ChemoCentryx, Inc.

Good afternoon and welcome to the Chemocentric's third quarter 2021 financial results conference call. At this time, all participants are in a listen-only mode. Later on, we will conduct a question and answer session. As a reminder, this conference call will be recorded. I'll now turn the call over to Lee Roth of Burns MacLellan. Mr. Roth, please go ahead.

Thanks, Jesse. Good afternoon and welcome to the Chemocentrics third quarter 2021 financial results conference call. Earlier this afternoon, the company issued a press release providing an overview of its financial results for the quarter ended September 30th, 2021. This release, along with a few slides that you may find helpful while you listen to the call, are available on the investor relations section of the company's website at chemocentrics.com. Joining us on the call today is Dr. Thomas Schall, President and Chief Executive Officer of Chemocentrics. who will review the company's recent business and clinical progress. Following his comments, Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer of ChemoCentrics, will provide an overview of the company's financial highlights for the quarter before turning the call back to Tom for closing remarks. During today's call, we'll be making certain forward-looking statements. As explained on slide two, these forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties It may cause our actual results to differ materially from those contained in the forward-looking statements. These risks are described in the company's filings made with the Securities and Exchange Commission, including our annual report on Form 10-K filed on March 1st, 2021, and our quarterly report on Form 10-Q for the quarter ended September 30th, 2021. We were cautioned not to place any undue reliance on these forward-looking statements, and ChemoCentrics disclaims any obligation to update such statements. In addition, this call contains time-sensitive information Accurate only as of the date of this live broadcast, November 9th, 2021. Chemocentrics undertakes no obligation to revise or otherwise update any forward-looking statements to reflect events or circumstances after the date of this live call. With that said, it's my pleasure to turn the call over to Tom Schall. Tom?

Thank you, Lee, and good afternoon to everyone listening. Thank you for joining us on our third quarter 2021 conference call. Please, let's move to slide three in our presentation. I have talked in the past of our corporate journey as a voyage into uncharted waters, full of uncertainty, sometimes tempestuous storms, and occasionally pushed by fair, strong winds of progress. Now, for the first time in our history, we have arrived at the shore of a new world, a new era for the company, and I believe for the patients whom we've always have aimed to serve. Following FDA approval in Anka vasculitis on October 7th, our innovative medicine Tavneos, the brand name for Avocopan, our small molecule selective inhibitor of the complement C5A receptor is now available across the United States. In retrospect, the Tavneos Odyssey seems hard to imagine. From concepts to compound to clinical development, commercial launch over the past 16 long years. But the voyage was worth it. Tavneos is the first FDA approval in ankylobasculitis in a decade. And with the approval of Tavneos, we achieve our vision of helping to improve patients' lives and becoming an integrated biopharmaceutical company with discovery development, and U.S. commercial capabilities. A remarkable journey indeed. Today, I will share a little bit more about the launch of Tavneos, which I and others hope may represent part of a new era for ankylovasculitis patients. We also aspire to make last month's FDA approval just the beginning of more contributions that Tavneos may make to patients with rare diseases and who have currently inadequate treatment options. I'll update you today on what comes next, where we stand with some of our development programs. And it bears repeating that all of this is based on our unique proprietary discovery platform, capitalizing on our core scientific expertise in targeting specific chemoattractant receptors to block inflammatory responses that lie at the heart of so many diseases and recently also applied to the activation of the immune system in cancer therapy using a true orally active small molecule inhibitor of the major immune checkpoint pathway. Let's begin by turning to slide four where you will see the indication very recently approved by the FDA. Stamniosis indicated as an adjunctive treatment for adult patients with severe active antineutrophil cytoplasmic autoantibody-associated vasculitis, also known as ankylovasculitis or ankyloassociated vasculitis, specifically granulomatosis with polyangiitis or GPA and microscopic polyangiitis or MPA, the two main forms of ankylovasculitis. It is given in combination with other standard therapies, and dosed at 30 mgs, 3 10-mg capsules twice daily with food. This is a strong label, and we are pleased with it. As you can see from slide 5, we estimate that in the United States, approximately 9,500 patients squarely fit the profile outlined in the label, these patients being quite similar to the advocate clinical trial population. Observers have also noted that with Tavneos, there is no so-called infusion confusion. Patients simply take their pills with food. Following approval on October 7th, our commercial and medical affairs teams sprang into action and executed on their many careful preparations, finalizing package inserts, training and certifying the field force, and so on. We received the FDA approval on a Thursday took approximately one week to get everything in place, and then launched on Monday, October 18th. And while we are gazing to the stars in our aspirations and our expectations for what we believe can be a blockbuster drug in this indication of ankylovasculitis alone, we also have our feet firmly on the ground as we look upward and forward. We all know that too many launches during this pandemic have not quite lived up to their expectations. COVID has complicated many plans for launches across the industry. To add to the complexity in the case of Tavneos is the fact that it is a specialty medication. So, turning to slide six, we are not naive as to the facts. We are launching into a world in which there is considerable uncertainty and in which face-to-face interactions, whether they take place between patients and their clinicians or between our field force and physicians, are constrained by a pandemic. Against this pandemic-generated new world disorder, we have endeavored to arm ourselves with a comprehensive plan and the right tools to execute on that plan. We are emphasizing quality in everything associated with our commercial execution, knowing that a firm foundation is essential to build the structure that brings this new medicine to as many appropriate ankylovasculitis patients and as quickly as we possibly can. You can see three major channels of action as we deploy what is now a fully trained field force with deep experience in nephrology in rheumatology, and in rare diseases. Our field sales force is now educating and detailing physicians following their unbranded disease education interactions and appropriate scientific exchanges that our medical science liaisons had with their clinicians. Our field force, including the MSLs, will focus on approximately 3,400 physicians comprising key opinion leaders, top prescribers, and community specialists who are responsible for roughly 80% of all prescriptions in ANCA-associated vasculitis. In the middle box on slide six, Tabneos Connect is a tool custom-built by us to focus on helping the appropriate patients receive Tabneos with as little effort and as little consternation as possible as we provide practical and, if necessary, financial or to help patients initiate their treatment with Tavneos. We know that it takes one or two months to go through the prior authorization process when a new medication is now covered by medical policy. Tavneos Connect allows us to partner with patients as they work with payers to obtain the necessary approval. We will also work with payers on patient access with the goal of securing appropriate coverage of Tavneos in their medical policies. Following the pre-approval clinical information exchanges that our national account team held with payers, which created a lot of interest, we are now engaged in post-approval clinical presentations and supporting information with the goal of securing appropriate coverage in medical policies. To be clear, our rollout in the early quarters will be focused on patient access. It is obviously far too soon after launch to provide much detail on how it is going. You can expect more on our Q4 call. But so far, we are pleased with the rollout of our plan, the functioning of our customized tools, and the interactions to date across the key stakeholders. Turning to slide seven. The most meaningful way to measure our progress for these first few quarters is not the revenue line, but instead by tracking three key metrics. One, patient start forms, which for a specialty drug is a lead metric that we will use as a proxy for prescriptions. Two, patients on drug. This lags patient start forms because of the time it takes before payers set their medical policies and load them onto their IT system. And finally, three, we'll be watching the conversion rate from patient start forms to patients on drug. In short, again, our initial focus will be firmly on patient access. From this, in our view, eventually all other metrics will follow. Kavneos was also approved in Japan at the end of the third quarter. triggering a milestone payment of $20 million to us from our partner, VIFOR Pharma. VIFOR will also pay us royalties in the teens to the mid-20s percent on potential ex-U.S. sales off one aggregate net sales line. Slide 8 shows the next steps for Tavneos. In Europe, the Committee for Medicinal Products for Human Use, the so-called CHMP, is meeting over the next few days. We expect the CHMP at this meeting to make a recommendation, i.e., render an opinion to the European Union as to whether Tavneos is suitable for use in ANCA-associated vasculitis. The EU, in turn, makes the official decision on the marketing authorization application based on that CHMP opinion. We expect the official EU action in January. So where do we go from here? Now that we have received approval for tabneos in ache of vasculitis, we are refocusing our attention on other indications. As you can see, we are hoping to turn tabneos into a pipeline and a drug with a further three indications in or about to enter clinical development. For example, in the debilitating skin disease, hydranitis superativa, or HS, please see slide 9, we plan to discuss with the FDA a pivotal phase 3 trial of Tobneus in patients with severe HS, the so-called early stage 3 of the disease. As you may recall, the dosage and that patient population were defined in our phase 2 Aurora trial in hydranitis superativa. We currently envision three to 400 patients for the next trial across two arms using the hydranitis superativa clinical response score or high score as the primary endpoint at 12 weeks with an open-label follow-up period. Pending regulatory input, we hope to launch this trial in the first part of 2022. With an estimated 30 to 50,000 patients in the U.S., early stage III disease could become another blockbuster indication for tabneos, and we have filed for orphan drug designation. Turning to slide 10, we also plan to meet with the FDA to discuss the data from our accolade phase 2 clinical trial of tabneos in the very rare kidney disease of C3 glomerulopathy. We note there are no FDA-approved therapies for this year's rare yet devastating kidney disease. The Accolade trial is a randomized control blinded trial testing tap neosis effects on kidney health in C3G using readouts including histology, that is, renal biopsy, and traditional biomarkers. Although the trial did not meet its primary endpoint in terms of a change in the C3G histologic index of disease activity, a measure of acute glomerular inflammation at six months, there was a significant improvement in the pre-specified secondary endpoint of the C3G histologic index of disease chronicity, which is a measure of kidney fibrosis or scarring. As you can see from this graphic, not only did patients on tabios have less fibrotic progression than the placebo group, during the first six months or 26 weeks of the trial, but also patients on placebo who had greater fibrosis during that first six months, when they crossed over to top nails during the second six months of the trial, reversed the scarring trend and showed a significant slowing of fibrosis as indicated by the biopsies taken at week 52. An e-poster was accepted on these data as a late-breaking entry at the American Society of Nephrology's annual kidney week, which just took place last week. Furthermore, as you can see from slide 11, Tavneos treatment in C3G led to an improvement in kidney function as assessed by biomarkers, including a reduction in proteinuria and, perhaps most importantly, an improvement in estimated glomerular filtration rate, or EGFR, as opposed to a deterioration in these markers in patients in the control arm. We note again that a similar result in EGFR improvement was observed in the advocate trial of dominoes in ache of vasculitis. And EGFR is widely regarded by nephrologists as a comprehensive way to measure overall kidney function. I'll note here, too, that EGFR has important implications in terms of the third potential indication for tabneus, lupus nephritis, or LN, a disease in which uncontrolled complement activation has been implicated in kidney destruction. Overall, we and others believe that kidney improvements seen in both ankylovasculitis and C3 glomerulopathy may bode well for our plans with tabneus in LN. To this point, at the ASN's kidney week last week, an abstract was presented with the following conclusion, quoting, C5A activation-induced macrophage secretion of factors that are known to drive inflammation, fibroblast activation, and tissue fibrosis may contribute to LN disease progression, inhibiting C5A receptor activity with avocopan, now tabneos, blocks these pathological changes and may provide therapeutic benefit to LN patients, ending quote. In brief, as I mentioned, uncontrolled complement activation has been implicated in the profound kidney destruction in LN, and the disease is poorly controlled with broad immunosuppression. So the targeted novel anti-inflammatory mechanism of tabneosis could prove to be an important differentiator in therapy for lupus nephritis. Our timing for launching clinical development is now the first half of this coming year, 2022, and we plan a two-step process, first to demonstrate the early effects of Avacopan-Tavneos in a focused patient group, and then expanding to a population of the scope, size, and length to provide a definitive finding regarding Tavneos' potential in this underserved indication. With an estimated prevalence of 65 to 100,000 patients in the United States, lupus nephritis is yet another orphan disease target for topneos. Moving beyond the topneos pipeline in a drug program, let me remind you of other important assets in our pipeline. Today I'll update you on just one, our small molecule immune checkpoint inhibitor CCX559, which is referred to on slide 12. In Q3, we launched first in human studies of our potent PD-L1, PD-1 pathway inhibitor, CCX559, following promising preclinical anti-tumor efficacy data using this molecule, and as reported at the meeting of the American Association for Cancer Research earlier this year. We initiated the design outlined on slide 13 and have already moved now through several dosing levels in cancer patients. We can confirm that the drug does get absorbed at levels that are approximately just proportional and that has been well tolerated to date as summarized on slide 14. We are very pleased with the progress of CCX559 to date. which we believe to be the best-in-class, orally-administered PD-L1, PD-1 pathway inhibitor, and by some appreciable measure as that. We look forward to report more full data at upcoming oncology meetings and on these quarterly calls. Before turning the call over to Susan, let me summarize in three points. One, COVNIOS has been launched. and launched in the middle of a pandemic. Revenue will be a somewhat trailing indicator. We should focus on patient access and engagement in the first year or so of launch. But the long-term potential we see is we're a blockbuster in this indication of ANCA-associated vasculitis alone. Two, we have moved forward on three additional indications for tibias. Two of these, Hydronitis superativa and lupus nephritis will involve clinical trials. On the third, C3 glomerulopathy, we plan to meet with the FDA to discuss the clinical data today and the potential pathway to registration in this ultra-rare disease. Three, we have launched a phase one trial of our first small molecule checkpoint inhibitor and progress is proceeding well to date. And as you will hear in a moment, financial situation is healthy. Susan.

Thank you, Tom. Our third quarter 2021 financial results were included in our press release today and are summarized on slide 15. Revenue was $17.7 million for the third quarter of 2021 compared to $5.1 million for the same period last year. The increase in revenue from 2020 to 2021 was attributable to the 20 million milestone from B4 Pharma for the September 2021 Japanese NDA approval for Tabneos in the treatment of patients with microscopic polyangiitis, or MPA, and granulomatosis with polyangiitis, or GPA. Research and development expenses were 20 million for the third quarter of 2021, compared to 18.6 million in the same period in 2020. This increase was primarily attributable to the manufacture of commercial drug supply in anticipation of the launch of TAVNEOS in the treatment of ankylovasculitis and higher phase one related expenses associated with the development of CCX559, our orally available small molecule checkpoint inhibitor. These increases were partially offset by lower Phase 2 related expenses due to the completion of the TABNEOS Aurora Phase 2B clinical trial in patients with HS. General and administrative expenses were $19.6 million for the third quarter of 2021 compared to $10.4 million for the same period last year. This increase was driven by higher employee-related expenses, including those associated with our TABNEOS launch readiness efforts, and higher professional fees. Net loss for the third quarter of 2021 was $22.3 million compared to $24.1 million for the same period last year. Total shares outstanding at September 30, 2021 were approximately 69.9 million shares. Lastly, we closed the third quarter of 2021 with approximately $372 million in cash, cash equivalents, and investments. We expect to close the year with cash and investments in excess of $360 million. Tom?

Thank you, Susan. To summarize where we stand, as you can see from slide 16, Tobneos is available in the United States as an adjunctive treatment in ANCA-associated vasculitis, and our initial focus is firmly on getting this drug to patients via focused patient access program. Tavneos is also approved in Japan, and a decision on Tavneos is expected soon in Europe. Beyond ANCA, we plan to make Tavneos a pipeline in a drug with potential additional indications in hydranitis suppurativa, C3 glomerulopathy, and lupus nephritis. And perhaps most important of all, we have just begun to realize the potential of our unique discovery platform symbolized by the entry into clinical development in Q3 of our first small molecule immune checkpoint inhibitor as a novel cancer therapeutic. I will now turn the call over to the operator for your questions. Operator?

Participants, we will now begin the question and answer session. To ask a question over the phone, you may press the star key followed by the number one from your telephone keypads. To withdraw your request, you may press the pound key. Again, that's star one to ask a question or the pound key to withdraw your request. As another reminder, we ask that participants limit themselves to one question per turn. Speakers, our first question is from Steve Seedhouse of Raymond James. Your line's now open.

Good afternoon. Thanks so much for taking my questions. I was hoping you could just share the number of patient start forms that have been received in the US. I'm also curious if you could comment on the launch in Japan. And then, if I may, I was hoping you could just clarify how the economics are divided Given your agreement with V4 in C3G, HS, and even lupus nephritis, which territories are yours and which indications are yours versus V4? Thank you.

Thank you, Steve. Too early to share numbers on start forms, I'm afraid. As you know, it's been literally days since we launched the drug, so if you'll excuse me for deferring that to our next call. But I think we're reasonably pleased with how things are going. People are on drugs. Things are rolling along nicely and executing according to plan. In Japan, as far as I can tell, there are still pricing negotiations going on. Japan has a calendar for that, so it's not entirely clear to me when that will be concluded, but sometime early in 2022, I presume. And we'll keep you posted on that. As to the alliance, our arrangement with VIFOR is essentially a kidney health alliance. The alliance has in it three kidney indications defined in the contract, one of which is anchoressiated vasculitis, one of which is C3 glomerulopathy, and the third one is still yet to be declared, although it could very well become lupus nephritis. Hydronitis superativa is its own beast. And should we be successful in our phase three clinical studies, which we intend to perform as a global study, we'll have to work out how that will be marketed abroad. And there may well be discussions with V4 on that aspect. But there would be special economics that they would have to invest in order to get into that program and share in the marketing. So again, more on that as we get closer to the eventual marketing of that drug. But it is a kidney-focused alliance with three indications in that alliance with BIFOR. And in those indications, the economics are all that meet. As I mentioned in ANCA-associated vasculitis, we have one top-line aggregate sales number for all of the territories that BIFOR or, indeed, any of their sub-licensees market in. From that one aggregate ex-U.S. sales number, we pull down our royalty rate which ranges from the teens to the mid-20s based on tiers. And that's how the deal is set up. For the other two indications, we have similar economics that are pre-negotiated that we haven't yet discussed, but they're also very good economics.

Terrific. Thanks so much.

Thank you.

Next question is from Dagan Ha of Stiefel. Your line's now open.

Great. Good afternoon. Thanks for taking our questions. I'll stick with one question. So when we think about the blockbuster opportunity that you mentioned, Tom, is that within the first approval indication, the 9,500 or the broader patient population? And I guess if you can kind of go into the strategies, I know some physicians' responses have been more towards as long as they get some real-world experience, they feel comfortable broadening their use in their respective practices. But are there studies that you have planned that you plan on initiating addressing those patient populations, or what would be your strategic alternative? Thank you.

Yes. Well, thank you. That's a great question. So, you know, as I said, the label – and we showed you the label – talks about severe active disease and associated vascularized for use as adjunctive therapy in adult patients. And that 9,500 number fits very squarely into that description based on our market analyses. That really is severe incidence in major relapsing population. There's additionally 10,000 patients that have active disease. And the severity is actually evaluated in terms of physician discretion. As we do research with those physicians, you know, you get various descriptions of severe disease. Of course, there are some guidelines. The ACR and CADIGO guidelines talk about organ or life-threatening disease. But again, how physicians define organ-threatening is frequently characteristic of that individual patient and their natural history of their disease. But even if one limits themselves just to the 9,500 patient population, And if one gets a reasonable penetration of that patient population, just that core group, you know, as you know, at our normal orphan price that we've determined for the drug, one gets quite close to the blockbuster level in the United States alone at peak. So I think any way we look at it, we feel very optimistic that the drug has blockbuster potential in the U.S. alone and ankylobasculitis alone. And if we add in the revenue opportunities that we'll take down from our rest of the world royalties, I think we have very little doubt about its blockbuster potential. We will have other studies ongoing, and we'll talk about those other studies at some point in the future about how we expand appropriately the use of Avotopneos and other folks with egg-associated vasculitis under one circumstance.

Sounds great. Look forward to it. Thank you. Thank you.

Next question is from Michelle Gilson of Canaccord. Your line's now open.

Hi. Thank you guys so much for taking my questions, and congratulations on getting the drug launched. You know, now you have MSLs and sales reps out in the field. You know, what are the common questions that they're getting from physicians? And, you know, what... I guess, education efforts or barriers do you think, you know, you need to sort of help with on the education side to get physicians to write that first script? And then just, I know, I think Steve asked earlier about start forms, but can you just confirm if you've seen any start forms come in and, you know, if any of them have been converted yet?

Yes, I can say, let's start with the back part of the question. We have had start forms come in, yes. We have had conversions, yes. We have patients on drug, yes. And yes, we have all those good things happening. But literally, we're days out. So I don't want to overextend too much what we know so far. But the answer is a resounding yes to all of those. So that's a good thing, I think, for all of us. What are we seeing in the field with MSLs and tax sales reps from physicians? You know, where, again, COVID is hampering so many things because we know there are many physicians that have told us, and there are patients that have told us, that upon approval of the drug, they want to explore how quickly can they get on it, how quickly can they get access. And yet there's the pragmatic restraint of meeting face-to-face either at the clinic, outside their scheduled visit, getting another visit that's not scheduled. There's certainly a COVID influence, and we're not unique in that, obviously. So physicians have asked, is there any other way that they might accelerate access to the drug? But, of course, at the same time, they say, well, I've got folks scheduled coming in a month, two months, three months. I'm going to wait to see them. So that's one thing we hear a lot of. Patient identification has been a theme. They like to know, tell us a little bit more about glucocorticoids. And really, it actually is not very complicated. When they see the label, they say, well, I didn't expect glucocorticoids to be eliminated. Of course not. I have to use glucocorticoids. If I'm giving rituximab as background therapy, for example. So we understand from your trial design, chemocentrics, that you did not eliminate the use of glucocorticoids. We also understand that people sometimes get worked up with a bolus of IV glucocorticoids when they come in in crisis. And in fact, maybe even haven't yet been definitively diagnosed. So we totally get that. But remind us how you tapered those sources. in your clinical study. So we're doing a lot of education around that. We get questions about, you know, I've got subjects or a patient that's been on 20 mg of prednisone for three years. And your study, you know, what did you do with those patients? Did you have examples of those? So we're going through that and, again, reminding them that in our trial, yes, we did taper those incidental sources of glucocorticoid exposure, the so-called spillover glucocorticoid, from pre-randomization exposure, and they had to be tapered down to 20 mg at the time of the start of the trial and get down from those spillover prednisone to zero by week four. We remind them that we eliminated in the trial the need for the scheduled daily oral prednisone, and we remind the physicians in so doing, we got rid of about two and a half grams of prednisone, which is about 86% of the median overall exposure from glucocorticoids from all sources in the therapy of these patients over the course of that, essentially the first six months, but certainly over the first year of the trial. So those are the kinds of questions we're getting. We're getting questions about access to the hub system and so on, all of those sort of logistics questions that you would expect to get. We do get questions about severe active. That's more a discussion point with most of the physicians that we've talked to because They say to us, look, this is a very severe disease. If I'm seeing these patients regularly, they have active disease, they have severe disease if they're showing detriment to kidney function. By definition, that kidney is under threat. So they're not really, they don't have too much question about severe active, which is interesting. They, too, talk about duration of dosing. And, you know, what we tell them is we've studied the drug for 12 months, and so we have really good control data at 12 months, and that's what we're talking about in terms of the largest data set. They ask about longer-term dosing, and if anything has been published, yes, there are case studies that have been published, and those can be referenced if they wish to. So, yeah, those are the kind of questions we're getting, and so overall it's been a very productive exchange. and kind of questions that we predicted we would get from the healthcare practitioners.

Okay. And if I can just squeeze in a follow-up here, you know, you mentioned that you are seeing stark forms. You have patients on drug. And, you know, are there any patterns in either patient characteristics or, you know, is it that target prescriber population that you've talked about in the past? Is there any color you can give us about either the patients or the prescribers that would help us to get a sense of who the early adopters are?

Yeah, it's a great question. You know, obviously, it's still really early, Michelle, and you know you're a very good scientist, scientifically trained. I hesitate to make too many trend determinations from fairly small end and early data. You know, overall, we're seeing about 50-50 rooms and nests right now. And so that's interesting, but it's not really a surprise to us. So that's, I think that that's pretty much how far I'll go with that one for the moment. But we hope to have a lot richer data set for you to comb through in the not too distant future.

Okay. Thank you so much for taking my questions.

Thank you.

Next question is from Joseph Schwartz of SVB Lee Rink. Your line is now open.

Hi, thanks very much. I was wondering if you could walk us through what you plan to propose to the FDA for C3G, and do you have a meeting date scheduled yet that you can share with us?

Yeah, I won't share a meeting date yet, Joseph. Thank you. But here's what we would love to talk with them about. We ran what has been, and I think still is, the largest randomized blind and controlled trial in C3G ever. Now, I know there's other phase three trials that are enrolling now that aspire to have, I think, upwards of 90 people. We ultimately enrolled, I think, 53. It took quite some years to get that data, as you know. Importantly, we have a very rich and deep data set. It has renal histology with renal biopsies at baseline at month six and at month 12. In most cases, not in all cases, but in We have a very rich data set. We have proteinuria, and we have EGFR. Now, at the time that we set up this trial, there had never been an example of an agent that changed EGFR and differentiated it from background medication, placebo medication, over the course of six or even 12 months. So we, although we pre-specified EGFR as one of our secondary endpoints, Certainly, the lore at the time, and maybe still, is it takes a long time for EGFR to change. During the course of the Accolade study, we got the ANCA-associated vasculitis result with Tobneos that showed that EGFR improved and separated by month six from the background med arm, the prednisone arm, in the case of ANCA vasculitis. And that difference was significant. or at least the lower end of the confidence interval did not cross zero. So it was really a good example that with this mechanism of action in another kidney disease, with some similarities to lupus nephritis, that EGFR could improve and separate, in fact, from the other medication in a controlled study. That happened as well. in C3G, even though the numbers, the N was much smaller, we had a significant difference at LUN6 between the tabneostating group and the control group. And that was a really important finding, I think, because after all, what are we striving to do in C3G? We're trying to, at minimum, stabilize kidney function. The EGFR improvements just were actually increasing filtration efficiencies. So something really important is happening there potentially. It was preceded by an overall reduction in proteinuria, another important sign of kidney function at the biomarker level. Many nephrologists will say that a rapid decline in proteinuria is the biggest beneficial prognosticator of eventual EGFR stabilization or at least slowing of decline. So that hangs together in the study. And then we have this really important and interesting biopsy finding with the C3 glomerulopathy histology index, which has two different ways of looking at it. The so-called activity index of disease or disease activity index, which was developed more to look at acute and ongoing inflammation in and around the glomerulus. And the C3G histology index of disease chronicity, which is a way of looking more at fibrotic indices, the progression of scarring in and around the glomeruli. The activity index didn't show a significant difference. Numerically, it was lower with tabneos. There was a lot of variation at baseline in especially the placebo group. And so that foiled the statistics on that measure. And, well, I would say, but the chronicity index was significantly different. It was better with Evacopan statistically during that first six-month period. And as I described in the slides today, even when we crossed over the placebo group and took their sequential read at week 52, all of those reads were done blinded as treatment conditions, by the way. They seemed to slow considerably in the fibrotic progression. So it looks like there's some very interesting signal there. All those signals seem to hang together. So we would like to ask the FDA, what do you think of these data? And this is a large data set for this quite rare condition, some would call it an ultra-rare disorder. There are no approved therapies. Is there a path to using this drug on some basis short of doing another six, seven, eight-year trial, which I'm not sure we would have the stomach to do at this point, absent some sort of maybe conditional approval? But we really want to get their impression more than anything else. We want to discuss the data with the agency and ask them, what do you think about how all these signals seem to trend together, sometimes in a significantly significant way, even though it's a fairly small N? And is that interesting to the agency? And what might we do with this in terms of supporting registration of this drug in C3G? So that will be the general nature of the discussion.

OK. Thanks very much. Thank you.

Next question is from Ted Tenhoff of Piper Sandler. Your line's now open.

Great, guys. Thanks for taking my question. Tom and team, I just have to, I said this when you got the approval and just your fortitude and steadfastness in getting this approved is so remarkable. And I always appreciate all the thoroughness of your answers. My question has to do with lupus bifidus and just trying to get a sense with all of the supporting data, acknowledging and appreciating that it's a new indication, how quickly do you think you could enroll that and actually start to generate data? Thank you so very much.

Yes, thank you, Ted. Thank you for your kind words and the very good question. You know, there... I hesitate to put marks on a timeline at this point. I first want to make sure, learning as we did from our experience in egg-associated vasculitis, that we have a very clear understanding with what regulators are most interested in right now. There have been recent approvals, as you know, in that space. Those are good drugs. There are certainly advances, but there's still a long way to go. As you know, these remission rates as defined in these trials still are in the, maybe at best, the 40%, mid-40% in lupus nephritis, even with the best and newest regimens of care. Again, that's a great advance over where we were several years ago, but it means that still the majority of people are not experiencing either these complete or partial remissions as defined in the trial protocols. So we have a long way to go. And we're still using things that are quite immunosuppressive and not without other consequences. Nevertheless, they're part of the landscape now. The endpoints have been refined to some degree. And the degree to which glucocorticoids are still used, and they are, and at what levels has changed somewhat, although certainly the daily scheduled prednisone doses are far from being eliminated, even in the most modern lupus nephritis practice. So all that's by way of saying that we really want to partner with FDA very carefully, use all of their best inputs to understand the correct trial design and what the goals could be with an agent like top news. Where we have shown in other indications that affect the kidney, That, yes, we can do things with things like scheduled daily oral medicine. We can do things with the increase in EGFR, not just trying to arrest a rate of decline. And that, yes, we have evidence for rapid reductions of proteinuria. So we have on our drawing board some really important and, we think, innovative ways to think about innovative and rapid clinical development in that space. But I'm going to hesitate to say anything more definitive until we have really the definitive feedback from regulators. And then I can put probably some greater metrics and milestones on times and numbers of patients.

Understand. And maybe one other quick question that your answer sparked is what kind of patient stratification or even biomarker work do you envision doing in this somewhat heterogeneous disease Again, the goal would be obviously sticking with kidney function, and that's pretty clear endpoint and pretty clear classification. But will you be looking at different ways to either stratify patients or potential markers? Thanks.

Short answer is yes. And we're working with some of the very top experts in the world on this right now. So rather than, I'm going to play those cards a little bit close to the vest for this next little while. But we're very keen on understanding how we might appropriately look at the different patient populations and also maybe look separately at effects across these various criteria. But we're looking very, very carefully at that.

Yeah, cool. Well, it's going to be fun and going to be an exciting study. So keep up the great work, guys.

Thank you very much, Dennis.

Next question is from Ed White of HC Wainwright. Your line's now open.

Hi, thanks for taking my questions. Tom, you mentioned the patient support program, and I was just wondering if you can give us some more details on that. Any projections that you have for free drug? How should we be thinking about initial revenues and the impact of the financial support program on that? And then also, if you can just give us a little bit more color on what you're hearing from payers, you know, where you expect to see coverage levels at. Thanks.

Yeah, thanks, Ed. You know, in terms of free drug, I have noted very, very much and accurately what we really are going to hyper-focus on is patient access in the first few quarters. Because from that, everything will flow. And the conversions to get patients on drug and then increasing proportion of patients on paid drug, again, will occur over time. We've very carefully modeled this. We've modeled many kind of scenarios, if you will. We think we know how that will work. I won't speak to the specifics at this point, other than to say, again, I think revenue will be A somewhat trailing indicator, so everyone should be aware of that. But investments that we make now in both time and money will pay, I think, handsome dividends as we go forward. And I think we will do the greatest service to the patient population in the most expeditious fashion. So all of those goals are to the good. In terms of what payers are saying, I have the great pleasure of having our Chief Operating Officer, Tosh Budd, here in the room. Tash oversees that part of the business. He's had a lot of direct discussions and his team have with payers. Tash, can you give us a little bit of a general idea or flavor without going into too much detail? Understood.

Happy to do that, Tom, and thanks for the question, Ed. Yes, in terms of what are the payers saying about Tavernier so far, I think it's fair to say that payers do recognize the unmet needs associated with this debilitating disease. They're particularly aware of the high rates of mortality, the organ damage, and the relapse rates that occur in this disease area. Encouraging patients, payers also recognize the side effects of using immunosuppressive drugs and the clinical and economical benefits they can reap if they're able to avoid steroid toxicity. And finally, I would add is that payers certainly do appreciate the design and the scale and the intent of the advocate study, the results of our study, especially the superior sustained remission at 12 months, as well as the exploratory data supporting the potential for renal improvement, a lower risk of long-term organ damage and relapses, all associated with our targeted mechanism of action. And they seem to be particularly impressed with that. So, so far, payers have provided positive feedback on Tavneoff's clinical benefits and safety profile, and more work can be done in this area, as Tom has stated earlier, generating patient demand and, importantly, opening up patient access to launch critical factors that we're hyper-focused on at this point in time.

Okay. Thanks, Tom. Thanks, Tash.

Thank you, Ed.

Next question is from Yonan Zhu of Wells Fargo. Your line's now open.

Thanks for taking my two-part question. So what might be the types of access restriction payers may implement beyond the most obvious one, which is the prior authorization? And then based on historical orphan drug launches, When payers embrace a drug and is fully on board, what does the conversion rate look like, the patient start form to patient-on-drug conversion rate look like? Thank you.

Okay. So what I can share with you is that so far the feedback from payers on Tavneos' clinical benefits and its safety profile, we're receiving positive feedback. We believe payers will reimburse Tavneos with restrictions that are typical in prior authorizations, as they do for most rare disease products. But given this, look, coverage will be challenging at launch, but it is absolutely expected to improve as payers begin to conduct their clinical and business reviews. And these factors give us confidence that on top of the pay discussions we're having, that they will see the benefit. So to answer your question, We don't expect any specific or different payer restrictions. It'll be the standard prior authorization restrictions that you would expect with a rare disease drug. And in terms of your question around the conversion rates, look, I'd rather not get drawn into what conversion rates you see for other specialty disease areas or rare disease areas, because those conversion rates really depend on the clinical value that drug is bringing, the adverse event profile and baggage that drug comes along, the disease area, and how much value the payers see that particular drug is bringing. Suffice to say, the conversion rate will be low at first, and then it will dramatically improve in 2022. And we're confident we can achieve a respectable and healthy conversion rate, but it will take some time.

Got it. Very helpful. Thank you.

Thank you.

Next question is from Anupam Rama of JP Morgan. Your line is now open.

Hey, guys. Thanks so much for taking the question. I just have a quick logistical question here. If we might get some of the early look at sales for Conveos in and around the JP Morgan conference in January, or will we really have to understand the patient metrics, the sales metrics? around the 4Q report, which I think, you know, time frame. Thanks so much.

Well, thank you. You know, hard to say, Anupam. I like to be, you know me, I'm more conservative than anything else. So, I would say that I would tend to steer us more towards the Q4 report and beyond. But it's not impossible. It's not impossible. But I would say Q4 report and beyond is what we're thinking.

Thanks so much.

Thank you.

Thank you, participants. I'll now turn it back over to Dr. Shah for closing remarks.

Well, thank you. It's been, as always, a very stimulating discussion session. I appreciate your comments and questions. I thank you all for joining our call today, and you may now disconnect. I look forward to speaking to you next quarter. Bye-bye now.

Goodbye.

That concludes today's conference call. Thank you all for your participation. You may now disconnect.