Aurinia Pharmaceuticals Inc

Greetings. Welcome to Orinia 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. 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, Jamie Harrell, Investor Relations for Arrania Pharmaceuticals. Thank you. You may begin.

Thank you, operator, and thank you to everyone for joining today's call and webcast to review and discuss Arrania's third quarter and nine-month 2023 financial and operational results. Joining me on the call this morning are Peter Greenleaf, Chief Executive Officer, and Joe Miller, our Chief Financial Officer. This morning, Arrania issued a press release announcing its financial results and operational highlights for the third quarter and nine months that ended September 30th, 2023. In addition, the company filed its quarterly financial statements on Form 10-Q. For more information, please refer to Arrania's filings with the U.S. Securities and Exchange Commission, which are also available on Arrania's website at arraniapharma.com. During today's call, Arrania 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 Arrania's future financial results in business, Please refer to the disclosures in Arrhenius' press release and his quarterly report on Form 10-Q, along with Arrhenius' annual report on Form 10-K, and all of its 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, Thursday, November 2, 2023, unless otherwise noted, and are based upon information currently available to us at this time. Except as required by law, ARINIA assumes no obligation to update any such statements. Now, let me turn the call over to ARINIA's President and CEO, Peter Greenleaf. Peter?

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 third quarter and year-to-date performance. We'll discuss key metrics and significant commercial highlights for Lucanus. We'll then provide an update on our progress outside the U.S. and close with a brief update on R&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 three months and year to date with Loop Kindness both domestically and abroad. Highlighting the third quarter, we achieved $40.8 million in Loop Kindness net product revenue, which represents an increase of 60% versus the prior year's third quarter. 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 Loop Kindness net product revenue through the end of the third quarter to $116.2 million. This represents an increase of 55% versus the same time prior year. As a result of our strong third quarter, we're narrowing our net product revenue guidance for 2023 from $150 to $160 million to $155 to $160 million. Additionally, in the quarter, we recognized a $10 million XUS milestone from our collaboration partner, Otsuka Pharmaceuticals. for securing the pricing and reimbursement approval in Europe. This, plus royalties from ex-US sales, brings our total revenue for the third quarter to $54.5 million. Leading the company's key commercial metrics for the quarter, patient start forms remain strong throughout the period, with 436 PSFs in the quarter. This represents a growth of 17% over the prior year's third quarter. 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 1,510 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, Irini Alliance. Once we get a patient onto therapy, equally important is how long they stay on therapy. As we know, their underlying disease is a continuous inflammatory process requiring maintenance therapy. 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 1,939 patients currently on therapy as of September 30th, 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 Leukinus since launch. As stated on previous calls, our business plan is focused on activating three main levers in the growth of Leukinus, and the 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 lupkinus and position it as part of the foundation therapy in the treatment of LN. 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 and our pivotal results, the Aurora II extension study demonstrating long-term safety and efficacy, and the biopsy sub-study depicting tissue-level evidence of no nephrotoxicity associated with leukinus, 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 to goal and reinforcing the guidelines on rapid and sustained reductions of proteinuria to preserve the kidney, the patient's kidney function. Over the third quarter, we maintained our call activity on high decile targets. driving home the message of treatment urgency, goals of therapy, and the benefits of loop kindness in helping physicians meet their ultimate goal of kidney preservation. In the quarter, we increased the depth of prescribing in our current base of customers, as well as expanded the total number of new prescribers. Additionally, we're starting to see patients come back to therapy as restarts. We have begun to examine this phenomenon, and we believe it is a good indicator for the brand. One, because physicians are comfortable with Leukinus, and two, if they're restarting therapy, they must have had a good experience with Leukinus during their first exposure to therapy. We believe this bodes well for further growing the brand with a somewhat unique segment of patients. 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 ULAR. The ULAR 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 three years. Let me go into a little bit more detail regarding the recently published ULAR guidelines and their advancement for the treatment approach to LN. At a high level, four key areas benefit Leukinus. 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 to treatment, is essential to preventing flares and organ damage. as well as improving prognosis and enhancing patient's 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 first years of disease and thereafter. The third is that the committee recognized a need for a treatment paradigm shift that moved Leukinus up in the line of therapy. Quote, unquote, with the breakthrough of Leukinus, a novel CNI for LN, consider shifting an induction maintenance regimen to early use of combination therapies. And lastly, long-term treatment. Following renal response with Leukinus, Treatment of LN should continue for at least three years based upon the long-term Aurora Extension Study, leading that reported stable EGFR throughout the three years of data. We believe these guidelines actively support our strategic approach to the management of LN and how to use loop kinase in the physician's treatment regimen. Our second focus is educating patients on the appropriate seriousness of their condition and to advocate for themselves. We need them to ensure that they are getting screened for kidney involvement with their lupus 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. To date, her message has reached over 750 million media impressions and tens of thousands of SLE and lupus nepritis patients. Our third strategy is directed towards clinically differentiating lupkinus from substandard therapies and working to establish lupkinus as a foundational therapy for all LN patients. The company recently announced the launch of the Aurora II extension data for lupkinus. 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 Leukinus. In addition, our ongoing medical affairs initiatives are focused on evolving the treatment approach for LN and educating healthcare professionals about Leukinus. 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 ULAR guidelines, as well as the upcoming CADIGO and ACR guidelines that are continued under development. Throughout the third quarter, 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 two 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 being presented. Now moving on to our globalization efforts for lupkinis. 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. In the third quarter, we recognized a $10 million milestone from Otsuka for securing pricing and reimbursement approval in three of the five 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 Lubekinus. Our work with Atsuka 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 2024, we would be eligible for an additional $10 million milestone around the approval in Japan, along with low double-digit royalties on net sales once launched. Now let me close with our R&D activity. 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 pediatrics study also remains ongoing. As for our pipeline, we remain on track to file an IND for AUR200, our 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 AUR300, our novel peptide therapeutic that modulates M2 macrophages via this anti-CD206 receptor, 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 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 of reviewing strategic options for the company, which include a variety of possibilities, ranging from a potential sale, a merger, or other strategic transaction. We have no further updates on the matter, other than that the process is actively ongoing. We remain committed to running a fulsome process that reflects the best interests 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 to open up the line for any questions that you might have. Joe?