Aurinia Pharmaceuticals Inc

Today, ladies and gentlemen, welcome to Aurinia Pharmaceuticals' second quarter 2024 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, then zero on your telephone keypad. As a reminder, this conference is being recorded. I would like to turn the conference over to your host, Andrea Christopher, Head of Corporate Communications and Investor Relations for Aurinia Pharmaceuticals. Thank you. You may begin.

Andrea Christopher Thank you, Operator, and thank you to everyone for joining today's call and webcast. Joining me on the call this morning are Peter Greenleaf, Aurinia's Chief Executive Officer, Joe Miller, our Chief Financial Officer, and Dr. Greg Keenan, our Chief Medical Officer. Today, we will review and discuss Arrhenius' 2024 second quarter financial and operational results as communicated in the company's press release issued this morning. The company also filed its quarterly financial statements on Form 10-Q this morning. For more information, please refer to Arrhenius' filings with the U.S. Securities and Exchange Commission and Canadian Securities Authorities, which are also available on Arrhenius' website at arrheniapharma.com. During today's call, ARINIA 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 discussion of factors that could affect ARINIA's future financial results and business, please refer to the disclosures in ARINIA's press release, its quarterly report on Form 10-Q, and its 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, August 1st, 2024, unless otherwise noted, and are based upon information currently available to us. 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, Andrea, and good morning, everyone. I want to thank everybody for joining us on today's call. On this morning's call, we will focus on the company's second quarter performance. I'll then turn the call over to Dr. Greg Keenan, our Chief Medical Officer, to give an update on our medical work across the business, including the development of our pipeline asset, AUR 200. Greg will be followed by Joe Miller, our CFO, to provide additional details on our financial results and highlights. Now let me provide some details on our second quarter business metrics and how we're preparing for the rest of the year. With the continued focus on commercial execution and accelerating the company's operations towards cash flow positivity, we achieved a strong second quarter performance. For the second quarter of 2024, Arunia achieved $57.2 million in total net revenue. This is versus $41.5 million in revenue for the same period in 2023. representing growth of approximately 38%. Year-to-date total net revenue was $107.5 million for the six months ended June 30, 2024, as compared to $75.9 million for the same period in 2023, representing growth of approximately 42%. Net product revenue, consisting of Loop Kynas and Baclosporin product sales, was $55 million for the three months ended June 30th, 2024, and $41.1 million for the same period in 2023. This represents growth of approximately 34%. Net product revenue is $103.1 million for the six months ended June 30th, 2024, and $75.4 million for the same period in 2023, representing growth of approximately 37%. We also achieved approximately $15.8 million in positive free cash flow in the second quarter ahead of our initial projections, which further strengthens our financial position and provides more flexibility to engage in business building activities for the future. The company had cash, cash equivalents, and restricted cash and investments of $330.7 million as of June 30th, 2024. In terms of commercial performance metrics, we added 428 patient start forms and approximately 127 new patients who are either restarting loop kinase or receiving it through a hospital pharmacy. Together, these total approximately 555 PSFs in combination with restarts and hospital fills. As compared to 451 PSFs in the prior year second quarter, representing substantial year-over-year growth. We also achieved 22% growth in total patients on loop kinase therapy, with approximately 2,336 patients on therapy as of June 30, 2024, as compared to 1,911 patients as of June 30, 2023. This significant year-over-year growth was driven by increased new starts. patients restarting loop kindness after being off therapy for an extended period of time, our hospital fills, and improving persistency rates year over year. From April 1st, 2024 through July 31st, 2024, we added approximately 538 PSFs and approximately 155 new patients from restarts in the hospital channels. We continued to sustain a high conversion rate in the quarter with approximately 85% of PSFs converting to patients on therapy. We also sustained a rapid conversion time with approximately 60% of patients starting therapy within 20 days. Our overall adherence rate remained high at 88% through the second quarter, and we continued to achieve strong persistency with approximately 56% of patients remaining on therapy at 12 months. Additionally, in the second quarter, 51% and 46% of patients remained on therapy at 15 and 18 months, respectively. So, in summary, we believe our second quarter accomplishments reflect solid execution against our previously announced business priorities. Based on this, we're narrowing our full-year net product revenue guidance range to a range of $210 to $220 million, from the previously established guidance range of $200 to $220 million. Looking forward to the second half of the year, we have several innovative commercial initiatives planned, as well as some upcoming key milestones. Importantly, as one example of these initiatives, Zirinia is launching a new marketing campaign that reinforces the company's commercial strategy to accelerate market growth by encouraging rheumatologists to prescribe loop kinase and do it earlier in the lupus nephritis treatment paradigm and to maintain that therapy for at least three years in accordance with current treatment guidelines. This innovative and eye-catching campaign highlights the importance of prescribing loop kinase as part of the foundation therapy to treat lupus nephritis from the start to reduce the risk of irreversible kidney damage caused by proteinuria. Our commercial activities outside the U.S. continue to grow. Atsuka's launch efforts in Europe are generating meaningful collaboration revenues, and we are also working diligently with Atsuka to seek approval for lupkinus in Japan. Recall that Otsuka filed a JNDA with the Japanese regulatory authorities in November of 2023 for the hopeful approval of Loopkinus to treat adults with lupus nephritis, and we anticipate a response in the second half of this year on that filing. Upon approval, we expect to receive a milestone payment from Otsuka for $10 million as well as low double-digit royalties on net sales once Loopkinus is launched in Japan. In terms of our pipeline, we're excited to let you know that we continue to progress AUR 200 into the clinic. Importantly, we anticipate funding the development of AUR 200 with available cash flow that will not impact previously announced post-restructuring operating expense targets. And as a reminder, we expect to recognize $50 to $55 million in annual cost savings following the restructuring. with approximately 75% of that that will be recognized in 2024. So with that, I'd now like to turn the call over to Dr. Greg Keenan, our Chief Medical Officer, for a more in-depth discussion on our medical affairs strategy and greater detail on our near-term AUR 200 development strategy. Greg will be followed by Joe Miller, our CFO, for a more detailed review of our financial results. Of course, I'll then return you to the end of the call for a quick recap and then to open up the mic in order to have you ask your questions. So with that, let me turn it over to Dr. Keenan. Greg?