Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Q1 2023 Earnings Call Transcript

Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Q1 2023 Earnings Call Transcript May 4, 2023

Operator: Greetings, and welcome to Aurinia Pharmaceuticals Inc. First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. . As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jamie Harrell, Investor Relations for Aurinia Pharmaceuticals. Thank you. You may begin.

Jamie Harrell: Thank you, operator, and thanks everyone for joining today’s call and webcast to review and discuss Aurinia’s first quarter 2023 financial results and operational highlights. Joining me on the call this morning are Peter Greenleaf, Chief Executive Officer; and Joe Miller, our Chief Financial Officer. This morning, Aurinia issued a press release announcing its financial results and operational highlights for the first quarter 2023. In addition, the company filed its quarterly financial statements on Form 10-Q. For more information, please refer to Aurinia’s filings with the U.S. Securities and Exchange Commission, which are also available on Aurinia’s Web site at auriniapharma.com. During this call, Aurinia 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 discussions of factors that could affect Aurinia’s future financial results and businesses, please refer to the disclosures in Aurinia’s press release and its quarterly statements on the Form 10-Q and annual report on Form 10-K, along with the recent filings with the U.S. Securities and Exchange Commission and Canadian securities authorities. Please note that all statements made during today’s call are current as of today, May 4, 2023, unless otherwise noted and are based upon information currently available to us at this time. Except as required by law, Aurinia assumes no obligation to update any such statements.

Now, let me turn the call over to Aurinia’s President and CEO, Peter Greenleaf. Peter?

Peter Greenleaf: Thanks, Jamie, and good morning, everyone. I want to thank you all for joining us on today’s call. It’s been a solid start to 2023, and we’re excited to share our company progress through the first three months of the year with you this morning. Today, we’ll primarily focus on the company’s first quarter, LUPKYNIS’ commercial execution and our financial results. We will outline the key performance indicators and financial information for the brand alongside focused commercial activities that we’ve been executing on. We’ll walk you through recently launched initiatives in commercial, updates from our medical team and development efforts from our regulatory group that we believe will further impact our trajectory in the U.S. and around the world.

I’ll then turn the call over to Joe Miller to provide additional details on our financial results. So let’s get started with our first quarter 2023 business performance, and the short story is that we’ve seen significant progress over the last six months. I’m pleased to share that we hit our best quarter to date in terms of net product revenue, number of new patients on therapy and number of wallets shipped. We have also made significant progress on LUPKYNIS clinical, regulatory and intellectual property fronts. Net product revenues were 34.3 million for the quarter, up 60% over Q1 the prior year, and 21% compared to the fourth quarter of 2022. There are several factors that we attribute this performance to. The first, strong patient start form productivity in the first quarter, building off our strong PSF ramp that began in November and December of last year.

We ended the quarter with PSFs approaching our highest levels ever at 466. This represents a 15% increase over the fourth quarter of 2022. As of April 28, 2023, we added an additional 138 PSFs bringing our total year-to-date to 604 PSFs. Second, our team’s execution in Q4 ’22 and to the early part of Q1 2023 helped to mitigate year-over-year impact as patients worked through the normal new plan year insurance transitions. As previously discussed, in the first quarter, the insurance changeover process, policy changes and patient copay resets can have a negative impact on continuity of care for patients. To attempt to counter this, we proactively deployed our support services teams towards patients and practices in order to help maintain consistent therapy.

As a result of our efforts, we saw less disruption to our patients, and we believe it had a positive impact on our overall results. In addition, our commercial activities continue to see positive impact through our focus on clinical differentiation and educating physicians on the importance of screening and proper identifications of patients who would most benefit from LUPKYNIS therapy. Our strong clinical message differentiating LUPKYNIS from the current standard of care is working, especially with face-to-face healthcare provider interactions, and focusing our call activity on top tier physicians, we believe this has enabled us to gain traction in the promotionally sensitive lupus nephritis market. These efforts, coupled with the powerful three-year extension data from the AURORA pivotal study, are making a real difference.

Just as a small tactical example to add to this. In the first quarter, we closed with our highest calls per day since launch. And in the month of March, we had our highest number of repeat and new prescribers in a month since launch. Obviously, once we have a PSF, we measure the percentage we convert and how quickly we convert that PSF to a patient on therapy. Over the past several quarters, we continue to improve patient access to LUPKYNIS. This has been accomplished by working closely with physicians, their office staff and patients and making meaningful strides to removing formulary barriers, step edits and prior authorizations with the major payers and PBMs out there to help them the conversion to therapy. During this period, our conversion rates, that is converting patients’ start forms to patients on therapy remained very strong, with more than 85% of patients being converted on to drug.

Even more importantly, we’ve made significant progress on reducing time to PSF to conversion to drug with approximately 61% of patients on average getting on therapy in 20 days or less. This is up from a 48% average rate in the first quarter of the prior year, meaningful progress and improvements on both fronts. We believe the three-year extension data from the AURORA clinical study is also having an impact on prescribing behavior and patient persistency. At the end of the first quarter 2023, 51% of patients remain on therapy after 12 months. We are pleased to see this level of patient retention. In February we reported 45% of patients remain on therapy out to 15 months. We now see 47% of patients remain on therapy at 15 months, as the number of patients across that time period continues to grow.

And while we’ve only seen a small number of patients through 18 months of therapy, it looks at about 41% are remaining on therapy through that time. So consistent with prior periods, patients adhering to treatment regimen, which is dosing and tablets per day, remains reasonably stable to prior periods at about 80% to 85%. Through March 31 of this year, we now have a total of 1,731 patients on therapy. This represents an increase of 61% over the first quarter of 2022. So to recap, our sales performance in Q1 was driven by improvements in all major commercial areas. Our commercial teams’ execution in the field, educating healthcare practitioners on the importance of screening, treating and maintaining patients on therapy continues to drive momentum.

Based on everything I’ve just discussed, we’re increasing our net product revenue guidance for 2023 from 120 million to 140 million to 135 million to 155 million. This guidance range is primarily based on assumptions regarding prescription start forms, consistent conversion rates, time and speed of conversion, as well as maintaining our current persistency rates and pricing. In addition, it also includes the impact of potential summer seasonality that we’ve seen the last two years. Recently, we kicked off two new initiatives that further drive and impact our top commercial strategic imperatives around LUPKYNIS and lupus nephritis. The first was, of course, distinguishing LUPKYNIS from first generation CNIs, obviously critical. To further strengthen our clinical differentiation story, we recently announced top line data from our Renal Biopsy Sub-study of the AURORA clinical program, which I think as you all know includes both the AURORA original study and the AURORA extension study, and this study was taken out — this segment of study was taken out 18 months of therapy.

And this will be presented this week at the Congress of Clinical Rheumatology East region meeting. These data demonstrated LUPKYNIS-treated patients showed histologic activity improvement with stable chronicity scores similar to the active control arm of MMF and low-dose steroids alone, meaning that patients are not demonstrating any further worsening of kidney function or nephrotoxicity at 18 months. We believe these data further differentiate LUPKYNIS from first generation calcineurin inhibitors. The second area was to reinforce the need for screening, routine monitoring and treatment by engaging and educating patients to get uncomfortable and get more engaged with their healthcare practitioners about their care. On the patient front, we believe an informed patient can play a major role in their own disease management when they understand the need and they actually seek out routine urine screening and treatment.

Many of you may have seen Aurinia’s most recent announcement that Grammy Award winning singer Toni Braxton, who has been living with lupus since 2008, is the new spokesperson for the Get Uncomfortable campaign. Since its launch in October of 2020, Get Uncomfortable has been a high performing component of our strategic marketing mix to activate lupus nephritis patients to prioritize their kidney health. It has generated nearly 30 million impressions across social and digital media with hundreds of thousands of visits to the campaign website. This is where patients can find a specialist in their area to complete routine testing and discuss management of their lupus nephritis. In just the first five days of launching Toni Braxton as the new spokesperson, we have reached an audience of nearly 550 million people, over 30 online articles, and television appearances that reach our target audience.

This outreach has generated pull-through engagement on social media, which is, of course, the Get Uncomfortable website and has created 20,000 website visits in just three days. Moving now to intellectual property, I would like to briefly highlight our recent progress to further strengthen our LUPKYNIS patent position. The U.S. Patent Office issued a new method of use patent, Patent No. 991, reflecting the unique and proprietary dosing regimen, and further refines the method of using LUPKYNIS in combination with MMF and corticosteroids, using eGFR as a method of pharmacodynamically dosing the product in patients with lupus nephritis from the dosing used in both AURORA 1 and AURORA extension trial. This patent has the potential to provide an additional layer of patent protection for LUPKYNIS up to 2037.

We’re currently working to list this newly issued patent in the Orange Book. Closing out with our globalization effort for LUPKYNIS, our partnership with Otsuka has resulted in significant launch momentum outside the U.S. this year. As announced yesterday, NICE, the UK’s governing body for value-based healthcare, issued a recommendation that LUPKYNIS can be used in combination with MMF to treat patients with lupus nephritis. The UK agency just issued their reimbursement guidance and LUPKYNIS will be soon available across the entire United Kingdom. And as a reminder, upon pricing and reimbursement approval in three of the five major EU countries, the company would be eligible for an additional $10 million milestone. In Japan, we currently are working towards a PMDA submission in the second half of 2023.

We anticipate approval the second half of 2024. The combination of these European market approvals and our pending Japanese submission further support our globalization efforts for LUPKYNIS. So I’d now like to turn the call over to Joe for a more detailed review of our financial results. I’ll then return at the end of the call for a quick recap, and open up the line for any questions that you might have. Joe?

Joe Miller: Thank you, Peter, and good morning, everyone. As of March 31, 2023, we had cash, cash equivalents, restricted cash and short-term investments of 361.5 million compared to 389.4 million at December 31, 2022. The decrease in cash, cash equivalents, restricted cash and investments is primarily related to the continued investment in commercialization activities and post approval commitments of our approved drug LUPKYNIS. Inventory purchases in advancement of our pipeline, partially offset by an increase in cash receipts from sales of LUPKYNIS. We believe that we have sufficient financial resources to fund our current operations, which include funding commercial activities, including FDA-related post approval commitments, manufacturing, and packaging of commercial drug supply, funding our supporting commercial infrastructure, advancing our research and development programs, and funding our working capital obligations for at least the next few years.

Now, let’s take a few minutes and go into detail regarding our financial results for the first quarter of 2023. Total net revenue increased 59% to 34.4 million for the first quarter compared to the prior year period. The increase is primarily due to an increase in net product revenue from our two main customers for LUPKYNIS, driven predominantly by further penetration in the LN market as evidenced by increase in patients on therapy year-over-year. Net realizable revenue per patient for LUPKYNIS remains higher than our initial guidance of 65,000 per patient per year on a quarterly basis. But as we discussed previously, we expect net realizable revenue per patient to continue approaching this figure on an annualized basis, as more patients go on and stay on therapy over time, and as persistency, dosing and payer mix evolve.

Every quarter since the initial launch, this number has ranged closer and closer to our analyzed estimate. As we’ve said in the past, the biggest driver of this estimate is our dose adjusting and persistency. Total cost of sales and operating expenses for the first quarters of 2023 and 2022 were 64 million and 59.5 million, respectively. Let me now give a further breakdown of operating expenses, drivers and fluctuations. Cost of sales was 421,000 and 256,000 for the first quarters of 2023 and 2022, respectively. The increase was primarily due to an increase in product-related revenue, as gross margin for the first quarters of 2023 and 2022 was approximately 99% for both periods. Selling, general and administrative expenses, inclusive of share-based compensation, were 50.1 million and 45.2 million for the first quarters of 2023 and 2022, respectively.

The primary drivers for the increase in SG&A expense for the three months ended March 31, 2023 as compared to the same period ended March 31, 2022 were an increase in professional fees and services related to marketing and pharmacovigilance, non-cash share-based compensation expense and travel and related costs. Non-cash SG&A share-based compensation expense was 7.6 million and 6 million for the first quarters of 2023 and 2022, respectively. Research and development expenses, inclusive of non-cash share-based compensation, were 13.2 million and 12.6 million for the first quarters of 2023 and 2022. The primary drivers for the increase were due to an increase in salaries, employee benefits and share-based compensation expense to further the advancement of AUR200, AUR300 and the post approval FDA commitments for LUPKYNIS.

The increase was partially offset by a decrease in contract research organization costs related to the completion of the AURORA 2 continuation study in 2022. Non-cash R&D share-based compensation expense was 1.6 million and 1 million for the first quarters of 2023 and 2022, respectively. Interest income was 3.8 million for the first quarter ended March 31, 2023 versus 262,000 for the prior year period. The increase was mainly due to higher yields in our investment, a result of rising interest rates. For the first quarter of 2023, Aurinia recorded a net loss of 26.2 million, or $0.18 net loss per common share, compared to a net loss of 37.6 million, or $0.27 net loss per common share for the prior year first quarter. Before turning the call back to Peter for some closing comments, I’d like to update you on a corporate initiative we recently undertook.

I’m pleased to share that Aurinia recently published its first ESG report, which highlights the company’s performance and provides baseline figures within their ESG priorities, such as energy and emissions, supply chain management, patient access and affordability, community engagement, talent management and retention, employee engagement, diversity, equity and inclusion and business ethics, among other topics. To learn more about Aurinia’s approach to ESG and our priority topics, please look within the IR section of our corporate website. With that, I’d like to hand the call back over to Peter for some closing remarks. Peter?

Peter Greenleaf: Thanks, Joe. As you heard throughout the call, we’re obviously excited about our strong results for the first quarter, hitting many all-time highs across the business. We remain focused on delivering LUPKYNIS to patients in need, and driving results in the U.S. and globally. We look forward to keeping you posted along the way. I want to thank everyone again for joining us on the call today. We’ll now open the call for any questions you might have. Operator?

Q&A Session

Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. . And we’ll take our first question from Olivia Brayer from Cantor Fitzgerald. Please go ahead, Olivia.

Olivia Brayer: Hi. Good morning. Thank you for the questions, and congrats on the nice print. Where are you guys seeing the biggest commercial tailwind so far this year in the U.S.? I’m just trying to get a better sense for where growth acceleration is coming from, whether it’s positive impact from the pre-op requirement changes or if you’re starting to see some new prescribers come online? And then can you guys address the recent letter that came out from MKT Capital? Have you actually had any prior contact with them and any other comments around the letter or a strategic review process more broadly? Thanks, guys.

Peter Greenleaf: Thanks, Olivia. And let me start with the commercial question first. As we said in the call, we experienced across the board many all-time highs, and I think they’re all drivers for us, right, everything from having a great quarter for PSFs. So the knock on effect with PSFs is going to be most likely felt in the next quarter. But if we get them early in January, et cetera, those affect and impact the quarter as well. We think the work we did at the end of the year had real impact last year, making sure that patients had continuity of care and that they sort of better ease their way through the insurance transition processes in the year. And I think all — the whole marketing mix and working with our physicians and their office staff and patients is having an impact on patient retention as we enter the year.

So I can’t really plug it on to one major metric as a driver. I think it’s across the board. And I think we have to continue to do that. Obviously, the two biggest impacts for us are new patients coming on therapy and those patients getting on therapy and staying on therapy. And in the quarter, we impacted on all those fronts. On your second question, let me just be crystal clear. Members of the management team and Board of Directors have met with MKT Capital several times in the last few years. And despite our best efforts, these meetings have been unproductive and have resulted in no value-enhancing ideas being offered. They instead appear intend and pressure on us to pursue a hasty public process and sell the company at what it would appear to be any price.

As today’s results I think show, our strategy is delivering results, positioning us to further unlock significant value for shareholders, near term and long term. And our Board has played an integral role in the current momentum we’re seeing. So we’re disappointed that MKT seems to be ignoring these facts and launching a distracting campaign. The shareholders we’ve engaged with up to this point, Olivia, and we’re pleased to announce, they understand this. And as you’ve seen, both ISS and Glass Lewis have recommended that shareholders vote to reelect all eight of our incumbent directors. So to be clear, and sort of to round this out, the Board is open to any value-enhancing opportunities. And I think as most would know just by looking at the backgrounds of our directors, seven out of the eight directors have M&A experience.

And several of the members of our Board and/or management have been involved in companies that have been acquired during their tenures in successful value-creating transactions. The Board now continues to focus on creating value for all shareholders. So we won’t be commenting further on our interactions with this investor during the call, but I thank you for the question.

Olivia Brayer: Excellent. Thank you.

Operator: And we’ll take our next question from Maury Raycroft from Jefferies. Please go ahead, Maury.

Farzin Haque: Hi. Good morning. This is Farzin on for Maury. Thanks for clarifying on the MKT Capital issue. So I wanted to ask you on the guidance. So the 2023 draft version of the KDIGO guidelines, we saw that and we saw AURORA 1 and 2 data out there. But then the LUPKYNIS risk benefit profile is grouped with the as a class. So wanted to clarify whether the guidance will remain as is, or is there anything in the works to further address based on the LUPKYNIS’ differentiated data profile?

Peter Greenleaf: Yes. So as you know, these guidelines and the ones referenced to the KDIGO guidelines, but there are also guidelines that are driven by the ACR and by ASN and other large physician practice bodies out there, governing bodies in nephrology and rheumatology. Yes, I think these first pass guidelines are something we continue to work on. I don’t think they take the totality of our evidence into account. Understand that these guidelines take months and years in some cases to redraft. And they usually, I believe, KDIGO, ACR, ASN, all — and are all derived from published literature. So they don’t take into account things like the AURORA extension, or most recently published data — or most recently issued data that has not been published.

So we feel very confident that over time, these will continue to evolve. And we have the data to be able to sell against a position that puts us alongside of historical CNI use. We don’t see our drug as a first generation calcineurin inhibitor. We see it as a next generation calcineurin inhibitor. And we think the data can sell us into a position to utilize a product where we studied it, which really is in a broad group of patients, both as a first-line, second-line therapy, and the data I think speaks for itself in terms of the results. So we’ll look forward to continuing to progress guidelines out there, but know that because of the nature of how they do guidelines, the totality or our evidence that’s out there probably wasn’t in there. We have some work to do.

Farzin Haque: Make sense. And then just a quick follow up is that what are some of the areas where you see increased LUPKYNIS use, like in the future, in prior Benlysta-treated patients, failed B cell therapy patients or more like patients?

Peter Greenleaf: It’s a good question, and I would say there’s not a majority of patients today that have seen B cell therapy first. The majority of our patients, I think, have seen a course of MMF and steroids. And our goal is to get those patients treated with LUPKYNIS in combination with low dose steroids and MMF as in earlier treatment in the treatment cycle. I do believe as more B cell therapies become available for the treatment of lupus, not lupus nephritis that we will experience more patients that will have experienced B cell therapy first. But I want to underscore that these patients are being treated by progressive B cell therapy in the treatment of lupus. So it’s not a competitive positioning for nephritis before us, but Saphnelo and Benlysta are products that are obviously approved for the treatment of lupus and we see it as a positive if more patients are treated with newly approved therapies for the treatment of lupus.

And then when they get lupus nephritis, they consider more aggressive therapies like ours that lower proteinuria much more rapidly and of course sustained over time. So we would assume that over time, patients having seen B cell therapies will be a natural course of just progression of new therapies in the marketplace for lupus.

Farzin Haque: Thank you so much.

Operator: Thank you. And our next question comes from Stacy Ku from TD Cowen. Please go ahead, Stacy.

Stacy Ku: Hi, there. Thanks for taking our questions and congratulations on the strong performance. So first question is actually on your patents, the different potential moats, in addition to your 036 and 991 patents regarding the composition of matter that you have for LUPKYNIS, can you provide an update regarding timing or progress on the patent term extension? We understand that we have an interim patent term extension to October 2023, but any additional updates would be appreciated. And then on 036 and 991, can you just follow up on the different subtleties and the importance? So what did the examiners find surprising? So that’s the first question. And then the second is going to be on the 2023 quarterly trajectory. As we follow up, you did mention the potential seasonality is implied in your guidance.

But as we exit the seasonal Q1 dynamics, what base case assumptions do we have? Should we expect steady growth quarter-over-quarter or a more strong Q2, and then potential downward growth in Q3 as we think about quarter-to-quarter? Thank you.

Peter Greenleaf: Okay, why don’t I guess start first on the patent side of the equation? I think as you know our composition of matter plus the benefits we get through Hatch-Waxman and through the approval of the product, and of course any extension work we do in terms of their pediatric work would take the product out to, let’s call it, the end of ’27, a couple months into 2028, right? We have to file for that patent term extension every year. So it’s somewhat of a formality. It’s a good question. But we do it annually. And we can’t predict when the exact response comes in. But if you feel comfortable that these are Hatch-Waxman benefits that we get that patent term extension each year once filed is, I don’t want to call it a formality, but to some degree it’s a formality.

To get into a little bit the differentiation between, okay, you had 036 and you filed 991, the new issued number for the most recently issued patent around our method of use, what’s the difference and how should investors be thinking about those two patents? Well, first, they’re in combination. 036 doesn’t go away, 036 is still there, and I think represents something that a patent that when challenged, someone would have to first look at the merits of 036 and address those. And then second, what 991 does is it further refines the 036 patent. It adds more data. Remember, we submitted 036 with data from the original AURORA trials. And this adds in the AURORA trials, the AURORA extension, et cetera, and it narrows the scope of the patents quite significantly, specifically to lupus nephritis and refined some of the language in the patent.

So I think it creates a tighter patent, a more refined patent and it’s additive to 036. Lastly to the question on 2023 guidance, we don’t give quarterly but I guess the one area I would just say of focus is look at two years worth of sales and what the pattern of our PSF production has been in our revenue production. As we said, we’re going to need to continue to drive all fronts commercially. But if there’s any level of caution, it’s just we’ve seen two years, one year being COVID driven we believe; the next year being hard to understand, because COVID was gone. Was it more vacation dynamics and less patients visiting offices? We have many metrics that kind of show that it does. So I think if there’s one level of caution, it’s that one piece.

And I would just look back to previous year’s sales if you’re looking to cauterize on the annual number, because we haven’t historically given quarterly guidance as it pertains to our annual guidance.

Stacy Ku: Okay, very helpful. Thank you.

Peter Greenleaf: Thank you.

Operator: And our next question comes from Justin Kim from Oppenheimer. Please go ahead, Justin.

Justin Kim: Hi. Good morning, and thanks for taking the questions. It’s really great to see the space of business forming under LUPKYNIS. And as we think about the updated guidance, can you just talk a little bit more about fundamentally what we need to see happen in the business to maybe reach the midpoint, just based on our sort of calculations for the strength that we’ve seen in this first quarter would sort of need to persist over the coming quarters and accounting for seasonality and such. But just any color there in terms of like what — how you think about sort of the low end, high end, midpoint for guidance?

Peter Greenleaf: Yes. Without getting too numeric on this because we don’t basically break it out that way, we just give the range, I don’t want to be overly simplistic here, but we need to continue to see new patients starts. And if you look at the but I assume it’s in queue to be asked if you don’t ask it next, Justin, if you look at our patients’ start forms for the first couple of weeks for this quarter, which I think were 138 that we reported. That’s about one patient per day or a little less than that actually short of where we were in Q1. So we want to see continued progression on patients’ start forms. That’s the top end of the funnel. And as I think most who model this business know, we can still hit our numbers for the year and have patient start forms not accelerate.

But this new patient starts is critical to the long-term health of the business. We are incredibly encouraged by the numbers we’re seeing. But at the same time, a level of caution, we need to continue to see that throughout the year. The second piece is patients need to take their meds. And as we go through the summer months, we need to make sure that patients are retained on drugs, that they pick up their prescriptions, et cetera. And as they go off on vacation or they decide to not visit the doctor, that number does not change. I think as you think about the range of guidance, if that gives a more simple way to think about it is probably the lower end of our range is some summer impact. The midpoint of our range is probably somewhere around consistently being able to hold our own throughout the rest of the year.

And the upside of our guidance would be continuing to see quarter-on-quarter growth throughout the year. While historically I think we’ve shown a little bit of a hockey stick — hockey stick is the wrong way to explain it. But we’ve seen growth in 3Q, 4Q. I think that will be consistent here as we look at the business, but I would not be extreme about it. I would not peg it all in the back half of the year. I think in order to get that high end of the market, I think we need to continue to see our guidance. We need to continue to see consistent growth quarter-over-quarter.

Justin Kim: Okay, great. And maybe just one on the persistent numbers. Just wondering if there’s any impact based on the cutoff point, as it relates to seasonality? Do you think that the summer months being sort of the cutoff for the 15 or 18 months or year-end start influences that number, just any granularity on how you calculate that number, if there’s any impact there?

Peter Greenleaf: Well, I think the year-end lesson learned is we got to put a good amount of effort in Q4 to ensure that patients don’t get unnecessary discontinuations and/or lapses in their therapy due to insurance plan changeovers, et cetera. And that we can appropriately help in that process once they’ve opt into getting help and education from us. So we have to continue to do that. But I don’t think there’s — there’s not an insurance plan driver that says patients can only get drugs through year end, or in most cases only 12 months of therapy. We’ve been pretty good about being able to ensure patients stay on therapy over time, and that plans don’t lock us down after 12 months. Some are seasonality. I don’t know that we have many predictive measures in terms of the aggregate of our business that we look at annually that would say that we see patients falling off more frequently there.

We do know that office visits, diagnoses and new patients start forms have slowed a little bit in those months. So that’s why we remain cautious there. And that of course impacts revenue. I think the persistency numbers we’ve shown out to 15 months and 18 months, I would just give one note of caution is that they’re small ends, right? And as noted by, we reported 15 months last time or last quarterly call and it was 45%. And this call, it’s 47%. The 18-month number reported a 41% could move around a little bit. So I think we’re learning as the drug is out there in the 2marketplace over time.

Justin Kim: Great. Thanks for taking the questions and congrats.

Operator: Thank you. And our next question comes from Ed Arce from H.C. Wainwright. Please go ahead, Ed.

Ed Arce: Great. Thanks for taking my questions. And let me add my congrats on a solid quarter in print. So firstly, just wanted to ask again, specifically around the drivers so far that you’ve seen, as you’ve mentioned, began really in November and December of last year. And now with this quarter, several of the commercial metrics are hitting all-time highs. I know you’ve gone through those numbers, but really what I’m trying to ascertain is if there is anything you can discuss in terms of qualitative efforts that you’re making that you think in particular have an impact. You mentioned recently commercial initiations or initiatives, excuse me, and in particular the Get Uncomfortable campaign. I’m just wondering if there’s specific aspects to newer initiatives that you think are particularly helping?

Peter Greenleaf: Thanks, Ed. Yes, I think the first that I would point to, and it’s an obvious because obviously you talked to many commercial companies out there, the COVID thing seems to be behind us, which has opened up access. I wouldn’t say that is on — and it’s not universal, right? There still are some centers that are tougher than others. But at the end of the day, we’re not locked down anymore. And that affects everything from how we run our business collectively. We get together more. We meet locally. We get more collective action as an organization due to the fact that we’re not locked down in our houses. I think that’s true in the institutions too. So COVID is one. The second is we have mentioned on two calls now that we’ve been focused in our efforts and very consistent in our messaging in terms of what we’re trying to deliver in the marketplace and move high decile physicians from trialing the product to getting more into active regular treatment with the product.

And put simply, Ed, our 8 to 10 deciles matter and matter the most, because somewhere around 80% of the business lies in that 8 to 10 category, and really getting them to move from trial to broad-based adoption is critical. And when we’re there, we are focused on a differentiated message that identifies a patient and clearly emphasizes the longer term data that we’ve had for about a year now with the AURORA extension study. And then lastly, I would point to, while we’ve always had a consumer support campaign, and efforts that we’ve worked to be strong advocates with the advocacy organizations that are out there for this patient population, we have surged in the last six months our efforts around a direct to patient education campaign. One is evidenced by the recent launch of the Get Uncomfortable campaign, the urinalysis campaign, the “pee in a cup” campaign, and our most recent launch of working with Toni Braxton as a representative sponsor of someone who lives with lupus, who we think is the right person to represent this community and urge people to take the disease seriously, get diagnosed and get aggressively treated.

So I think it’s a combination of all those factors. We have to continue to focus on them, add more, really pour gasoline on the efforts that we’re doing. And I think it’s starting to show fruit. We have to continue to produce solid quarters. And that’s what we aim to do.

Ed Arce: Great. And so as a follow up to that, you talked about how the continuity of care is a big driver in sort of mitigating the new year reset effects that we’ve seen in the last couple of years. And frankly, I was expecting flat to down for this quarter from the fourth quarter, and it was up pretty significantly. So I’m wondering if those efforts to mitigate that could also be applied to the summer seasonality and any commentary around qualitatively would be helpful? Thank you.

Peter Greenleaf: Yes. So if I were asked like any general specialty product business how should you think about January and February, and we would always still say use caution when thinking about any company that has a specialty product about how January and February may look due to these factors of insurance transitions, I would still say use that caution even looking at us, because it’s a tough one to predict. I think we did a great job in trying to manage that transition. I think the fruits of that labor were bore out in a quarter. Ed, all I can tell you is for the summertime, we are acutely focused on this and we’re doing everything from looking at our backend patient support group, our support people and nurse case managers working directly with our patients and offices and in our field to put intense effort down over the next three to four months.

So we have a plan. We have to see how it plays out. And to go back to the question around ranges of guidance, I think we’re pretty clear if it plays out well for us, that’s how you get to the upside if we run into some challenges, as we’ve seen historically that we’d probably set the lower end of that guidance range. Anyway, we have a plan and it encompasses all areas of tactical support, including patient identification and support of the office through the rep, and then backend support through the Aurinia Alliance group, which is our bespoke group that works on patient support and education.

Ed Arce: All right. Thanks, Peter. One last question, if I may sneak it in, just for Joe probably. And that is you spoke about the cash used in the quarter and obviously continuing to expand commercialization efforts. But the post marketing requirement spend, how much more of that can we expect and what specifically is still remaining? Thank you so much.

Peter Greenleaf: Yes. So I think as most know, we have a few studies that we have ongoing. The pediatric one, VOCAL study, is probably being the largest. I think it comes down to, Ed, how long it takes to execute on the trial. And as most know, pediatric studies, especially in areas where the majority of the population is middle aged women, or women sort of in that 40 to 58-year-old category, finding patients that are young and fall in the pediatric area will take time. So I think as you think about the commitment on pediatrics, it’ll be protracted. The other is that we’re working on things like the registry et cetera, and the drug-on-drug interaction study. I think the DDI study, we’ll continue to monitor over time. I think that’s got a tail on it somewhat, but probably not as long as the pediatric study.

And then other initiatives, like any investigator-initiated studies, Phase 4s and/or the registry that we intend to put commercially relevant and clinically relevant data out from will be ongoing. So I know I’m not being specific here, but I think you should think about them not in six-month increments, but they’ll probably be ongoing for the next couple of years.

Ed Arce: Very helpful. Thanks, again.

Peter Greenleaf: Thanks, Ed.

Operator: Thank you. And we’ll take our next question from David Martin from Bloom Burton. Please go ahead, David.

David Martin: Yes. Good morning, and thanks for taking my questions. First question related to the biopsy study results, I’m wondering is the sales force promoting that data with the doctors now. And what has been the feedback? And do you also plan to ask the FDA to change the wording on the LUPKYNIS label regarding nephrotoxicity beyond a year?

Peter Greenleaf: So the answer to your first question is no. Our sales force is not proactively promoting the biopsy data. Obviously, this is new data. It’s not within our label. But when asked — if a physician asks about the biopsy study, they can forward them to a medical letter request and/or to our medical affairs group that has clinically the ability to take them through that data. And so far, I think the receptivity through those clinical conversations in our medical affairs group has been quite positive. This, in combination with eGFR data, I think tells a differentiated story. And I think to many of the naysayers around CNIs makes him think. This is three-year — 18-month biopsy data and three-year eGFR data that shows that maybe some of these challenges don’t necessarily accrue to this product, which I think is positive. And your second question was —

David Martin: Label.

Peter Greenleaf: Yes, the short answer is yes. But I want to set the right expectation here. These were not supplemental studies that were done to enhance a supplemental NDA. So we, first, owe both these groupings of data to the FDA. And our hope would be that through good conversation, the AURORA extension study and the biopsy study find their way into — because we think they’re important for a physician to understand — and are enhancing to understanding the drug that they make their way into the label. I think it’s a reach to think it will be something that will impact the indication statement of the drug.

David Martin: Okay. And a second quick question. You mentioned that daily PSFs were down versus first quarter. Can you think of a reason for that? And is it temporary?

Peter Greenleaf: And I say they’re down on a daily basis, but it is less than one per day. So I guess it tells you how acutely we look at this, which either make you real confident or — it’d probably make you more confident. How we look at this daily? We look at whether it’s 0.5 better, 1 better, 2 worse. It doesn’t have us concerned at this stage of the game. We’re looking at it closely. I think you got to look at the fact that versus where we were last year, it is looking good. And we always see quarter — when a quarter ends and a new month begins, we can see some softness. So to Joe and I if you’re asking us what — April and May are going to be important to look at. And I wouldn’t call April data a trend yet. I think we got to look at what May shows, et cetera. But positively speaking, after a really strong first quarter, it’s still less than one patient off of the trajectory that we had in the first quarter per day.

David Martin: Okay, got it. Thanks.

Operator: Thank you. And next we’ll go to Joseph Schwartz from SVB Securities. Please go ahead, Joseph.

Will Soghikian: Hi, all. This is Will on for Joe. Thank you for taking our questions today, and I’ll add my congrats for the quarter. So for us, I guess could you just help us contextualize the growth a bit more in the first quarter? Specifically, you’re seeing more prescriptions from certain centers and has this growth in prescriptions been consistent among the nephrologists and the rheumatologists?

Peter Greenleaf: So a couple of things, and I wouldn’t call any of these trends that I would say are statistically significant, they’re more leading indicators that we’re looking at. So our focus has been on top decile physicians, and we’re seeing more repeat prescriptions coming from decile docs, so a good sign that our focus is working. And in addition, we’re seeing more new prescribers coming out of that group and new prescribers coming in the below deciles 8 to 10. So again, good metrics. More concentration on the top, because that’s where our focus has been. And then while this is one that we’ve always said is an opportunity to crack, we are seeing lupus centers or major medical institutions, academic centers out there, opening up more.

None that I would say are such a large volume that I would call it a trend break, but I would say we have seen the majority of the lupus centers actually treating patients now. And in previous quarters, that was quite limited. And I don’t think that’s an individual sales rep and marketing tactic impact issue. I think a lot of it has to do with COVID. And then there are some more complexities that we’ll continue to need to think about as we want to crack that marketplace. So moving into academic centers and the complexities around the sale process here is quite different than a community office physician. So we are thinking about that strategically and tactically, and we’ve seen more prescriptions coming out of that area as well. Your last question was on the percentage break nephrologists to rheumatologist and what I would tell you is it’s still pretty evenly split down the middle.

But as I’ve said in the past, lupus patients generate first in the rheumatologist office. So I look very acutely at the rheumatologist office for understanding how earlier we can get in the disease. And I look at the nephrologist office as one of these physicians deeply understand the kidney and how is our message penetrating there, because they’re the kidney experts and we need to make sure that they buy our drug and that they buy our story or our data around the drug. And I think all metrics are improving there, but in terms of prescription base is evenly roomed in that for right now.

Operator: Excellent. Thank you. And our last question comes from Sahil Dhingra from RBC. Please go ahead, Sahil.

Sahil Dhingra: Hi. This is Sahil for Doug Miehm. Thank you for taking the questions. I just want some incremental color from what you have already provided. So I think in the past you had highlighted that 55% of the prescribers are not repeat prescribers, and you see this as an opportunity. So given the long-term study data that you have and also the renal biopsy study, how has that evolved? And has that improved your competitive positioning versus Benlysta? Thank you.

Peter Greenleaf: So as I just mentioned, we’ve seen increases both in new prescribers and repeat prescribers. And I would probably put more emphasis on repeat prescribers, because as I said we’ve been focused on that 8 to 10 decile, and that’s where we’re seeing the majority of our impact as well. In terms of persistency, I think you have to look across the total. And I wouldn’t call a trend yet, 15 months persistency changing from 45% to 47%. But I think represented in the percentage of patients that we retain over that time, if you benchmark it versus other products in light categories, whether that be other rheumatoid indications like psoriatic arthritis, rheumatology, other GI indications like IBD, or even moving into areas like MS and other more specialty areas of chronic diseases, the persistency we’re seeing with the drug is actually quite good.

So we’ll continue to keep you updated along the way. But I think you’re seeing improvements in those areas and you’re seeing it through what we announced each quarter, every three-month increment that we’re maintaining patients over those periods of time.

Operator: Mr. Greenleaf, that was our last question.

Peter Greenleaf: Okay. Thank you very much. I want to thank everybody for joining the call with us today. We’re obviously excited about the progress we’ve seen in the first quarter of the year. We’ll look forward to talk to you again next quarter. Have a great day.

Operator: Thank you. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.