Aurinia Pharmaceuticals Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 2, 2023

There are 12 speakers on the call.

Operator

Greetings. Welcome to Aurinia Pharmaceuticals Third 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. Keypad.

Operator

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.

Speaker 1

Thank you, operator, and thank you to everyone for joining today's call and the webcast and Joe Miller, our Chief Financial Officer. This morning, Aurinia issued a press release announcing its financial results and operational highlights for the Q3 and 9 months that ended September 30, 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.

Speaker 1

Securities and Exchange Commission, which are also available on Aurinia's website at auriniapharma.com. During today's call, Aurinia may make forward looking statements based on current expectations. Those 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 Aurinia's future financial results and business, Please refer to the disclosures in Aurinia's press release and its quarterly report on Form 10 Q along with Aurinia's Annual Report on Form 10 ks and all of its recent filings with the U. S.

Speaker 1

Securities and Exchange Commission and Canadian Securities Authorities. Please note that all statements made during today's call are Current as of today, Thursday, November 2, 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?

Speaker 2

Thanks, Jamie, and good morning, everyone. I want to thank you all for joining us on today's call. On this morning's call, we will focus on the company's Q3 and year to date performance. We'll discuss key metrics and significant commercial highlights for Loop Kinus. We'll then provide an update on our progress outside the U.

Speaker 2

S. And close with a brief update on R and D activities for both loop kindness as well as our pipeline assets. I'll then turn the call over to Joe Miller, our CFO, to provide additional details on our financial results. Now let me dive into our overall business performance. I'm pleased to share that we continue to make progress over the last 3 months year to date with lupkinus both domestically and abroad.

Speaker 2

Highlighting the 3rd quarter, We achieved $40,800,000 in Loopkinis net product revenue, which represents an increase of 60% versus the prior year's Q3. We're quite pleased with these results, in particular in light of the impact that the summer months have had on our business historically. This brings year to date LoopKynis net product revenue through the end of the Q3 to $116,200,000 This represents an increase of 55% versus the same year same time prior year. As a result of our strong third quarter, We're narrowing our net product revenue guidance for 2023 from $150,000,000 to $160,000,000 to $155,000,000 to $160,000,000 Additionally, in the quarter, we recognized The $10,000,000 ex U. S.

Speaker 2

Milestone from our collaboration partner, Otsuka Pharmaceuticals, for securing Pricing and reimbursement approval in Europe. This, plus royalties from ex U. S. Sales, brings our total revenue for the Q3 to 54 point $5,000,000 Leading the company's key commercial metrics for the quarter, PatientStar forms remained strong throughout The period with 436 PSFs in the quarter. This represents a growth of 17% over the prior year's Q3.

Speaker 2

Driving new patient starts continues to be an important area of focus for us, and we're pleased to see that PSFs remained relatively stable throughout the Summer, through the end of October, we recorded approximately 1510 PSFs since January 1, 2023. Patient conversions to therapy remain at high levels with approximately 90% of all patients who have a patient start form submitted receiving actual treatment. We're very pleased with the majority, roughly 65% are now starting therapy within 20 days. This represents continued strong execution from our best in class patient support services group, Once we get a patient on to therapy, equally important is how long they stay on therapy. As we know, their underlying disease is a continuous inflammatory process requiring maintenance therapy.

Speaker 2

Our 12 month persistency rates remain around 54%, with 15 month persistency at about 48%, and now we're seeing 43% persistency at 18 months. We had a total of 19 39 patients Currently on therapy as of September 30, 2023. While this number continues to grow, there's been a slight increase in The quarter of discontinuations, which is a function of when patients initiated therapy and when they're falling in the persistency curve at the quarter end. We're also pleased to report that we have approximately 4,000 patients who have been treated with lupkinus since launch. As stated on previous calls, our business plan is focused on activating 3 main levers in the growth of lupus nephritis market: Educating healthcare providers on the need to screen and treat more aggressively, activating the patient to advocate on their behalf, And then lastly, continuing to clinically differentiate lube kindness and position it as part of the foundation therapy in the treatment of LN.

Speaker 2

We now have the full complement of data to be able to share with the medical community. When we look at the comprehensive data set from the original AURORA trial Our pivotal results, the AURORA 2 extension study demonstrating long term safety and efficacy And the biopsy sub study depicting tissue level evidence of no nephrotoxicity associated with loop kinase, We continue to educate physicians on these data sets as we further work to penetrate and grow the lupus nephritis market. Our first lever is driving healthcare providers to act with urgency to screen and treat patients more aggressively, getting them to recognize the consequences of their lack of action. We continue to emphasize the importance of treating the goal and reinforcing the guidelines on rapid and sustained reductions of proteinuria to preserve the kidney the patient's kidney function. Over the Q3, we maintained our call activity on high decile targets, driving home the message of treatment urgency, goals of therapy and the benefits of lupkinase in helping physicians meet their ultimate goal of kidney preservation.

Speaker 2

In the quarter, we increased the depth of prescribing in our current See patients come back to therapy as restarts. We have begun to examine this phenomenon. We believe it is a good indicator for the brand. 1, because physicians are comfortable with lukeinase and 2, if they're restarting therapy, they must have had a good experience with Lupconis during their first exposure to therapy. We believe this bodes well for further growing the brand with a somewhat unique segment of patients.

Speaker 2

It also becomes an opportunity to discuss extending the duration of therapy in these patients Based on both the AURORA extension study, biopsy data as well as the recently published guidelines from EULAR. The Euliar guidelines further support our messaging and educational efforts. They reinforce the need to routinely screen lupus patients to treat aggressively, to treat to target proteinuria levels and to maintain proteinuria at manageable levels throughout 3 years. Let me go into a little bit more detail regarding the recently published EULAR guidelines and their advancement for the treatment approach to LN. At a high level, 4 key areas benefit lupkinis.

Speaker 2

The first is driving earlier diagnosis. Early diagnosis and regular screening for organ involvement, especially in LN with prompt initiation of therapy aiming at remission and strict adherence Treatment is essential to preventing flares and organ damage as well as improving prognosis and enhancing patients' quality of life. The need for routine monitoring is a second. SLE disease activity should be assessed at each clinical visit with an evaluation of organ damage using validated instruments. Vigilant monitoring for new organ involvement, mainly kidney organ involvement from LN, especially in the 1st years of disease and thereafter.

Speaker 2

The third is that the committee Recognize the need for a treatment paradigm shift that moves lupkinase up in the line of therapy. With the breakthrough of lupkinase, A novel C and I for LN, consider shifting an induction maintenance regimen to early use of combination therapies. And lastly, long term treatment. Following renal response with lupkinus, Treatment of LN should continue for at least 3 years based upon the long term AURORA extension study, leading that reported stable eGFR throughout the 3 years of data. We believe these guidelines actively support our strategic approach to the management of LN and how to use loop kindness in the physician's treatment regimen.

Speaker 2

Our second focus is educating patients on the appropriate serious and that they are routinely monitored to ensure their well-being and kidney preservation. We have Several patient directed campaigns ongoing that are focused on educating the patient about their disease and the consequences of not getting screened. They also advocate for routine monitoring by their physicians. The majority of these campaigns run through the digital marketing and social media channels to maximize reach to target audiences in a cost effective manner. We have also been working with Toni Braxton, The spokesperson for our unbranded disease awareness campaign, Get Uncomfortable.

Speaker 2

To date, her message has reached over 750,000,000 media impressions and tens of thousands of SLE and lupus nephritis patients. Our third strategy is directed towards clinically differentiating loop kindness from substandard therapies and working to establish loop kindness The company recently announced the launch of the AURORA 2 extension data for lupkinis. In September, the extension data was published in Arthritis and Rheumatology, the official journal of the ACR. This publication, along with our biopsy data, gives us a great opportunity to go into the remainder of the year reinforcing the long term Safety and efficacy of lupkinus. In addition, our ongoing medical affairs initiatives are focused on evolving the treatment approach for LN and educating healthcare professionals about lupkinus.

Speaker 2

Our medical teams continue to work with the global key opinion leaders to ensure that they have the latest information in support of their guideline writing efforts. This holds true for the recent EULAR guidelines as well as the upcoming Codigo and ACR guidelines that are continued under development. Throughout the Q3, our medical team engaged with physicians and healthcare providers over 1,000 times. They engaged over 100 clinical data presentations, 95 follow ups to medical information requests and 150 in light LN related visits. For the 2 upcoming major medical meetings of the American Society for nephrology, ASN, and the American College of Rheumatology, ACR, in November, they have 14 abstracts and posters that were accepted and Presentation being presented.

Speaker 2

Now moving on to our globalization efforts for lube kindness. Our collaboration with Otsuka has resulted in significant launch momentum outside the U. S. This year. Having received European Commission, British and Swiss marketing authorizations, Otsuka is now focused on launches and securing pricing and reimbursement approvals in various countries throughout Europe.

Speaker 2

In the Q3, we recognized a $10,000,000 milestone from Otsuka for securing pricing and reimbursement approval in 3 of the 5 major countries in Europe. In addition, this quarter, we started recognizing collaboration revenues related to our mono plant and offsetting a portion of our fixed facility fees as well as royalties on our European sales for lube kinase. Our work with Otsuka in Japan remains on track for a regulatory submission before the end of the year. Upon approval in Japan, which is currently anticipated for the second half of twenty twenty four, we would be eligible for an additional $10,000,000 around the approval in Japan along with low double digit royalties on net sales once launched. Now let me close with our R and D activity.

Speaker 2

We continue to enroll patients in our LN registry and currently we have 71 sites activated and a total of 113 patients screened with 111 enrolled. The Vocal Pediatric Study also remains ongoing. As for our pipeline, we remain on track to file an IND for AUR-two hundred, are BAF April inhibitor by the end of the year. We continue to evaluate potential autoimmune and kidney related target indications with a high unmet medical need for this asset. As for AUR-three hundred, our novel peptide that modulates M2 macrophages via this anti CD206 receptor.

Speaker 2

We are currently in reformulation work on this product as we work towards an IND submission by the end of 2024. Before I turn the call over to Joe, I'd like to give you a brief update on the ongoing strategic review, which we now announced a few months back. As a reminder, we initiated a strategic review of the company at the end of June. We continue to work through the process Reviewing strategic options for the company, which include a variety of possibilities ranging from a potential sale, Merger or other strategic transaction. We have no further updates on the matter other than that the process is actively ongoing.

Speaker 2

We remain committed to running a fulsome process that reflects the best interest of the company, our shareholders and other key stakeholders, including our patients, healthcare providers and our employees. We ask for your patience in these matters and know that when we have something material to share at the appropriate time, we will share it with all of our stakeholders. I'd now like to turn the call over to Joe for a more detailed review of our financial results. And of course, I will 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?

Speaker 3

Thank you, Peter, and good morning, everyone. As of September 30, 2023, we had cash, cash equivalents, restricted cash and investments of $338,500,000 compared to $389,400,000 at December 31, 2022 $350,700,000

Operator

at the

Speaker 3

end of Q2 2023. 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, Loop Kindness, inventory purchases, advancement of our pipeline and mono plan payments, and are currently in a listen only mode. We believe that we have sufficient financial resources to fund our operations, which include funding commercial activities, including FDA related PROST approval commitments, manufacturing and packaging of our 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 Q3 and the 9 months ended September 30, 2023. Net product revenue was $40,800,000 for the quarter ended September 30, 2023 $25,500,000 for the quarter ended September 30, 2022.

Speaker 3

Net product revenue was $116,200,000 for the 9 months ended September 30, 2023 $75,100,000 for the 9 months ended driven predominantly by further penetration of the LN market. Total net revenue was $54,500,000 for the quarter ended September 30, $20,23,000 $55,800,000 for the quarter ended September 30, 2022. The decrease period over period is due to the recognition of a $30,000,000 regulatory Following the EC marketing authorization of Loop Kindness in September 2022, partially offset by the recognition of a $10,000,000 pricing reimbursement milestone in 2023 as well as additional collaboration revenue from Otsuka in 2023. Total net revenue was $130,400,000 for the 9 months ended September 30, 2023 and $105,600,000 for the 9 months ended September 30, 2022. The increase is due to the aforementioned increase in net product revenue, partially offset by the change in milestone related revenues.

Speaker 3

Total cost of sales and operating expenses for the quarter ended September 30, 2023 was $70,800,000 65 point $3,000,000 for the quarter ended September 30, 2022. Total cost of sales and operating expenses for the 9 months ended September 30, 2023 was $192,400,000 versus $189,000,000 in the prior year period. Let me now give you a further breakdown of operating expense Drivers and fluctuations. Cost of sales amounted to $6,800,000 $2,400,000 for the quarters ended September 30, 2023 and September 30, 2022. The increase is primarily due to increased sales of Loop Kindness, coupled with the amortization of the Mono Plant Finance Right of use asset, which was placed into service in late June of 2023.

Speaker 3

Cost of sales was $8,800,000 $4,300,000 for the 9 months ended September coupled with the amortization of the model plant finance right of use asset, partially offset by higher inventory reserves in 2023 due to the write down of FDA validation batches. Gross margins for the quarter ended September 30, 2023 was 88% versus 96 Selling, general and administration expenses inclusive of share based compensation were $47,800,000 and $52,200,000 for the quarters ended September 30, 2023 September 30, 2022 respectively. The primary driver for the decrease in SG and A expense was a decrease in professional fees and services, including legal fees, incurred during the quarters With respect to litigation matters that occurred during the 3 months ended September 30, 2022, partially offset by an increase in share based compensation. SG and A expenses inclusive of share based compensation was $145,000,000 for the 9 months ended September 30, 2023 versus $148,900,000 at September 30, 2022. The decrease was primarily due to a decrease in professional fees and services, including legal fees and other corporate costs, including rent and insurance, partially offset by an increase in share based compensation expense.

Speaker 3

Non cash share based compensation expense included within SG and A expense for the quarter ended September 30, 2023 was $9,600,000 versus 6.6 for the prior year period. Non cash share based compensation expense included within SG and A expense for the 9 months ended September 30, 2023, was $27,000,000 versus $21,500,000 for the prior year period. Research and development R and D expenses, Inclusive of share based compensation, were $13,600,000 at September 30, 2023 versus $11,000,000 for the quarter ended September 30, 2022. The primary driver for this increase in both quarters was due to an increase in CRO and development costs as the company advances its pipeline assets. R and D expense inclusive of share based compensation expense was $39,400,000 $35,100,000 for the 9 months September 30, 2023 September 30, 2022.

Speaker 3

The primary drivers for the increase in the 9 month period were an increase in cost to advance its preclinical assets An increase in share based compensation expense, partially offset by the decrease in costs associated with the completion of the AURORA continuation study and drug to drug interaction study, which were substantially completed in 2022. Non cash share based compensation expense included within R and D expense $2,000,000 $1,500,000 for the quarters ended September 30, 2023 and September 30, 2022. Non cash Share based compensation expense included with R and D expense was $5,700,000 for the 9 months ended September 30, 2023 and $3,500,000 for the 9 months ended September 30, 2022. Interest income was $4,500,000 at September 30, 2020 versus $1,500,000 for the prior year period. Interest income was $12,400,000 $2,200,000 for the 9 months ended September 30, 2023 September 30, 2022, respectively.

Speaker 3

The increase for both periods is due to higher yields on our investment as a result of increased interest rates. For For the quarters ended September 30, 2023, Aurinia recorded a net loss of $13,400,000 or $0.09 net loss per common share as compared to a net loss of $9,000,000 or $0.06 net loss per common share for the quarter ended September 30, 2022. For For the 9 months ended September 30, 2023, Aurinia recorded a net loss of $51,100,000 or $0.36 net loss per common share as compared to a net loss of $82,100,000 or $0.58 net loss per common share for the 9 months ended September 30, 2022. With that, I'd like to hand the call back over to Peter for some closing remarks. Peter?

Speaker 2

Thanks, Joe. As you heard throughout the call, we're obviously excited about our Strong results for the quarter and our momentum through the 1st 3 quarters of the year. We continue to focus on business fundamentals and commercial execution. Our commercial teams are concentrated on delivering the newly published data from the AURORA 2 extension study and educating healthcare providers on the promise of kidney prevention for their lupus nephritis patients. Our R and D teams are focused on our regulatory commitments for lupus nephritis and advancing our 2 pipeline molecules into the clinic.

Speaker 2

And our executive team and our Board are working behind the scenes of our day to day business on the strategic review process to deliver value to all stakeholders in Aurinia. We remain focused on delivering Louganis The patients in need and driving results in the U. S. And key markets globally. We look forward to keeping you all posted along the way.

Speaker 2

I want to thank you all for joining us today. And I'd now ask the operator to open lines for any questions there may be. Operator?

Operator

Before pressing the star keys. Our first question is from Maury Rancroft with Jefferies. Please proceed.

Speaker 4

Hi, good morning. This is Farzin on for Maury. It's good to see the persistence stabilizing so far at 12 months 18 months. So can you talk more about the feedback you're getting from the prescribers on the for those patients? And if you're how much leveraging how much

Speaker 2

Yes. I mean, listen, thank you for the question. Yes. We're encouraged by not only the 12 month persistency, but 18 month. And as we didn't report on the call, 4 month persistency kind of shows a flattening of the curve after 12 months to 18 months, which is encouraging.

Speaker 2

I think the key takeaway should be most of this was driven in a time period where we had launched the product Got approval with the AURORA, the original AURORA data, which was 1 year data. And since that time period and has recently We come to a head with the publication of the AURORA extension study, which has added an additional 2 years of data on top of the 1 year data, So 3 years of safety and efficacy now. And the biopsy data, which was recently presented at one of the regional meetings and will continue to be presented at ACR and ASN, are all adding to our ability to go out there And promote actively through the right channels in the right way, through medical affairs and through Providing information on medical requests on that data to physicians. So, we're encouraged Feedback we get from physicians and patients is that historically this has been sort of a start and stop disease So patients actually show reducing of proteinuria, many times physicians will remove meds and that includes MMF and steroids. The new guidelines published through EULAR future guidelines coming from ACR and ASN, we're encouraged that we already See a reinforcement of the importance of keeping patients on therapy and maintaining, the control of that inflammatory process, Because obviously the results are would be quite negative for patients.

Speaker 2

So there's a shift happening and we're encouraged by the data. So the feedback we've gotten so far has been good.

Speaker 4

Great. And then based on your efforts so far, do you have a sense of whether they're leading to increased diagnosis rates yet?

Speaker 2

All we have is qualitative data at this point on that front. And what I would tell you is the qualitative is Yes. But we look forward to reporting more quantitative as it's important, for the future growth, not only of the brand, but of the market, in Total. So encouraging qualitative data, but nothing quantified yet.

Speaker 4

Okay. And then quickly for Joe, the COGS Came in significantly higher versus prior quarters. If you can provide some color on that.

Speaker 3

Yes, Pareteen, as mentioned in the prior Quarter call, the model plant came online right at the tail end of the second quarter. So this quarter, 3rd quarter, we had a full absorption of the mono plant facility, of which a portion approximately 50% is actually reimbursed via Suka under the supply agreement, which is reflected in the collaboration revenue. So you see a little bit of an offset reflected in the collaboration revenue. Does that answer your question?

Speaker 4

Yes, perfect. Thank you so much.

Speaker 5

You're welcome.

Operator

Our next question is from Joseph Schwartz with Leerink Partners. Please proceed.

Speaker 6

Hi, thanks very much. I was wondering, first of all, if you could talk a bit about how you arrived at Your new guidance and why it might not be proportionally higher to what you delivered this quarter, it looks like you will be able to hit the low end even if sales decrease from the 3rd to the 4th quarter, especially given the robust Patient start forms numbers we've seen for October. So I'm just wondering if there's any reason for pensiveness or if you can give us Your insight into that and then I have a follow-up.

Speaker 2

Yes. We expected the question, Joe. The short answer is We raised the low end of the guidance because I think you're right. I think you'd have to decline to even get to the low end of guidance. We've tightened the range because Based upon the quarter and the new patient starts that we actually saw in the quarter, We wanted to be somewhat conservative about where we were going to fall in that range.

Speaker 2

So for example, if we saw the same sort of new patient starts in Q4, we feel conservatively that we can still hit that guidance range. If you fell below, you'd have to decline in the quarter to be below that guidance And I think there's just a level of conservatism there that we wanted to be predictable and be Consistent with our performance, had we seen a higher number of new patient starts in Q3, there's no doubt We would have taken off the upper end of that

Speaker 6

range. Okay, great. Thanks. That's helpful. And then how has the number of prescribers And repeat prescribers have been trending relative to the total number of patients on drug.

Speaker 6

We appreciate the latter numbers, but any insight into the I'm just wondering how satisfied you are with the breadth of lipkinase prescribers relative to the penetration for lipkinase within each practice.

Speaker 2

Yes. I think as you know, Joe, we haven't given the total prescriber numbers yet, but it's one for us to go back and chew on And think about reporting, some of that's been for competitive reasons. But what I can tell you is, there now are thousands of physicians within that Total universe that have utilized the product and that we've seen double digit increases in terms of percentages on both Volume of prescribing from our repeat prescribers and in our prescriber base. So we're Happy with the penetration. As we've said all along, it means of the universe of nephrologists and rheumatologists have prescribed products The treatment of lupus NLN, the eightytwenty rule applies here.

Speaker 2

80% of prescriptions come from somewhere around 20% of the prescribers. And we think our penetration within that universe is actually quite good and the depth of our prescribing in there continues to improve. As we get on future calls, we'll look into whether we want to start reporting the specific numbers. But as I said, that's more for competitive reasons as to why we haven't rolled that out.

Speaker 6

Thanks again.

Speaker 2

Thanks, Joe.

Operator

Our next question is from Stacy Hu with TD Cowen. Please proceed.

Speaker 7

Hi, Peter and Joe. Thanks for taking question and congrats on a very strong quarter. This is Vish on Slide 5. So given we have results from 3 quarters behind us, could you talk a little bit more about your expectations for next year? How do you see sales and patient start forms panning out over 2024?

Speaker 2

Yes. So I think the system did you have another question?

Speaker 7

I can ask that after this one. Thank you.

Speaker 2

Yes, I have a fast response to that. I mean, we're going to try to stay consistent with what we did last year and give some sort of steer Prior to or around or before JPMorgan next year. And I think there's a lot of things weighing on that, but That's what we did last year. I think we gave some characterization in Q3 due to the summer Challenges we saw in 2022 and then we reaffirmed that or got tighter on it prior to JP Morgan. So we're going to stay consistent with that and not give any look for 2024 until then.

Speaker 2

You had another question, Vish?

Speaker 7

Yes. I had a question regarding the net pricing. So based on the information given in the press release and Carl, it seems that even for Q3, the guided price the net price that we're seeing is a little bit above the guided price. How do you see that settling over Q4?

Speaker 2

I think the best way to think about this and I realize We've been pretty dogmatic about this, our estimate of average net of $65,000 per patient per year. But I think I would hope that everyone can appreciate that we have slowly, sailed down closer and closer to that point. We don't give quarterly guidance, so not going to be much very helpful there. But I guess what I would encourage you to do is just look at the trend and then continue to trend it downward into the quarter. And we think as that settles out, it will be closer to an average of 65 net per patient per year.

Speaker 7

Got it. Thank you.

Operator

Our next question is from Olivia Breyer with Cantor Gerald, please proceed.

Speaker 8

Hey, good morning, guys. Thank you for the question. Wanted to drill down on PSF trends. It looks like there's a downward trend in October versus what you saw in August September. So how should we be thinking about patient start form growth over the next few months?

Speaker 8

And then I got a quick follow-up.

Speaker 2

Yes. Well, first thing I would just take it backwards a little bit on is it was encouraging to See the PSF work that we did in those summer months that we had not historically seen the 2 years before that. And then the trend in October was still higher than what we had seen in the same time period last year. So I guess what I would lead with is we're trying not to read too much into it. And recent numbers look encouraging is all I will leave you with.

Speaker 2

And we're talking somewhere around 5 to 10 PSF difference from what we saw in those summer months to what we saw in October. So I'd say there's a level of consistency See there and our hope would be as we get into now October, November, December, that we're going to see an increase in that trend. So

Speaker 8

No worries, Peter. Yes. And can you give us any color on or any more color on how the strategic review process is going? And Really, I guess my question is whether there have been any learnings or takeaways from the process since you began it back in June?

Speaker 2

As I'm sure you can appreciate, my hands are somewhat tied on what I can and can't say here. But so I'm going to stick to that outside of saying that We're working hard and we're taking it very serious and that's both at the management level and the Board level. We see this as a real opportunity Accelerate our strategy and to and keep an open mind in all directions, not that we've not historically done that, but this gives us a very focused way to do it. When we have more or something material to report, it's on our it's in our obviously our best interest to report that out and we'll make sure to do so. But outside of that, I can't give much more color.

Operator

Okay, great. Thank you.

Speaker 2

Thanks, Olivia.

Operator

Our next question is from Justin Kim with Oppenheimer and Company. Please proceed.

Speaker 5

Hi, good morning from ASN actually and And congrats on the progress and thanks for letting us ask the question. I just wanted to touch on That's a good question again. Have you kind of seen maybe more of a smoothening and avoiding of maybe that seasonality this summer? Just curious, do you have any color as to what might be driving that moving or whether there's A new level being reached here. Just any additional sort of color that maybe is more sort of patient and prescriber practice Dave, would be helpful.

Speaker 5

Thank you.

Speaker 2

Jess, I hope Philadelphia is going well for you. Our team is on the ground as well For ASN, we worked a lot of different angles and I think in the summer months and I give a lot give credit to the people who are driving this, which is our marketing and sales people out there doing their work on a day to day basis. I think the data around the extension study being published was quite helpful, the biopsy data quite helpful. We had a blitz of tactical execution during that time period. I think all points to potential levers.

Speaker 2

But I think as I think the base of your question and the one that we need to continue to prove out is that it's consistent and that it can pull forward And that we're going to start reaching new levels on PSF trends. It's important for the not just the near term execution, But more importantly, the long term, growth and how big the product can be in the future. So, Yes. Outside of a host of different tactics and the new data that we have to bring to bear in the market, those are the two things I would point to. And then I guess reinforce what your underlying question is, which is we need to continue to see us well, we need to see A new plateau start to be reached in terms of PSF performance, moving from that, let's call it, 4.50 or so PSFs per Quarter to 480, 505 100 and beyond.

Speaker 2

And we believe that this new data alongside of our push On talking about guidelines, impact to disease, treating the target are all parts of key components of unleashing that.

Speaker 4

Great. Thank

Operator

you. Our next question is from Ed Arce with H. C. Wainwright. Please proceed.

Speaker 9

Hey, Peter and Joe, congrats on a strong quarter and let me add my greetings as well from ASN. I wanted to ask you about the guidelines. And as you mentioned, some of the points from the EULAR guidelines, It seems really quite supportive of the kindness. So I wanted to ask as The guidelines from Codigo and AACR are forthcoming. How do you view these as important in driving awareness with physicians and growing scripts And growing strips more consistently.

Speaker 9

And would you expect these other two guidelines to be as supportive as you are? And I guess, along with that, would they include the 3 major studies that you mentioned as well as the DDI

Speaker 2

Well, I can't obviously, I can't predict where the guidelines are go will go, but I'm hopeful that they will be Somewhat in line with where Eulah is, which with emerging therapies and pipelines Starting to show productivity for many companies within our space today, you're going to have to address novel therapies and novel treatment approaches. And I think there'll be consistency, Although I can't think for that group as they do their work, but we're predicting that they'll address more aggressive use novel therapies. I guess just to rewind back, prior to the EULAR guidelines and new ones being published, when There was the old approach to Eular, Cadego and ACR. There are several things in there that reinforce Really important components for us. One is doing consistent diagnosis for SLE patients.

Speaker 2

We believe only about 50% of SLE patients have visited an office practice on any given day, Get a urine screen for lupus nephritis. The guidelines have always been consistent that every time an SLE patient visits The office and need to be screened. We see that as a huge driver potentially newly diagnosed or existing patients that aren't currently getting diagnosed. The second is treating to target and trying to reach certain proteinuria levels by 3 months And 6 months and a year target levels that we know today rheumatologists and nephrologists don't aggressively treat to. And aligned with our data, we're the only product that actually shows consistent performance at those levels aligned to the guidelines.

Speaker 2

So There is a lot of gems within the guidelines that if we can just get physicians treating more, I guess, more in a more Congruent fashion that we can actually see the market start to grow. Your last question of whether they'll incorporate the new data, Published data is usually what they look for, and the extension data has now been published. The AURORA study has been published. The biopsy is in poster form. We'll see when they actually publish these guidelines.

Speaker 2

We're working hard to get the biopsy study published too, but usually they Point at published data, not stuff that's been an abstract or poster. Sorry for the length of the question. Do you have or answer, do you have another question, Ed?

Speaker 10

No, that's it. Thank you.

Speaker 2

Thank you.

Operator

Our next question is from Sahil Figueres with RBC Capital Markets. Please proceed.

Speaker 11

Hi. This is Sahil for Dagmi. I have two questions. My first question is on the comment made in the prepared remarks that there were some higher discontinuation This quarter, so is it related to summer seasonality to a degree or is it more dependent on where the patients are on the for

Speaker 2

In a dynamic as you model it, think about it in a dynamic fashion. And during this quarter, we saw more patients who have seen Therapy for longer periods of time and, obviously, the discontinuation rate for patients who've been on drug for 12 months versus Patients who have been on drug for 9 months, if you see a higher average of them in a quarter, you're going to see higher discontinuation There's no that we can tell some rationale as to why it was more just a mix of the patients in the quarter. You have another question?

Speaker 11

Yes. Thank you for that response. And my second question is related to the prescribers. I know this was asked before, but if you could provide more color. I think in one of the earlier calls you had mentioned that 55% of the prescribers are not repeat prescribers.

Speaker 11

How has that trend

Speaker 2

The short answer is, We've seen improvement across the board and we see less patients than 55% now, a higher percentage who are prescribing More than having a higher dependence upon first time tries, initial tries. So As I said, the reason we haven't because we segment this data pretty we do a lot of quant on this. We haven't rolled that out primarily because we think we give a lot of data. And this one, I think, is important at least at this stage Keep a little closer to our best in terms of the competitive set that's out there. But I can tell you that whether it's depth of prescription and or total number of prescribers we've made meaningful movement on both fronts during the quarter.

Speaker 2

Thank you.

Operator

Our next question is from David Martin with Bloom Burton. Please proceed.

Speaker 10

Good morning. Thanks for taking my questions. The first one is a follow-up to the question Ed asked. Have you made any progress in getting the nephrotoxicity language changed on the U. S.

Speaker 10

Label based on the AURORA Extension on the biopsy data. And when the U. S. Guidelines are crafted, do you think they'll be affected by that language in the label or Or by the EULAR type language.

Speaker 2

Well, I can't predict where the agency is going to go, but I can reinforce To everyone on the call that we announced in June that we had submitted this data to the U. S. FDA. It was expected the extension data and the biopsy data as sub study and extension study were both expected from the agency. We're hopeful that this will be incorporated in a meaningful way into the U.

Speaker 2

S. The label here in the U. S, but we can't predict where the agency is And we've not heard back anything from the agency at this stage.

Speaker 10

And do you think the guidelines are swayed by the label that much or not?

Speaker 2

No, I think it's a published data.

Speaker 10

Okay. Second question, do the restarts require new

Speaker 2

Restarts require new PSFs? No.

Speaker 10

Okay. And last question, what pricing did you get in the European countries where you got the pricing?

Speaker 2

We can't speak specifically for every country and sort of it's Otsuka's domain. So I'm not sure how much of this they want to disclose. But I can't just give you the color that in terms of appropriate pricing as we see it in terms of reference pricing

Speaker 10

Okay, fair enough. Thank you.

Speaker 2

Thank you, David. It appears that that's all the questions we have for today. I want to thank you all for your time and we'll look forward to talking to you again next quarter. Thank you very much and have a great day.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

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Earnings Conference Call
Aurinia Pharmaceuticals Q3 2023
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