 30th 2021. This represents an increase in excess of 375% year over year <unk>.
Revenue growth for both periods is primarily due to the recognition of a 30 million dollar regulatory milestone for mazzuca. Following the E. C approval Blooped kindness and September of 2022, coupled with an increase in product sales for kindness, which was driven predominantly by further penetration and the lupus nephritis market.
Total cost of sales and operating expenses for the quarters ended September 30th 2022 in September 30th 2021 was $65.3 million and $65 million respectively.
Total cost of sales and operating expense for the nine months ended September 30th 2022 $189 million in comparison to 172 point $870.2 million for the nine months ended September 30th 2021.
Cost of sales were $2.4 million and 254000 for the quarters ended September 30th 2022 in September 30th 2021, respectively cost of sales were $4.3 million and 610000 for the nine months ended September 30th 2022 and 2021 the.
The increase for both periods is primarily due to an increase in product related revenue a low margin contribution for collaboration activities with our partner Asuka, coupled with an increase in our safety stock inventory reserves <unk>.
Gross margins for the three months and it's September 30th 2022 in September 30th 2021 was approximately 96% and 98% <unk>.
Gross margin for the nine months ended September 30th 2022 September 30th 2021 was approximately 96 and 97% respectively.
Selling general administration, or SG&A expenses inclusive of our share based compensations was $52.2 million or $44.6 million for the quarters ended September 30th 2022 September 30th 2021, respectively.
SG&A expenses inclusive of our share based compensation expense, we're $148.9 million and $128.8 million for the nine months ended September 30th 22 September 30th 2021 the.
The increase for the three months ended September 30th 2022 was primarily due to an increase in professional fees related to corporate legal matters, an increase in travel costs now the COVID-19 is normalized and an increase in sponsorship and programs to support the commercialization of loop kindness for the nine months ended September 30, 30th 2022, the increase also <unk>.
<unk> higher salaries incentive pay an employee benefits.
Non-cash SG&A sure based compensation expense for the quarters ended September 30th 2022 in September 30th 2021 was $6.6 million and $6 million.
Non-cash SG&A shared basecamp expense for the nine months ended September 30th 2022 September 30th 2021 was $21.5 million and $19.2 million respectively.
R&D expenses inclusive of share based comp expanse, where 11 million and $20 million for the three months ended September 30th 22 and 21 for.
For the nine months and it's September 30th 2022 in September 30th 2021 already expenses inclusive of share based comp expense with $35.1 million and $40 million.
The primary driver for the decrease for both periods was that in prior year. The company expense at $10 million upfront license and a crude milestone obligation related to its AUR 300 program, which was partially offset by additional development expenses related to the E. U R. 200, <unk> you are 300 programs for the current year period, ending September 30th 2022.
Non-cash R&D sure based compensation expense for the quarters ended September 30th 2022 September 30th 2021, $1.5 million and 1 million, respectively non-cash R&D sure based cop expense for the nine months and it's September 30th 2022, and 2021 was $3.5 million and 3.2 <unk>.
Dollars respectively.
Interesting them was 1.5 million and 106000 for the three months ended September 30th 2022 in September 30th 2021.
Interesting thing was $2.2 million and 420000 for the nine months ended September 30th 22 September 30th 21, respectively. The increase in both periods is due to higher yields and our investment as a result of increasing interest rates.
For the quarters ended September 30th 2022 Arena recorded a net loss of $9 million or six cents net loss per common chair as compared to a net loss of $50.3 million or 39 cents net loss per common chair for the quarter ended September 30th 2021 for.
For the nine months ended September 30th 2022 Arena recorded a net loss of $82.1 million or 58 cents that lost per common chair as compared to a net loss of $147.6 million or $1.15 cent net loss per common share for the nine months ended September 30th 2021 with that I'd like to hand, the call back over to Peter for.
Some closing remarks Peter.
Thanks, Joe had you heard throughout the call we faced a number of challenges in the quarter, but we continue to remain optimistic on the overall opportunity we're focused on delivering blue kindness to patients.
Driving revenues in the U S slowly and.
And we continue to operate with a healthy balance sheet, which will enable us to execute on our long term strategy, including the advancement of our pipeline programs and the potential for opportunistic business development.
We look forward to keeping you updated along the way.
I want to thank everyone again for joining us today will now open up the call for any questions operator.
Thinking that this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a confirmation tumble indicate your line is in the question. Kim you May press start to if you'd like to remove your question from the camp for participants using speaker equipment. It may be necessary to pick up your handset before pressing the starkey.
In the interest of time, we ask that you eat to keep to one question and one five thank you.
Our first question comes from the line of Mare Raycroft with Jeffries. Please proceed with your question.
Hi, Good morning, this is Friday not for Murray.
You're supposed to expectations, so low for the rest of the year and even a modest increase in the 2023 guidance can you provide more specifics on assumptions behind the guidance.
And maybe Scott I don't know if it's underlined by any stretch to take initiative. He can take to basically get to boost attraction at the major medical centers and don't think Sir.
Yeah. So let me let me start with the the run rate to end the year and and then sort of bridge add into guidance for next year.
If you look at the Psf number that we reported through the month of October .
That gives you an idea of.
Sort of how we're seeing current trends in in terms of patient start up alarms wish as I've said previously I think the best way to think about patience dark forms in the quarter is the knock on effect to the next quarter and beyond.
And as you'll see for patient star forms year to date, we reported a number through October 31st of this year that shows that we were under 100 patients SAR forms for the fall.
For the full month of October now we have two full months ahead of us and we are starting to see a pick up on our dailies, but what I can tell you is that that was a big factor that along side of some of the more macro trends is lower office visits lower patient diagnoses lower urine screens that led.
To you know more modest growth into 2023.
The year and number is pretty much the die is cast on.
It's you know we we saw the numbers of Psf's all the way through to two and Q3 and I think the year and number is indicative of of that and it's kind of that simple. We've got two more months left of sales to report here in months in November and December obviously.
And you know we felt we had a good bead on exactly where those months. We're gonna come out we felt that was gonna fall in the hundred to $105 million range in terms of your question on activities. We can do in the major medical centers. This is somewhere we've continued to put on time and intensity against and what I would tell you.
You is we've looked at everything from a targeted approach with specialized representatives and reimbursement people and medical affairs efforts I think the sales process and these major medical centers is longer and as you know during the entirety of Covid. These major medical centers, where.
Down in many remain to be fairly locked down in terms of access but it is a key priority of ours and when we start to see some significant movement in these centres, we will update you accordingly.
Thank you.
Thank you operate your next fall.
Next question comes from the line of <unk> H T Lean right. Please proceed with your question.
Hi, Good morning, Thanks for taking my question joined a bit late but so I may have missed it but I just wanted to.
Ask about the the driver of the lower Psf's lowered diagnoses to lower patient visits you just mentioned.
I'm I'm curious really what's driving that because.
I don't really.
I don't really think <unk>.
Covid is overwhelming driver at this point certainly for third quarter I'm, just trying to get at what specifically is.
Impacted those relatives, who say the second quarter and then separately just wondering about the.
<unk> opinion panel denial you know if there's anything you can say about that and and the the offense why we got your.
Finally tomorrow.
And the deadline was.
For that thank.
Thank you.
Okay.
Alright, So let me try to give you my best articulation of song.
What we're trying to figure out is the driver of these lower diagnose candidate to COVID-19, I think in the first year of the law. We clearly reported that we were seeing lower office visits and lower rates of diagnosis Lucas nephritis due to COVID-19.
And then we saw some slight recovery and we're taking this from an internal clients data. So we <unk> back when we look at those findings is rooted therefore, thises and thats over driving in these numbers strong. So we saw some recovery, but then towards the summertime <unk>. So you wanted to.
<unk> into Q3, we saw him or steep decline in both diagnoses urinalysis within those data claims and and renal biopsy. It's while we don't know concretely Ed some of this effect. We think is just.
You know sort of I don't want to call. It summer seasonality, but there is some effect of patients going on vacations dot going on vacations office staff going on vacations cause we seem to establish appears in <unk>.
Natalie belated towards the major driver and this year I actually we don't see it as as a COVID-19 related issue, but what we do is still clearly see that.
<unk> I think tomorrow Asian population as it pertains to.
Of of the air <unk> and and obviously the.
They wouldn't let their is there as we continue to learn more about this four by four.
As I said it started to see a revival and the number of TSS will see at least at the rate of the PSS FRC moving into October end of October and it generally in November so there's some encouraging signs there and as we continue to track that data in terms of the call.
A small when we have a few of sorta a Q3 in the queue for will try to keep your view as to whether it normal lives right now in our best answer I can give you is.
Clinton appears to have happened it appears to have <unk>.
Those as well and then they have another drugs and we track and this summer some of the theories the best we can to.
Your second question was around the.
The I P R and as I mentioned in the call. We <unk> agreed to an extension to the date for the filing of the initial response from us and <unk> <unk> Friday. This week, so in order to get all our expert.
Witness.
Dot and everything we needed to do we wanted to take the time to get it as they should.
Friday, which is the due date, so the expectation should be.
Editor Com aftermarket tomorrow and that will be fought with.
Filing and the issue of approval of that.
About look back hyphen US and then your last question was on the denial of the review as normal or re review as normal horse of these go obviously when the P tab decided to take up the review the challenge.
The company Who's being challenge has the ability to go back to the P tab and challenge that decision, which just about everybody does but the success rate on those challenges is actually quite well and we've been guided by our lawyers is to have a low expectation there. It is not a false some.
You know response to Fulsome response, you will see go in at the close of business or after market Tomorrow.
Okay.
Great. Thank you for that Oh, one more follow up if I'm Mary I'm just wondering what.
What trends are you see.
Recently, you're currently with.
Persistence on patients existing on on therapy.
Well through 12 months, which is you know.
The <unk> to look at we reported.
Excellent.
<unk> 12 last night I was 50 per cent.
So it is clearly an area we want to continue to work on but when you benchmark that versus other chronic therapies involve.
Lucas So if you look at Benlysta as an example, or even look at other alright. There are fees to have a rate of 50% at 12 months is actually quite good.
And I underscore, but we're not we're.
We're not settling got that we have the data. It shows patients continue this show consistent reduction in their proteinuria out to three years and that it's diseases from what we know about the guidelines and the data is not one that should be treated sporadically or on a flair.
Or even basis. So we're not accessing you know that number will continue to work on and we think we have the data to be able to work on persist and see but the answers 50 per cent at 12 months it.
Great. Thanks, Peter appreciate it.
Thanks.
Thinking our next question comes from nine S. D C.
Counting company. Please proceed with your question.
Thanks. So the first question is that set up a follow up on the last plan for 2023 revenue guidance <unk> at 120 840 for for next year.
And assuming roughly 80000 per patient for that for the year and.
Plan that you need to capture over 3000 patients next year with that discontinuation rate of 50 per cent, we are making a lot of Pat assumptions, including pricing in these calculations. So can you just help us understand where assumptions to conservative, but you're optimistic where you might have more connection in my where there might be a little bit more variability. So the first question and.
Follow up based on that persistence you right. So can you just provide them a commentary on the atmosphere ability what kind of fees is is being used for an infection <unk> maintenance just help us understand I'm glad that 50 per cent discontinuation is coming from thank you.
So let me start with your first west in which centered on how we should be thinking about the 120 to 140 guidance the.
The.
As I said in the call word factoring on prescription star form G. S. Persistence C. S speed to improvement, yes, but I think you could see any one of those metrics do better than the other in order to get to these numbers.
Right now we need to see a significant improvement in our patient star forms for sure but to say that we need to add 3000, new patients at 80000, a year. I think is is probably I don't know if I would say that it's aggressive but I mean, it's all based upon how your for how your individually forecasting while the other parameter.
<unk>.
Z assumption that we continue to see improvements in getting patient on drug getting them on drug quicker working any backlog of patients are all in there and in terms of you know or what the average net probation is as we've said, we think it's probably better to be more.
Conservatives towards the 65 to 70000 net per patient per year, Joe My missing anything there.
They'll be there I think you've got captured it fairly well.
And I apologize for asking C joint through several questions. There can you jump to the and repeat the questions yeah.
Yeah. So based on that 50 per cent persisting area, just more commentary around the average durability <unk>, where do you think this drug is being used more induction wine maintenance just to help us understand that 12 months that's for sure.
Alright.
Well as reported in the past and I don't think there's a lot of change here. There is we get <unk> when a patient discontinued drug we try to or you know a patients not just discontinue has been over time falls off drug doesn't take a shipment decides not to refill the prescription.
We have a a pretty beef so.
Patients support of physicians for network rely on so we follow up with the patient we follow up with the physician and what I can tell you. Please we get a large range of reasons.
They're always Angela.
And are patient driven and the majority I would say are usually patient driven and they're across the board everything from patient.
Lost to follow up to patient decided to stop taking the drugs no answer to patient could it could.
Could not tolerate the drug anymore, it's just a broad broad range <unk>.
Oh I've seen much from physicians in terms of them, telling us that they have a belief that they should stop therapy at 12 months, but when a patient is proteinuria gets down to a level at times. It appears that physicians have a tendency some physicians to discontinue drug at 12 months all of.
Which we have data to support wire patient should not discontinued drug and why a physician should not discontinue drug the guidelines work in our direction here. The Aurora to data is is you know in our favor here in terms of the results. So we do think we can continue to make headway there.
As part of our primary messaging, but the rash the reasons for patients coming off drug on average 50 per cent after 12 months or abroad broad range of of reasons.
That's very helpful. Thank you.
Thinking our next question comes from the line after a stuffed Schwartz.
He is please proceed with your question.
Hi, Thanks, so you've given us some prescription.
Prescription data and I was wondering if you could give us some insight.
Hello, the number prescribers has been transferred.
Hitting a wall prescribing audience.
As much as you need to.
Can you talk about.
Prescriber audience has been.
Lately and what is your strategy there.
Yeah, well this strategy clearly as I mentioned is to go after the high death style.
These are the docks at we know have a large number of lupus and a large number of lupus nephritis patience and within that some set a large number have already prescribed but let me give you. The the total prescriber number today through the end of the quarter was about 1600 and.
And that's off a fairly large base of Rheumatologists in Nephrologist. So you should deduced although on a semi dilutive basis, because our seven or seven to 10 to really where our focus or when you start going down to your one through six is you're talking about stocks, who have very few patients so you're at.
Forget spread really thin, but we still do think there's opportunity you know over time to increase our overall prescriber base. If you look at those who have prescribed.
Only about I believe that the number is 45% had been repeat prescribers.
85% of that number had given us trial. So they've tried the product, but they are not become repeat prescribers. We think that's a huge opportunity to do going after those physicians, who pad experience had good experience and getting them to read prescribed the product figure next follow up.
Quite a few will be well if a if a physician fries your product why are they not prescribed.
Prescribed it again and I think while there is lots of reasons underlying I think the most prominent one is probably that these physicians gave us one of their tough to treat patients right out of the gates and they need to be more clinically sold over time. So that's why our concentration is against those positions and and will remain there but.
1600, and a high concentration on seven to 10 dialed 10, decile our growth rate and the total number is reported last quarter was a hungry new physicians I'm not sure what it is for this quarter, but we could get back to you on that.
Okay. Thank you and then I guess.
Is there more urgency.
Okay.
Jo Jo we're losing your active we can't hear you <unk>.
Okay. Let me try again, so that's better in general why why isn't there more urgency sort of physicians and patients.
General.
Especially when they have a new tool to do so and how much control do have over this phenomenon, it's not a small market.
Celebrating overall I wonder where you are unable to date.
Mmm.
Relatively low market penetration.
Yeah. So we lost Ya on the end, but I think I've got to just through the questions I'll repeat it for others on the call I think the questions centered around why does it appear that if there's a low sense of urgency to treat treat aggressively and to make sure that patients say on drug over time you know.
It's surprising to me in that all the data that's out there Joe and the published data and the guidelines speedy to treatment urgency with treatment targets and they're pretty open ended about.
And to treat again within the guidelines they don't talk to treating flaring episodes, they talk to <unk>.
An area to frequent targets patient <unk> area should be maintained what we're seeing in actual practice at least you to claims data and and the qualitative feedback that we have is that.
There tends to be a desire to treat at very high levels of <unk> area and that over time that drove seems to be discontinued and I'm not just talking about our drug <unk>. Both the use of steroids and an M. M F as well so they're not keeping patients does it.
Here to us you're keeping patients on M M F and steroids over time.
I you know the only thing I can compare it to is sort of past experience in other markets and you know when we launched infliximab back in Gastroenterology back decades ago Gastroenterologist kind of did the same thing they treated with a group of generic drugs they treated flares. They these days.
We're not aggressive with the therapy. They use an interview ball today and biologics are a mainstay there probably close to first line today and they keep patients pretty chronically on these drugs.
Took a long time to develop that mark and to get physicians to treat server error.
To change their treatment paradigm and that's what I think we need to do here. There is an element of market development that needs to happen moving physicians from what has historically been a very generic driven not data driven frequent protocol to one today, where you have newly approved medicines operating on.
Data and approvals that in.
Need to shift that mindset and on the patient side I think it's gonna take education to make sure. They understand that if this is not it's not treated aggressively that it can cause and this is data driven patience to you know have kidney failure patients.
To lose kidneys patients to have a a higher increase in likelihood of uhm get in further morbidity not just the darker <unk> so aggressive treatment and continuity of treatment are critical my answer is market development. It's gonna take time, how long will it take you know in the y.
I think our market research shows that there's just this.
This physician.
Comfort that we need to continue to breakthrough.
Mmk, Thanks for those insights and maybe if I can ask one more related question about your new marketing campaign.
It's.
It's clearly designed to be impactful why did you design it the way. It. So my question is why did you design. It this way.
And.
Mm.
You think.
So far.
Yeah, you're falling out on US again, Joe Let me recap and you can just E L. Yes back but.
Thank you asked why we evolved the campaigning to where we have today.
And maybe ask why you know we didn't have that before why I didn't get the back end of the question, but here I think what you drive and that is why did why did we evolve the campaign.
Yeah, that's that's essentially it.
Okay.
Well I I, you know lessen our data is strong across all patient types first but our data is extremely strong in southern types of of of African American patients and Hispanic patience and you know the majority of the patient population is African American Hispanic and female so I think what we've tried.
To do an error. Most recent is update our campaign with all data available on two targeting very much towards the majority of the patient population and to use the most impactful data that we have which avalanche of course, we didn't have the Aurora two data and you know coupled with.
There are two data. This message is having strong residents, we're quite a lot of discipline down on utilization of the tools yet in the offices consistency of the offices et cetera, not to say there was an emphasis on that at launch there was but we're just taken it down to the next level of discipline.
Thanks for the color.
Thinking our next question comes from the line of Ken Cacciatore with counting company. Please proceed with your question.
Hey team. Thanks for taking a second question from town when I was like getting on those Stacy ask the question Peter I wanted to talk about the <unk>.
The I P R challenge and the challenge in general from Sun.
It strikes us that they don't have much to win here and I know, there's two different litigations here, you're suing them, they're suing you on.
<unk> and your showing them on the ophthalmology side.
But if they win if sun is able to win in this IPR process. They haven't certified paragraph four I don't believe they can until the.
A patent expires 2027 or comes closer to that and I think they have a few more years before they can certify against any other patents. So so what I'm asking and trying to get to is why is this even happening you shouldn't kind of business folks be able to reach an agreement that makes sense. When there's really not much of a wind here Sunday.
Is able to do to win in the I P. R. You also are struggling obviously, but the size of the product. So even if there is a quote unquote when they can't launch for awhile, but the size of the product is struggling can you just help us understand.
Why this is persisting in why we can't come to some kind of reasonable settlement amongst the parties. Thanks so much.
I guess I'll start with.
Yeah. Your conclusions are are not an accurate I mean, <unk> <unk> <unk> <unk> <unk>.
Product has protection under.
<unk> to use through the the benefits of approval and with the whole full edition of pediatric extension work. We're doing out 2028. So you think strategically and you say well you don't have an AD on file you don't get 188, eight 180 days first mover advantage you just notify a pack in a market.
You don't necessarily know even what the size is going to be Jesus doesn't sound like a very good entry strategy or that the filing has anything to do with generic entry.
I think we've said from outset that we think this is retaliatory and that we have ongoing litigation and all I can tell you is.
<unk>, we're keeping all our options open to you know ensure that we extend the longevity and the strength of these facts period and yeah. We're business people. So I think you can sort of see that.
All options means all options, we do think it's important to get our defense out there in the public domain onto the challenges that were presented so that is somewhat purposeful, but our goal is is not different from your conclusion, which is we would like you know these challenges too.
To get resolution I think sons, probably in the same place and we want to give confidence to our employees are investors are physicians and patients that there's this product as as patent protection over the long haul so agreeing with your strategic.
Questions about the Y and leaving you with the message that we're keeping all options open to extend longevity, but that this friday filing is important to get onto the record. So people see what our primary defense are and don't forget. We also have on track one patents on file.
<unk> with the P. T L that if that if if she could give us even more ring fencing around that method you use that.
Great. Thanks, so much.
Thanks again.
Thinking our next question comes from the line of Justin came with Oppenheimer accompanying. Please proceed with your question.
Hi, good morning, and thanks for taking the question maybe just one you know as <unk> as he tried to understand better at this dynamic of finite.
Finite versus chronic treatment with with <unk>.
Just curious if the team plans to give longer term metrics with persistence C. As it becomes available and I'm. Just wondering you know are we going to go down the sort of 15, 18 21 month persistence D right.
You know.
In the coming quarters.
Yeah, all I can all I can say is that we metric we our.
<unk> and we sort of thinking of forecasting way the same way you would.
Which is we came to the data that we have I E. The data, we reported and we're not holding anything back here I'll best received it for being transparent probably even more so it's in some cases about the metrics that were driving in the business. So what what is nothing that would hold us back from reporting you know 18 months and beyond.
But in.
Doing that and having any days barely been in on the market 18 months here.
We used other analog of products and you know Lucas and Lucas nephritis or different but we do look at Benlysta and we look at products and the rheumatoid arthritis category and other are rapid these and we look at M. S N.
Chronic diseases that have a level of acuity.
That doesn't necessarily a talent too if you don't take drug you die, but you. If you don't get drug you have more mobility more morbidity light diseases and see what we should be benchmarking again. So if you look at our benchmarks 50 per cent persistency at 12 months actually quite good.
But if you look at the data we have in the guideline expectation to me they for quite short of that so we're not accepting it although we look at other analog products like the anti DNF classes for an example in rheumatoid arthritis, and say 50 per cent is actually not doing that.
Actually quite good.
So we forecast it based on animals and will report in when we got it.
Okay, great. Thanks, so much.
Thinking our next question comes from the line of Sam.
<unk> R. B C capital markets. Please proceed with your question.
Hi, Good morning, Thank you for taking our questions <unk>.
I had one question on the October Psf's, So I think the monthly fee.
Four Q4 is currently 113.
<unk> 120 543.
I understand there was some some of seasonality.
<unk> why is October b as a <unk> I'm trying to lose a monthly one for yourself.
Oh, a few three and then my follow up question is for the guidance for next you what kind of <unk> you've been Lincoln.
She's got 122 140 minutes. Thank you.
While we have not.
I answer the last question burst, we've not actually giving guidance on forward looking PSS. So because there's variability in accord right you can see our financial scheme through maybe not where we wanted one but they were carried through in a way where you know persistent sin speed to getting patients on drug into backlog in drug and.
Conversions drove a lot more than in the quarter did P. S. S. So you know <unk> given the psf projected forward I think would give us a false sense of accuracy cause dad, one fall off on the other you might not make it <unk>. So it all things have to working in harmony. Your question on October I think.
Is is you know while I can give you answers that that did go backward located coming off of the summer I can tell you that and we didn't report on this call because a day I don't want to just run through a list of of excuses <unk>. We are seeing the trend move upwards in the most recent weeks.
Don't forget our highest performing region out there in the country is southeast region, and you know, Florida gives us somewhere between I dunno.
Measurable number call. It maybe I single digits per week of P. S. S and the state of Florida has been pretty shut down so I I because of bought a hurricane in so I think that would be one factor that's there.
Courier coming back online numbers are leading me to believe that that work power and through that so that's the only thing I can say that specific like could have impacted October .
Okay. Thank you can you. Please remind me of the milestone payments that are expected.
Can you repeat the question.
Can you. Please remind me again on the milestone payments. So I think this one for Japan and another European countries that was mentioned earlier.
Yeah. Upon approval. So we just received a $30 million milestone on approval in league with the European Commission.
S received.
And banks and a quarter.
The <unk> would be when we get three major countries out of the five top European countries with approval in pricing reimbursement. That's another 10 million and then there's a 10 million dollar approval milestone in Japan, and then coupled with that.
And we estimate you know hopefully.
Somewhere in the 24 time period for better herbal you have to file their in Japan, and we have to get approval.
So in addition to that we have a cost plus manufacturing arrangement.
And we have a a royalty rates that we believe in those markets as well.
Sorry, just one for the what's the timeline for the European $10 million.
It's very dependent country specific so we've not given a a guide on that.
Okay. Thank you.
Thinking our next question comes from the line of David Martin with Balloon-berry. Please proceed with your question.
Thanks for taking my questions. The dark sides talk to tend to say is that if a patient's nephrotic they'll choose lewd kindness. If the patient is fatigue they'll choose bad list I'm wondering if that's how you see it shaking out as well and what proportion of these loop.
This nephritis patients are nephrotic, and which ones are fatigued.
Well I need to answer the question directly if a patient fatigued I have lupus patients showing persistent.
<unk> <unk> <unk>.
So.
So I'm not surprised by that answer I don't know that I have a <unk> view on how docks or selecting one versus the other I can't even tell you that and and you can book.
And as the folks at GSK this they're positioning the product as Elizabeth this product and they're talking about kidney health lupus patients. So the gullible there is clearly to get patients before they ever be Tom patients with lupus nephritis.
Positioning of the product for where are indicated which is for a purpose bryce.
Had it in a specific data I arrange getting a higher education.
<unk> that I don't know.
I can't say deck physicians seem to <unk>.
Angel ever throw to either product so there's opportunity.
To start up again.
You know just those patients that have already seen a course of and then that's in steroids.
Okay. Next question is how much competition or how much sales do you see going to other kelson urine inhibitors and how important is it to emphasize.
The lower enough for now for toxicity with kindness and can you really do that before you get the biopsy results from over and what when should we expect those results.
Well the only data that we had a.
Very strong data since we're the only ones who reported data out this long as the data is look at kidney function as it relates to Egfr out two three years from the Aurora one into there are two extension study, which shows no degradation in terms of kidney function at least as measured by Egfr.
We think or losing patience based upon this fear <unk> toxicity I I don't want to see it in the data the market research that we have right now it just seemed to be a group of physicians Nephrologist, primarily who have a strong opinion about calcium urine inhibitors, but they're a small percentage and the overall.
Nation of calcium urine inhibitors. According to our data that being cyclosporin, a an attack is actually quite low less than 10%, although overall lupus nephritis patient. So I, while I think we compete there who would degree because we're part of a class you know if we're only growing now and we're only competing there.
A small market opportunity. So I think we need to think in the bigger your question on me.
Data for the biopsy G is remember we had a self study from a Laura original Aurora study of a very small subset of patients that we actually did do I believe serial biopsies on and then those dioceses were then reviewed by a central lab and <unk>.
The lab two caveat, David Super small from what I understand and I still do not know exactly what they read out time period I know that the central lab continues to work on this and that will be look in there looking at the Battology work and then they have an oversight. This best of luck in a day off work as well.
So I don't have a definitive date for you, but I will underscore that it is a small and and the reason it's a small and is because most patients. It's a difficult task to advocation opt in for a.
Invasive procedure as part of doing a clinical trial.
Got it got it one one last quick question when patients discontinue will kind of <unk> area rebound rapidly or does it pretty much stay where it is maybe rebound slowly.
Alright, the data driven answer from our studies because I don't think we tracked it and I would hesitate to give you because I'm not a practicing clinician what I see in practice all I can tell you is we don't bracket, but what we do know from the claims data we have his patients.
<unk> cycle. It shows it very variable across so if they do flare again did you get retreated.
Okay. Thanks.
Thanks, David.
Thinking our final question. This morning as a follow up from the line of more Humane Crossword Jeffries. Please proceed with your question.
Thank you for taking a question again, so you talked to patterns like any kind of patterns surround <unk>, it's gonna be more specifics about those patents are related to and when <unk> when should we expect those to be granted.
Okay.
On file I believe have an April action date or at least one of them as in April action day, they're ongoing they sent around two major areas one is.
A modern modifications and and Ah addition of new data and and adjustments to the O. Three six pattern. So think about that as a evolution of D. O. Three six Patton a matter of fact, I think that Pat addresses many of the challenges that are centered around.
The Sun challenge, while we think there's a lot of and validity to them with new data and and further enhancement through that could potentially be beneficial. The second is is our new data claims which.
I can't really get into here, but the pads issue will be more than happy to talk about.
Okay. Thanks.
Thank you maintain gentleman that concludes our question and answer session I'll turn to flip back to Mister beat me for any final comments.
I Wanna. Thank you everyone for joining us. This morning, we appreciate your time and your support and we look forward to reporting back to you as we continue to progress through the launch over the next couple of months and quarters. Thank you very much.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.